MECHANICAL WATCHES are exquisitely superfluous in

MECHANICAL WATCHES are exquisitely superfluous instruments. They keep time based on 15th-century spring technology. They require daily winding. The manufacture of a high-end complicated wristwatch, depending on the number of features, can involve more than 1,000 painstaking steps. A single, hand-finished timepiece might take two or more years to complete. They are about as utilitarian as a horse-drawn buggy, with price tags that rank alongside that of a big car or a small house. Undeniably, a $25 drugstore Casio keeps better time. Yet, as more than one watch buff has said, when it comes to these tiny mechanical marvels, "telling time is often beside the point."

click to view interactive photo.

This perspective explains, in part, the thinking behind dropping $500,000 on a musical alarm wristwatch like the Girard-Perregaux Opera Three, which plays Mozart and Tchaikovsky from a minuscule 20-blade keyboard and a spinning drum of 150 hand-mounted pins. For serious-collectors and the growing swells of wrist-conscious gear heads, it is precisely the finer points of horological nihilism that are the attraction. After all, you can find the correct time of day on every gadget from a cellphone to a microwave oven. What those gadgets lack is minute repeaters that strike the hour on tiny gongs, sky charts that track the heavens or perpetual calendars that display the date, automatically adjusting for leap years. Nor do they have the most complex of all mechanisms: the tourbillon, an ingenious 18th-century device that compensates for gravity's pull. The appeal of an extravagantly intricate movement, steeped in centuries of tradition and brimming with "complications" (those functions outside of timekeeping), is what lends the instrument its exclusive élan.

Today, mechanical-driven wristwatches account for only about 20% of the global watch industry, but they are its most profitable segment. It wasn't always this way. Twenty-five years ago, with the flood of cheap quartz watches, the mechanical watch industry was nearly extinct. But for more than a decade, it's been on the upswing, aggressively defying the global recession. In 2011, sales of Swiss watches—the uncontested leaders in this category—reached a 20-year high of $21.8 billion, of which 70% came from mechanical pieces. Over the past four years, there have been record-smashing sales at the major auction houses.

When asked to account for the resurgence of interest in mechanical watches, longtime collector Michael Safdie, who recently transformed his passion for vintage Patek Philippes into a private museum and salon in New York, quipped: "What other half-a-million-dollar object can you wear and enjoy 24/7?" Indeed, last year when French watchmaker Richard Mille, part of the new wave of virtuoso independents, introduced his RM056, he reportedly sold out all five models. The split-second chronograph tourbillon, encased in transparent sapphire, cost $1.65 million.

The masters of today's micro-mechanical universe have restored timepieces to the upper echelon of power toys, with attendant bragging rights.

One Wall Street titan, the owner of 15 complicated Patek Philippe wristwatches, recounted to me the time his secretary called while he was traveling abroad to inform him that an armored truck had arrived at the office bearing his latest piece. It was a platinum-cased wristwatch that bore several of the most coveted complications, including a tourbillon—not to mention a $650,000 price tag.

For the modern horophile, perhaps the only thing more thrilling than wearing, say, a sought-after Patek Philippe Reference 1518 on one's wrist, is the honor of having another discriminating enthusiast take notice of the benchmark timepiece. "A watch tells a lot about its owner," said Reginald Brack, a New York-based entrepreneur and a collector and dealer of modern and vintage Rolex and Patek Philippes. Mr. Brack—who still owns his first piece, a 1967 Rolex Explorer 1016—also noted: "They offer instant entry into a club."

This exclusive fraternity includes former Italian Prime Minister Silvio Berlusconi, who sports a platinum Vacheron Constantin Patrimony wristwatch with a minute repeater and perpetual calendar ($540,000), and Russian President Vladimir Putin, who wears a platinum A. Lange & Söhne Tourbograph, featuring a split-second chronograph and tourbillon ($580,000). During last year's French Open final, Spanish tennis player Rafael Nadal wore his custom-made ultralight Richard Mille RM027 Tourbillon ($376,000) to victory. Wristwatches, however—as opposed to pocket watches—were once "the mark of sissies." They gained wide acceptance only after World War I.

I came to know this insular and obsessive world while chronicling the collecting duel between auto magnate James Ward Packard and financier Henry Graves, Jr. Two of the most important watch connoisseurs of the 20th century, they shared a desire to possess the most complicated mechanical timepiece in history—a rivalry that resulted in the Graves Supercomplication. This tour de force timepiece, manufactured by Patek Philippe in 1933, featured 24 complications and became the center of a bidding war 66 years later, fetching a record $11 million at Sotheby's BID -1.14% .

In the spirit of Mr. Packard and Mr. Graves, today's aficionados yearn for the best, snapping up complicated watches the way that fine-wine connoisseurs doggedly pursue the most elite vintages. "Especially at the high end, it's almost like buying art," said Michael Sandler, vice president of merchandise and strategic planning at the luxury-watch retailer Tourneau in New York.

Like art, these watches appreciate. A Patek Reference 2499 bought in the 1970s for $30,000 can fetch $400,000-$500,000 today. When Eric Clapton's platinum perpetual calendar Patek chronograph with moon phases, Reference 2499/100, was sold at Christie's last November, it went for $3.6 million.

"We're seeing an investment in watches as a true long-term strategy," said John Reardon, a horological expert and the author of "Patek Philippe in America." The huge appreciation in value, so evident at auction, inspires new blood to get into the game."

Converts soon realize that nothing compares to the tick of a fine mechanical watch. Or, for that matter, to the zeal with which a collector preaches the windup gospel. "Everyone has a mass-produced iPhone," said Marc Berliner, a film and television producer based in Los Angeles who owns 20 watches, mostly vintage Patek Philippe, Rolex and Vacheron Constantin. "A mechanical watch is handmade and hand-finished. There is a level of craftsmanship and passion that you don't find in a lot of things these days."