19 replies to this topic

[Thuley]

Unlike other items on the TP, and unlike other games which offer ways to legitimately spend RL currency and convert it to game currency, ArenaNet decided to control the exchange rate between gems and gold.

You cannot out in buy or sell orders for gold or gems, and thus the exchange rate isn't set by the market (the players) but by Anet.

Now if you look at the gem price trend from http://www.gw2spidy.com/gem you will see this:



a generally upward trend in the value of gems vs gold, till it peaked in mid December and has been continuing to decline ever since.  Basically your gems are currently worth less gold than they were two weeks ago, and likewise your gold currently buys you more gems.

So the question is, why not let the free market set the exchange rate?

[ChapDev]

I'm am far from a good economist my current guild leader can tell you that I never even attempt to play the market when I could be fighting instead however I'll give it a shot.

Mid December is the best time in the quarter for where I currently work to make money everyone goes completely insane and buys everything in bulk I would assume this is the same for Guild wars 2 Gem's either from people who were hoping to save up as much gold as they could for Christmas events or the more profitable "It's Christmas" so everyone is buying Gem cards for their children to use in game as Presents.

The problem with at this time there being a free market is that A-net wouldn't have been able to control how attractive the value of the gems looked at the time of Christmas purchase and parents or friends would be less inclined to buy the gem cards as presents. (In a free market I would assume the Christmas purchases would bulk out the amount of Gem's on the market and lower their Gold value because of this so when someone looked to see at getting it as a present for someone it would appear as if they weren't getting as much for their money.)

Now we also need to remember that A-net is still a business that needs to eat so needs to make as much money as possible, the easiest way to do this now they have sold all the gems? Lower the value of the gems-gold ratio and make them worth less gold so when everyone after Christmas invests in their Gem cards they were given and doesn't quite have enough gold left over for the things they want to purchase because the value dropped they are more inclined to go out and buy more Gem cards so A-net continues to keep their Gem sell level's high over this quarter.

Essentially what I am trying to suggest here is that under A-net control the Gem trade can be controlled by subtle means to maximize their profit at peak purchase times during the year such as holidays like Christmas which a free market could very well ruin for them. There is no reason to be mad at them about it either because if you are you should be mad at every business in the world that makes "Special Offers" at Christmas, they all do it.

Now to find out if I just spewed out a complete load of crap or not.

[Janus Bloodrunner]

Ok so what makes you think that the price of gems/gold isn't influenced bt the rate at which they are purchased/sold? Everything I have read about this has suggested that the prices inversely fluctuate according to supply and demand. If you look at the chart and see the dates of the greatest spikes, you'll notice that they are almost all around the holiday events (halloween, lost shores, and wintersday). All of these events had advertised that there would be gem purchasable items and therefore demand of gems went up and people were buying them both with real currency and in-game gold. The reason it is steadily decreasing is due to the lack of demand. Also, im sort of positive that should the price of everything in the TP rise to unfathomable sums, this chart would be affected. So when you ask why not have the free market determine the price, I wonder if you took into consideration that the gold to gem ratio is actually essentially controlled by us and that both retain an even constant. Now the only thing that can be said of Anet's involvement in the price is their initial setting of the ratio on the first day the game opened. After that it seems it has has very much been our doing. Although I kinda like the Anet conspiracy theory a lot more.

[Thuley]

Janus Bloodrunner, on 31 December 2012 - 07:51 PM, said:

Everything I have read about this has suggested that the prices inversely fluctuate according to supply and demand.

Because there is no explicit measure of demand.  If I were to be able to post how much gold I am willing to pay, then there would be a actual measure of demand, but I don't have that option.  The demand only exists conceptually by just generally assuming that some people are willing to pay gold for gems.  How much gold one has to pay for gems is seemingly arbitrarily decided by Anet.

That this arbitrary assignment is completely out of touch with reality is demonstrated by the fact that you can spend $25 on a gem card and walk away with 10g, or you can spend the same amount paying the gold farmers and receive an order of magnitude more gold.

[Circaetus]

They control it to avoid the need to create a fiscal cliff.


..too soon?

[NullMad]

Way back when, on their forums, their economist was talking about how it works. The rate is controlled by the rate of transfers from gold to gems and from gems to gold. So what ANet controls is the margin between two transactions.

I'm curious why you think that buy orders actually influence the price? Does anyone even sell at buy price? I've yet to run into an item that would not have liquidity to not sell at sell price.

[Thuley]

NullMad, on 01 January 2013 - 09:11 AM, said:

I'm curious why you think that buy orders actually influence the price? Does anyone even sell at buy price? I've yet to run into an item that would not have liquidity to not sell at sell price.

Stuff I buy in bulk on the TP I only buy with buy orders.  Some get filled immediately and some sit a bit before they get filled because people put up higher buy orders to get ahead of the "queue".  The only time I buy from a sell order is when the difference is 1c.

The problem I see with the rate of transfer is that it's not based on player participation at all because Anet has an infinite amount of gems.  So if I want to buy gems with gold, I am not buying your gems, I am buying gems Anet created out of thin air.  This is true for when I buy gold with gems, again I am not buying gold another player put up, but I am buying gold Anet injects into the economy out of thin air.

My guess is that few people actually buy gems to turn them into gold.  There are probably more people who turn gold into gems to buy inventory/bank/character slot upgrades and the outfits they sell for gems.

I just fundamentally not understand why this isn't a player driven system where gems are only available if another player is selling them and there is no difference between the gold-to-gem and the gem-to-gold exchange.  This type of system, which is completely player driven, has proven highly successful in EVE Online.  But of course the EVE publisher doesn't create their version of gems or gold out of thin air to inject into the market.

[Octavian]

I have noticed that if more people are trading in gold for gems it causes the price to inflate.   Not sure, but if that is true then if more people were trading gems for gold then it would decrease.  Halloween i saw a 20% profit on the gems i bought from gold as you can see the spike in October.   Then another spike up for make over kits in late November and again for X-mas.  now that there is no real reason for the masses to trade gold in for gems we are seeing a decreasing trend.  It will most likely keep decreasing till it balances out or something good gets put into the gems store.  

For the January update we will most likely see some new items in the store so expect it to spike up then.

[Jacquili]

I know I use legitimately earned gold to buy gems, and thus I'm annoyed at the potential impact people buying from gold farmers have on the market.   Assuming there is some supply/demand going on,  many people who would normally buy gems for cash and turn into gold are instead being taken out of that market and buying from gold farmers.....likewise, people who want gems may find it cheaper to buy illegal gold and turn them into gems,  distorting the market further.   Bleh.

(I also am pretty small scale on my gem purchases....so far I've bought a character slot and 2 bag slots)

[remm]

It's not controlled by anet. The more gems get bought the more exspensive they become and the price degrades over time if there's not enough people purchasing to make it rise/keep it the same (and like Octavian said, if people are cashing out their gems as well). The steady increase in price since launch is due to more gold entering the game by more people reaching level 80 and doing things that make them gold. Those people are buying more gems (with gold) to unlock things like inventory/bank/character slots.

I see what you're saying about them being made out of thin air, but the system is still controlled by the players and isn't influenced by anet aside from the releasing of gem store items which obviously causes an increase as people buy them up.

[Thuley]

remm, on 03 January 2013 - 01:07 PM, said:

It's not controlled by anet. The more gems get bought the more exspensive they become

But that in itself is based on a formula that Anet created as opposed to the free market deciding what gems are worth in gold via a normal TP buy/sell order process.

[Janus Bloodrunner]

Thuley, on 03 January 2013 - 01:52 PM, said:

But that in itself is based on a formula that Anet created as opposed to the free market deciding what gems are worth in gold via a normal TP buy/sell order process.

And what that equation is more than likely something along the lines of (the # gem/gold purchased)/(a set amount of time) or a÷t=p. That amount of time is probably the amount of time the TP takes to refresh itself. Thus allowing a greater increase in price relative to large purchases or sales of gems and gold. The only control that is present was during the initial starting period of the game where Anet had to figure out (probably based on beta tester info) what the starting values were and from there it has been player based. The only other influence they have had is to using strategic marketing (ie holiday/special events) to keep people buying gems which inadvertently affects the chart.

[Thuley]

I question the necessity of an equation as opposed to letting the free market decide what gems are worth in gold, or gold is worth in gems.

[Janus Bloodrunner]

Because the free market would make both almost worthless to Anet. Gold farmers make every MMO's economy go ape nuts. I for one enjoy the once a month spam from them as opposed to other games where you stand in one of the home areas and see spammers almost every sec. With this game there is less of a market because of the affordability of anet's legit gold.  Plus since the amount per dollar is essentially based on the need, then it makes it relevant to the cost of things on the TP.

[Thuley]

Janus Bloodrunner, on 04 January 2013 - 12:48 AM, said:

Because the free market would make both almost worthless to Anet. [...] With this game there is less of a market because of the affordability of anet's legit gold.

Let's think about this.  Right now you get about 25g for 2000 gems which cost $25.  Compare that with 100g you get if you give your $25 to the gold farmers.  How does 25g vs. 100g qualify as affordable?

If you have a free market then people with a lot of gold buy gems from players.  So those who want to sell gems for gold will get more gold for their gems.  Those who want to buy gems with gold have to pay more for them.

The current system essentially rewards people who want to buy gems with gold, and punishes people who want to sell gems for gold.  If anything the current system drives people who want gold toward gold sellers as opposed to using the legit way.

[Octavian]

Sales in the gems store causing the gold to gems ratio the spike up a lot.

[Cornflake]

Octavian, on 05 January 2013 - 05:21 PM, said:

Sales in the gems store causing the gold to gems ratio the spike up a lot.

I don't think so.  In my opinion, that spike was driven by the golden era of botting.  The sharp ramp lines up well with when botters switched to teleport/speed hacking nodes.The ramp up matches up perfectly to when the bot trains all became teleporting/speed hacking node farmers.  It also matches up with the ramp up of farmables like Iron that you can correlate to bot activity ( http://www.gw2spidy.com/item/19699 ).

I don't know what would cause the ramp down, because looking at supply on the AH it would seem bots are still going strong and that gold value continues to deflate.  My guess is you would want gold value to artificially inflate on the market to create a gold sink and kill some of that gold in the economy.  Maybe they have given up on competeing for gold sales (via selling gems) and are just focussing on selling gems to players who just want the gems?

They've lost the bot war.  That they made a huge announcement, within days of all the trains swapping to node farmers, on their success at eliminating botters shows they don't really have a handle on the in game situation.  There hasn't been so much as a dip in any of the possible available metrics everyone can go and use to see just what sort of impact changes in botting behavior are having.

Why no free market? Because they are aware they can't control the exploits, and they don't need prices to be even less stable that they are by players manipulating the market daily in order to make money via flipping gold/gems.

[Octavian]

Cornflake, on 05 January 2013 - 06:25 PM, said:

I don't think so.  In my opinion, that spike was driven by the golden era of botting.  

Ya i guess if the majority of the people trading in gold for gems are people who bought gold from these gold farmers or are botters. I sure don't cause its just to expensive.  Either way a promotion in the gem store will always cause the cost for gems to go up.  The botters just make it more then it should be.

[Cornflake]

Oh, I don't disagree.  Don't mind me, I just have a habit of typing way to much when it could just be summarized with "I don't have a fracking clue, but my guess is..."

[Thuley]

I had some more time to mull this over and would like to revise my previous statement.

The current Anet controlled exchange rate between gems/gold only rewards people who don't have much gold and want to purchase gems with gold.  All other players who want to participate in the gems/gold exchange are punished by the set rate.

I am unable to come up with a rational explanation why Anet chose to control the exchange rate as opposed to offering the gem/gold and gold/gem exchange as a normal Trading Post item where people can use buy/sell orders to trade in gems and gold.

Clearly someone at Anet thought it was a good idea, but what was their reasoning?

What about inflation?  They don't want 1,000 gems to sell for 75902757245 gold?  Why not?  If players are persistently able to offer 75902757245 gold for 1k gems, why would Anet insist on selling it for 20g?