Blog Archive

Tuesday, 28 January 2014

Information, Theorycrafting and Investment

Anyone can look at an item on the trading post and decide if it is worth investing in or not, but speculation is not simply all about supply and demand, but rather the forces that can and will change these factors. When it comes to speculation I like to think of it from two angles; the first are investments based on knowledge of supply and demand. A good example of this would be a limited special event item skin such as the Zephyr Rucksack Skin - since it's release in July of last year it has almost quadrupled in price. This skin was only obtainable as a rare drop through the Aspect Arena during the Cutthroat Politics release. Since then, demand has been steady and supply has slowly dwindled, causing the increase in price. The second is a much deeper type of speculation that takes into account many sources of information, theory crafting and the likes as I will explain below.

For this part I will reference a very successful speculation I had a few months back. At the time, ascended weapon crafting had been available for a few weeks so everybody interested in that also knew what materials they needed and how much. Then I heard of ascended armour crafting in the works, and it was this announcement that got me speculating around materials and most of all; which material(s) would be the most demanded and/or the hardest to acquire should it suffer a shortage of supply on the trading post. For a while I thought about investing into Gossamer Scraps - my thought process was that the tier 6 equivalents in weapon crafting, Orichalcum Ore and Ancient Wood Logs, had exploded in value following the ascended weapon crafting patch and on top of that I knew that Gossamer would be needed in most cases in large quantities to level the armour crafting professions from 400-500. However, many other speculators had gotten to Gossamer Scraps before me, and their price had already increased a significant amount making it a very risky investment.

In the end, I decided against Gossamer. The risk highly outweighed the potential reward and after much thought the already-inflated price dissuaded me from investing. And so I began to review the ascended weapon recipes and took on the assumption that ascended armour would follow the same algorithm. I could see that Mithril Ore is used in huge quantities, and began thinking about Silk Scraps. This was an interesting one - this was a tier 5 material that was listed in masses on the trading post at 1 copper over the vendor value, a whopping 8 copper per unit. What's more, ArenaNet had changed the recipe of Bolt of Silk so it required 3 scraps instead of the standard 2. This would be an almost risk-free investment - at worst I would vendor them for a loss of only 2.5 silver per stack. Although it felt like it might be a waste of time, even with several million scraps listed at 8 copper, I went for it and invested in a large amount of Silk Scraps. It took a long long time for anything to happen, and even after the long-awaited ascended armour patch, the scraps took a long time to break the 8 copper mark. Eventually they started going up in price, and it is hardly surprising considering a full set of heavy ascended armour requires 7500 Silk Scraps - that's 30 stacks! I sold all of my scraps for 2.3 silver each, meaning I made just under 2 silver profit per scrap.

The reason I wanted to explain this particular speculation was because of the process of taking in numerous sources of information and theory crafting upon existing knowledge and potential patch speculation. Right now, getting any information about upcoming patches is very difficult. ArenaNet seemed to have stopped making release pages about their patches a week before implementation and instead, seem to be having various interviews with large fan sites and associates. Regardless, to be successful at speculating you have to do most of the leg work, and that means finding the information you need to be able to theory craft and make connections. The upcoming patch scheduled for February 4th, is called The Edge of the Mists, as detailed in this video.