I think we can all (including OP) agree that the watch we are discussing is not gaudy per se, as it is a very understated and beautiful watch. Nobody will scream BLING BLING upon seeing it and most people will not even recognize it for what it is.
The interesting point (which I also believe the OP is trying to make) is whether it is gaudy to spend 20k (or over) on a watch that, at the end of the day, is a watch.
This is a forum dedicated to the appreciation (and nit-picking) of beautiful things so its members are naturally inclined to accept high prices for perceived high quality. Brands add a premium to prices while not increasing quality which is why many of us dislike over-branded items like Gucci or Versace. Naturally even the brands loved by Styleforum have branding premiums, Savile row charges higher rates than off-the-row for bespoke, for arguably similar quality. Japanese watches like Seiko (at their top range), can achieve similar quality to Swiss manufacturers a lower prices.
In essence, we all want maximum bang for our buck. To this I think we can all agree. The Patek watch in question costs so much partly due to its brand and partly due to the enormous difficulty and man-hours inherent in creating such a watch. I think an interesting question arises when the perceived quality does not match the cost of manufacture. To take it to its extreme: Imagine you were to order a clockwork cell-phone, handmade by the Dalai Lama himself. Using only cogs, minute pieces of machinery and the mysteries of Buddhism he painstakingly crafts one over the course of 20 years. You receive your cell-phone and it looks very similar to other cell-phones and operates in the same way. Only you can revel in the fact that this masterpiece only cost you the purchase of Tibet from China to procure.
However it is still just a cell-phone.
Or, a simpler example: Swiss watchmakers discover a new component that vastly improves (relatively that is) the performance of the tourbillion. The secondary super-tourbillion is insanely difficult to make, costs four times the amount of a normal tourbillion but improves watch performance by some astronomically small amount. Where does the line go? Does making things more complicated and more difficult to make (with extremely small improvements to quality) justify the tens of thousands of dollars spent on purchase?
Let's take two people:
A: Purchases a Versace limited edition jacket, with tassels, chains and sparkly stuff. Made in a purple shiny material with leather sleeves.
B: Purchases a discrete, beautiful watch that costs 10x the jacket.
Assume away the maintained value of the watch (say the jacket has collector value). The jacket bearer widely announces the cost of his jacket to everyone whereas only "people in the know" realize the value of the watch. A is left with a slightly impractical jacket and B is left with a (very) slightly impractical watch. Both spent money on items without added functionality.
Gaudiness then sort of comes down to taste.