Guild Wars 2

Someone said in another post: If you want to do your part to shift the ratio, buy some gems and change them into gold.

How would this change the gem price? Can people here tell me what they think about this?

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Step 1 : buy gems with dollars.
What do you think that the affect is on the gem price in gold of this step?

( a ) Does it go up, because there was more demand for gems?
( b ) Does it go down, because there is now a higher supply of gems?
( c ) Does it cancel each other out.
( d ) The amount of gems bought with $$$ does not influence the gem price in gold.

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Step 2 : sell gems for gold.
What do you think that the affect is on the gem price in gold of this step?

( a ) Does it go up, because there is now less supply of gems?
( b ) Does it go down, because there was a higher supply of gems?
( c ) Does it cancel each other out?
( d ) The amount of gems bought with gold does not influence the gem price in gold.

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3: effect of 1 and 2 combined.
Assume that there were no other gem trads being made between step 1 and 2, by nobody.

( a ) Was the effect of Step 1 greater than Step 2?
( b ) Was the effect of Step 1 smaller than Step 2?
( c ) Was the effect of Step 1 the same than Step 2?

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I would love to know the community’s opinion on this…

Step 1: (D) no effect at all.

Step 2: (B) it goes down, seeing as more gems = higher supply which means cheaper prices

Step 1 does never, in anyway, effect the gem to gold prices seeing as you have to actually sell the gems in order to add them to the system.

It’s actually very simple. It isn’t buying gems with real money that affects the exchange. If you buy gems with real money and spend gems on things, it doesn’t affect the exchange at all.

When players turn gems into gold, the exchange moves slightly in favor of gold. Meaning, gold is worth slightly more gems.

When players turn gold into gems, the exchange moves slightly the other way.

It doesn’t matter how the gems or the gold were acquired. You could have bought gems long ago with gold and be trading them back to gold (if you did it long enough ago, it could be profitable) and the exchange would still move.

It’s simply designed to emulate the movement of the market. When people are buying one way the exchange moves so that sale is slightly less attractive and the opposite is slightly more attractive. Over time, we reach something like equilibrium.

Note, there is still a transfer tax. As there should be. That’s ArenaNet’s “cut” over and above the cost of gems for real money. But factoring out that tax, the two move together.

No one likes hearing this, but the reason gems are SO expensive (as so many complain) is because despite how much gold it seems to cost to get those gems, no one who has gems already is interested in selling them for gold – at roughly this exchange. And until they are, the price will keep moving in the same direction.

Just following up, basically it means, there are many people who want to buy gems with in game gold, to get various BLTC items.

But there are fewer people willing to buy gems with real life money and trade them for gold. ie. few people want to buy official gold.
This is presumably because third-party gold is so much cheaper.

So, lots of people buying gems with gold, few people selling gems for gold.

The internal gem stockpile in the TP goes down, the internal gold stockpile goes up.
—> Gem prices vs. gold rises via an automatic mechanism.

Rieselle.5079:

Just following up, basically it means, there are many people who want to buy gems with in game gold, to get various BLTC items.

But there are fewer people willing to buy gems with real life money and trade them for gold. ie. few people want to buy official gold.
This is presumably because third-party gold is so much cheaper.

So, lots of people buying gems with gold, few people selling gems for gold.

The internal gem stockpile in the TP goes down, the internal gold stockpile goes up.
—> Gem prices vs. gold rises via an automatic mechanism.

I think that’s roughly it, but it’s not necessarily a case of lots on one side and few on the other, but just that there is an imbalance between the two sides. The greater the imbalance, the faster the movement.

So, everyone agrees it is 1 D, 2 B and 3 B.

Prices of gmes in gold are only affected buy buying and selling gems with gold: when you buy gems with gold, the price of gems in gold goes up.

And thus, according to the community, the amount of gems that people own has no influence whatsoever on the price.

If all players combined own 1,000,000 gems and someone buys 100 gems with gold, the price will go up with the exact same amount as when players own 25,000,000 gems and someone buys 100 gems with gold.

Tallis.5607:

So, everyone agrees it is 1 D, 2 B and 3 B.

Prices of gmes in gold are only affected buy buying and selling gems with gold: when you buy gems with gold, the price of gems in gold goes up.

And thus, according to the community, the amount of gems that people own has no influence whatsoever on the price.

If all players combined own 1,000,000 gems and someone buys 100 gems with gold, the price will go up with the exact same amount as when players own 25,000,000 gems and someone buys 100 gems with gold.

Yep… if it helps, think of the reverse situation. All other things being equal, if all players combined own 25,000,000 gold and someone sells 100 gems for gold, the price will go down with the exact same amount as when players own 1,000,000,000 gold and someone sells 100 gems for gold.

In a supply and demand system the only thing that matters is the supply available to buy. And that supply comes from gems sold. The demand comes from people buying the gems with gold. If the demand (gems leaving the supply) is higher than the supply (gems going into the supply) the price in gold for gems goes up. The larger the difference in rate the faster the price moves up. If the supply is higher than demand then the same applies but in reverse the price in gold goes down. Keep in mind too that demand has a secondary influence of, the more gold the average person has the more likely they are to buy gems with gold. Which means that the overall price of gems for gold will rise with the overall continued rise of the average wealth of players.

You can’t speak of supply or demand as the supply is infinite. I could buy a trillion gems and exchange them all into gold without the gold running out. Gems and gold aren’t traded between players but always with the black lion trading company.

Exchange rate only looks at the demand of gold and gems. If you exchange gold for gems the demand for gems increased resulting in a higher cost of gems in gold.

BiJay.9830:

You can’t speak of supply or demand as the supply is infinite.

I agree: the supply of gems is infinite, Anet can sent you as many as you want.
The demand of gems is infinite too: Anet buys up all gems that you offer.

The supply in gold is infinite, Anet gives you gold for any gem you offer.
The demand in gold is infinite too: Anet takes all gold you give, in return for gems.

That is why it is odd to say that the gem price depends on demand & supply, cause both demand & supply are infinite.

And how do we know that?

They did state that they would use the same system as the Rare Material Traders in GW1, and those sure could run out of items, if too many people bought but not enough sold.

Until we got a clear statement from ArenaNet that they are buying and selling gems via the Transfer I would suggest not assume they do.

Here’s the post where John Smith confirmed that the gem exchange has a supply of gems and gold….

From https://forum-en.gw2archive.eu/forum/game/bltc/Who-sets-Gem-prices/page/7#post705345

John Smith.4610:

There seems to be some confusion:
The currency exchange has a supply of Gems and Gold.

If players are converting Gold to Gems, then the Amount of Gold player will receive for their gems goes up.
If players are converting Gems to Gold, then the amount of Gems players receive for Gold goes up.

The exchange rate changes based on the scarcity of each supply. You cannot inflate it, it’s an exchange rate. As players purchase in one direction, it entices purchases in the other direction.