Who sets Gem prices?
I’m no economics major but I’ve been acknowledged for grasping the fundamentals in academics.
Curious as to what the exchange rate for Gems > Gold was at launch? Was it more abysmal than 58 silver (current rate?) If so I can’t imagine, say (2.7x is current inflation of Gold > Gems since I last bought them) paying $10 for 800 Gems = 1g 72s back when Gems were 29s per 100. That is, if people are using Gold to buy Gems more than using Gems to buy Gold causing the cost to rise, then by the dev’s claim the opposing exchange would improve by a similar (if not symmetrical) rate.
If Gems cost 2.7x more now, you should be getting 2.7x more Gold per 100 Gems exchanged, and if you’re not, then there is indeed inflation which will cause both exchange rates to become unreasonable and economically unsound in the future.
Looking at http://www.gw2spidy.com/gem and taking the earliest available data point and comparing agains the most recent data point, I get the following:
Buying gems: initial rate – 28s09c; current rate – 88s70c; change = 315.77%
Selling gems: initial rate – 20s33c; current rate – 64s08c; change = 315.20%
So both rates are changing at very similar rates and the difference could possibly be explained by the fact that exchange has to round to the nearest copper.
I’m no economics major but I’ve been acknowledged for grasping the fundamentals in academics.
Curious as to what the exchange rate for Gems > Gold was at launch? Was it more abysmal than 58 silver (current rate?) If so I can’t imagine, say (2.7x is current inflation of Gold > Gems since I last bought them) paying $10 for 800 Gems = 1g 72s back when Gems were 29s per 100. That is, if people are using Gold to buy Gems more than using Gems to buy Gold causing the cost to rise, then by the dev’s claim the opposing exchange would improve by a similar (if not symmetrical) rate.
If Gems cost 2.7x more now, you should be getting 2.7x more Gold per 100 Gems exchanged, and if you’re not, then there is indeed inflation which will cause both exchange rates to become unreasonable and economically unsound in the future.
Looking at http://www.gw2spidy.com/gem and taking the earliest available data point and comparing agains the most recent data point, I get the following:
Buying gems: initial rate – 28s09c; current rate – 88s70c; change = 315.77%
Selling gems: initial rate – 20s33c; current rate – 64s08c; change = 315.20%So both rates are changing at very similar rates and the difference could possibly be explained by the fact that exchange has to round to the nearest copper.
Thank you, very well understood and presented and a difficult story to tell
“No! You can’t eat the ones that talk!
They’re special! They got aspirations.”
Finn the human
They’re special! They got aspirations.”
Finn the human
The free market is the only one that can work. In real-life and in-game. That’s why the free market libertarian economy in EVE works so well, and that’s why in the real world we have a prolonged worldwide economic depression even with all our extensive regulation and central planning. Artificially setting prices will haunt you later. Even if you made it a 100% free market today, there’s still damage that is already done.
Many players without confidence in the system will simply not use it. It doesn’t seem feasible at all to me to trade gems for gold. It’s not a free market so you can’t play the market by buying low and selling high either way. With the current system there’s no smart trading and the Real Money value is very skewed, thus the black market will flourish.
As of earlier; purchasing 10$ of gems from A.Net gets me 800 gems which I could change into approximately 3g 60s. You can say give or take since it does fluctuate slightly. Now, for comparison, I pick out a random gold seller and 10$ gets me 21 gold which if I wanted to I could turn into gems and get in upwards of 3000+ gems, maybe much more.
Now it’s understandable that gold sellers are always going to try and undercut you. But when gold sellers can offer you 6x more value for money, I personally think it’s hard to fault the customers given such a discrepancy. When I first saw the difference that’s when I really knew there was something wrong with the economy. In a free market your product should be relatively similar in price, but instead it’s 600% more expensive. While I advocate the free market, it will take time for it to stabilize. Prices will have to come down and consumers must have their confidence in a free system restored. I would love to play the gem/gold market, but it’s simply not economically feasible.
Btw ANet let me know if you’re hiring :P.
First off, “free market libertarian system” kind of states you are not up to par in economic terminology… it would just be easier to say Laissez-faire capitalism.
2ndly: Under the gold standard (which a lot of libertarians) during the Great Depression there was wild fluctuations with inflation. In he fiat money system of today there has been a lot less fluctuation during the current recession.
I agree with Libertarians on a few matters of personal freedom. But Austrian economicists and laissez-faire fans misunderstand economic agents by presuming markets themselves behave when left alone.
And my own thoughts that are not related to the quoted person…
The gold sellers and botters essentially deflated the economy. It deincentivized regular players from earning coins. Players who were buying their gold are responsible for that…
With the removal of botters and gold sellers, it was natural for the gem prices to push upwards since players had to purchase gold in a legitimate way. It really is supply and demand.
I really wish I was privvy to information like the money supply in GW2, GDP of servers and such…
[SU]
Looking at http://www.gw2spidy.com/gem and taking the earliest available data point and comparing agains the most recent data point, I get the following:
Buying gems: initial rate – 28s09c; current rate – 88s70c; change = 315.77%
Selling gems: initial rate – 20s33c; current rate – 64s08c; change = 315.20%So both rates are changing at very similar rates and the difference could possibly be explained by the fact that exchange has to round to the nearest copper.
That explains far too much.
Last week I had been looking into the $ cost of acquiring Abyss dye at 5g if the entirety was funded by Gem purchases. At that time inflation was closer to 3.5x its initial rate and you could get about 63s per 100 ($10 buys 63×8 = 5g 4s). The intial rate of 20s 33c would have required not 800 but 2,479 Gems, or in excess of $30. $30.99 if you could buy exactly 2,479. For some dye. On a single character. The inflation of Gem prices has reduced it to $10.
Meanwhile 5g exchanged for Gems can’t even buy you an extra bank tab. So you’d need to pay more than $10 assuming you had no standing balance.
The initial and current exchange rate for Gems > Gold cannot possibly keep up with inflation as Gold loses value in game, as it started abysmally low. This will only get worse, as people hoard $100 or $1,000 worth of Gold, the mere thought of paying $10 for 5g when you have 500g is ludicrous. Meanwhile you will have to hoard that much gold if you want to still be buying Gems at the rate they will continue to climb to, since the incentive to keep that side of inflation in balance is almost nil.
TLDR: The Gems > Gold exchange needs a variable modifier which scales, both on Gold > Gems conversion and the increase in total player-owned (hoarded) gold in game. That way it will always be viable to purchase Gems and convert into Gold as it will guarantee an appreciable rate no matter how much Gold floods the market.
Again, not speaking as some economic guru, merely as the end-consumer that needs to see real incentive to invest in said economy. I see none in either direction. The base rates combined with the steady lopsided market trend paint a giant “grind for gold and stay away from Gems” sign all over it.
(edited by Asilion.9213)
I’m indifferent on the Free Market question, but 100% FOR a transparent market.
You have been said that the Gem Exchange does not create gems or gold, merely facilitates in it’s transfer.
Tell me how much gold is currently in the Exchange!
Tell me how many gems there are currently in the Exchange!
Show me the Algorithm used to calculate the exchange rate!
I want to support this game financially, and would willingly buy gems if I understand the mechanics behind them. But with a black-box style exchange, I can’t be certain any gems I purchase will have any real buying power in the future.
I’m indifferent on the Free Market question, but 100% FOR a transparent market.
You have been said that the Gem Exchange does not create gems or gold, merely facilitates in it’s transfer.
Tell me how much gold is currently in the Exchange!
Tell me how many gems there are currently in the Exchange!
Show me the Algorithm used to calculate the exchange rate!I want to support this game financially, and would willingly buy gems if I understand the mechanics behind them. But with a black-box style exchange, I can’t be certain any gems I purchase will have any real buying power in the future.
And the moment you release information on how Anet calculates the exchange, you give detailed tools for someone to figure out a way to manipulate the prices. But then again, thanks to Halloween, now I know exactly when to flip Gems for coins, and vice versa.
If you don’t want to buy Gems with real money, buy them with Gold you earn from in game. It would be more volatile to do the latter though, as I assume the $ to Gem rate will always be constant. Having said that, the buying power of Gems for account items and boosts will never change, only the conversion rates to Gold.
In GW2, Trading Post plays you!
And the moment you release information on how Anet calculates the exchange, you give detailed tools for someone to figure out a way to manipulate the prices. But then again, thanks to Halloween, now I know exactly when to flip Gems for coins, and vice versa.
Right now, only Anet can manipulate the price, and they can do this behind the scenes without letting the customers know.
I’d rather it be in the the open, so we can tell if there is artificial manipulation going on.
Right now, someone with enough gold should be able to ‘buy out’ the gems avaialable on the exchange. Anet would then have to “Magic” gold and/or gems back into existence in the exchange to enable trade to occur again… They have said that they don’t do this.
If there was only 1 gem available in the exchange, would it cost an infinite amount of gold?
That explains far too much.
Last week I had been looking into the $ cost of acquiring Abyss dye at 5g if the entirety was funded by Gem purchases. At that time inflation was closer to 3.5x its initial rate and you could get about 63s per 100 ($10 buys 63×8 = 5g 4s). The intial rate of 20s 33c would have required not 800 but 2,479 Gems, or in excess of $30. $30.99 if you could buy exactly 2,479. For some dye. On a single character. The inflation of Gem prices has reduced it to $10.
Meanwhile 5g exchanged for Gems can’t even buy you an extra bank tab. So you’d need to pay more than $10 assuming you had no standing balance.
Just a quick point, the exchange has not been designed to facilitate converting gems to gold and back again (or gold to gems and back again). The presumption is that people will buy gems with gold in order to spend them in the store, and those who sell gems for gold want to spend that gold in the game. In the above example, if you wanted the bank slot, you would either pay $7.50 in real money or just over 5 gold from in-game funds.
The initial and current exchange rate for Gems > Gold cannot possibly keep up with inflation as Gold loses value in game, as it started abysmally low. This will only get worse, as people hoard $100 or $1,000 worth of Gold, the mere thought of paying $10 for 5g when you have 500g is ludicrous. Meanwhile you will have to hoard that much gold if you want to still be buying Gems at the rate they will continue to climb to, since the incentive to keep that side of inflation in balance is almost nil.
TLDR: The Gems > Gold exchange needs a variable modifier which scales, both on Gold > Gems conversion and the increase in total player-owned (hoarded) gold in game. That way it will always be viable to purchase Gems and convert into Gold as it will guarantee an appreciable rate no matter how much Gold floods the market.
Again, not speaking as some economic guru, merely as the end-consumer that needs to see real incentive to invest in said economy. I see none in either direction. The base rates combined with the steady lopsided market trend paint a giant “grind for gold and stay away from Gems” sign all over it.
There is one primary purpose for gems, which is to buy things in the gem store. The fact that players can trade gems for gold and vice versa is a secondary feature, and as such, the demand for gold → gems should depend on the desirability of items in the gem store, not the supply of gold in the game.
The problem with a scaling modifier such as you suggest is that the exchange rate would become decoupled from the actual demand for gold → gems and would likely mean that the supply and demand for gems → gold would become imbalanced. If the supply side is higher (more gems being converted to gold), then gold is being added to economy out of “thin air”. If the demand side is higher (more gold being converted to gems), then ArenaNet is supplying items to players from their cash shop that no one has actually paid for and thereby losing revenue.
Right now, only Anet can manipulate the price, and they can do this behind the scenes without letting the customers know.
I’d rather it be in the the open, so we can tell if there is artificial manipulation going on.
Right now, someone with enough gold should be able to ‘buy out’ the gems avaialable on the exchange. Anet would then have to “Magic” gold and/or gems back into existence in the exchange to enable trade to occur again… They have said that they don’t do this.
If there was only 1 gem available in the exchange, would it cost an infinite amount of gold?
If you release too many details, then people will know exactly how much gold would be required to “buy out” the available gems, or rather, what quantity of gem buying would be required to shift the rate by more than 30% and into the territory of profitability.
In addition, while ArenaNet could modify the rate behind the scenes, I’ve yet to see any evidence of this happening (and with rate data available on gw2spidy I’m sure someone would notice if it did happen) and I don’t see any valid reason for them to do so.
Just a quick point, the exchange has not been designed to facilitate converting gems to gold and back again (or gold to gems and back again). The presumption is that people will buy gems with gold in order to spend them in the store, and those who sell gems for gold want to spend that gold in the game. In the above example, if you wanted the bank slot, you would either pay $7.50 in real money or just over 5 gold from in-game funds.
I realize this and would never suggest such a drastic change (or uncontrollable variable) that exchanging when rates favor you only to wait until the fulcrum shifts by a wide enough margin that buying in bulk yields significant profit becomes standard. If one were to enter the market right now (without a hoard of gems they bought at 1/3 the current price) they’d be extremely hard pressed to make a single copper profit from the most extreme shifts in either direction with even bulk trading, and the risk associated with the high probability that they will never profit at all (as Gold now is worth more than it ever will be in the future, and Gems now aren’t worth as much as they eventually will be when people are paying 2g per 100 gems in the future) far outweighs the potential gain.
I want 2 extra bank tabs, and maybe 1 extra character slot. So far I’ve gotten 1 bank tab when 600 gems cost me ~1g 75s. Sure that isn’t as much money to me now as it was then, but it wasn’t the equivalent of 5g+ now… closer to 3g. The trend is outpacing gold savings of the average enthusiast (and with so many gold-sinks aside from gems, such as lining the pockets of the market controlling elite, it is no wonder) by too wide a margin.
Would I buy Gems at 40-50 silver per 100 for exclusive use in the Gem Store? Probably, infrequently. Would I buy Gems $10.00 at a time if $10 netted me more than 4g – 5g? I’d consider it. $2 per gold (it used to be $6!), you’re crazy. I haven’t found a day job that pays me $2 for the number of clicks it takes to earn a gold “the old fashioned way” in game. It’s the only option. And in spite of your concerns, that equals lost revenue… not on paper, but in reality.
(edited by Asilion.9213)
If you release too many details, then people will know exactly how much gold would be required to “buy out” the available gems, or rather, what quantity of gem buying would be required to shift the rate by more than 30% and into the territory of profitability.
Sure, they would know that buying 100 Gems would shift the going rate into profitable territory, but they also need to sell those 100 Gems back into the market. If the Gems → Gold rate goes to high, wont people will buy Gems for $real, and normalize the price again?
What real world economic models would fit this 3 currency system (gems, gold, $real)
I realize this and would never suggest such a drastic change (or uncontrollable variable) that exchanging when rates favor you only to wait until the fulcrum shifts by a wide enough margin that buying in bulk yields significant profit becomes standard. If one were to enter the market right now (without a hoard of gems they bought at 1/3 the current price) they’d be extremely hard pressed to make a single copper profit from the most extreme shifts in either direction with even bulk trading, and the risk associated with the high probability that they will never profit at all (as Gold now is worth more than it ever will be in the future, and Gems now aren’t worth as much as they eventually will be when people are paying 2g per 100 gems in the future) far outweighs the potential gain.
I want 2 extra bank tabs, and maybe 1 extra character slot. So far I’ve gotten 1 bank tab when 600 gems cost me ~1g 75s. Sure that isn’t as much money to me now as it was then, but it wasn’t the equivalent of 5g+ now… closer to 3g. The trend is outpacing gold savings of the average enthusiast (and with so many gold-sinks aside from gems, such as lining the pockets of the market controlling elite, it is no wonder) by too wide a margin.
Would I buy Gems at 40-50 silver per 100 for exclusive use in the Gem Store? Probably, infrequently. Would I buy Gems $10.00 at a time if $10 netted me more than 4g – 5g? I’d consider it. $2 per gold (it used to be $6!), you’re crazy. I haven’t found a day job that pays me $1 for the number of clicks it takes to earn a gold “the old fashioned way” in game. It’s the only option. And in spite of your concerns, that equals lost revenue… not on paper, but in reality.
I can sympathise to some degree. I earn a half-way decent salary, but due to other factors I haven’t been able to justify spending real money in the gem store yet, although I still want extra bank slots, maybe a character slot a bit later on, and possibly some other things in time. I did however spend gold recently on buying enough gems for a bank slot when they were around 80s for 100 gems.
While you and I might consider something to be a fair price, others may consider it to be over or under priced. The exchange is designed so that the volume of trades on both sides should reach equilibrium and the “price” at which this equilibrium occurs is determined by how the player base as a whole is willing to value gems and gold.