(it seems I misremembered the story, if the following account is authoritative)
Later in 1975:
Zeppelin's road manager, the notorious Richard Cole, had become friendly with one of Elvis's bodyguards, Jerry Schilling. The year before, while Led Zeppelin didn't tour, Cole had road-managed Eric Clapton's American tour, and had taken Clapton to meet Elvis in Memphis. Now Cole had decided to meet Elvis again, and arranged to take John Paul Jones up to Elvis's mansion in Bel Air. So they took one of the limos, and when they got to the house they were told not to discuss music with the King and to leave after twenty minutes. Cole walked into Elvis's living room with a cold bottle of Dom Perignon in each hand. They found Elvis sprawled over a couch, wearing pajamas and house slippers, watching television with his entourage. Cole was a little drunk. “Wot the fucking hell is going on here?” he asked good-naturedly. Elvis didn't like people to curse in his house. “Man,” the King said, “what's all this cussing and swearing?” But Cole started to 'kid' Elvis. “You're sittin' there in your fucking carpet slippers and fucking Charlie Hodge
is twiddling a fucking pencil over here, what kind of fucking party is this?”
Elvis could take no more. He jumped up in a karate pose and whacked wrists with Cole, who had also gone into fighting stance. On contact, Cole's gold Tiffany watch clattered to the floor. Elvis picked it up. He liked watches, so he put it on. “That's nice,” the King said.
“Ahh, fucking keep it!” Cole said. But giving Elvis a watch set off the Kings automatic gifting mechanisms. Elvis ran out of the room and returned with another watch. Here,” he said, handing it to Cole. “You fucking keep this!!” It was a gold watch decorated with thirty-two diamonds. Then Elvis looked at Jones and said, “Whaddaya got? Gimme your watch.” Jones handed the King his Mickey Mouse watch. Elvis exited and returned with a double-dial (for two time zones) Baume & Mercier watch set in lapis lazuli. Elvis wasn't through. “What else you got?” he asked. Cole gave him his Brazilian amethyst ring. Elvis took a ring off his hand and said, “You can fucking have this,” throwing Cole a two-karat diamond ring engraved with “Love Linda.” Elvis finally let Cole and Jones leave three hours later.
He walked them to their limo in his pajamas and opened the car door for them.
The drivers and the other retainers almost dropped dead.
http://experts.about.com/q/Led-Zeppelin-501/led-zeppelin-1.htm