While the banking crisis continues and the stock market declines precipitously, some investors are finding a refuge in some surprising places. Fine mechanical timepieces made of precious metals now have an appeal that extends beyond the collector’s desire for aesthetics and craftsmanship. These watches increasingly represent a long-term investment opportunity for those who understand the industry and have an eye for value.

• On October 16, 2008, a 1930 Longines Company watch worn by Albert Einstein sold for $596,000 in New York, setting a record price. The auction house originally believed that the famed physicist’s watch would sell for $25,000 to $35,000, but greatly underestimated collector’s demand.

• At another recent auction an anonymous UK buyer acquired the Seamaster Planet Ocean worn by Daniel Craig during the filming of Casino Royal. After a frenzy bidding war the watch finally sold for $213,000.

• A watch does not have to be “famous” to appreciate in value, most watches routinely sold by collectors privately or at auction are of recent vintage (less than 5-10 years old), and while of fairly limited production (under 100 pieces worldwide), are affordable for the investor (under $10,000).

• Driving the increase in prices for luxury watches is an exploding group of collectors. The price appreciation of fine timepieces can surpass that of more prevalent collectables (such as fine art, stamps and coins) whose collector base remains flat.

• Unlike investments in collectibles or financial instruments, purchasing and wearing fine quality watches has the added benefit of making the statement of knowledge and excellent taste. A quality timepiece is thought by collectors to reflect not only its high quality, but that of its wearer.

• Many people have inherited treasures of which they are unaware. Many inherited vintage watches lay forgotten in drawers, for which collectors would gladly pay top prices.

While recent emphasis has been on people checking on the value of their gold jewelry, we believe that they should also check on their watch collection and consider collecting fine watches as a hedge against the recent market volatility.