Occasionally interrupting
my posts on making gold will come observations on the World of Warcraft
economy. These posts will have no gold
making value, just observations from myself.
The economy of World of Warcraft that players can make serious
gold from is almost entirely based on production of items, the farming of raw
materials or the trading of items on the Auction House. Hence, compared to the real world, the Industrial
and Mining sectors are alive and kicking in World of Warcraft, with a dose of
Auction House trading.
Services (repairs, transport etc) are supplied by vendors. Sure, players can charge for portals and
dungeon runs, but those are relatively rare.
Healing is done for free by healers and Blizzard provide the Law &
Order, and keep the lights on. Thus
Health Care, Pharmaceuticals, Technology, Utilities, Retail and Financials etc don’t
exist in this economy.
(Gold from mob drops and dailies etc is a gold earning venture but
perhaps not a serious gold earner for this example.)
The gold required to set up production is the spend in
levelling the profession (a similar concept to building a factory) and then add the spend in buying the initial raw materials
to set up the first production run. The next
set of raw materials is purchased from the proceeds of selling the first production
batch. And the profits from selling production
batches eventually repays the gold spent in levelling. Likewise, the gold required to start trading on the Auction House is the initial spend to acquire underpriced items to repost them.
Furthermore, the constraint on players making gold is
normally time, not their own lack of resources.
Whilst the process of levelling a profession requires gold, at some
stage it also requires time in the form of dailies or cooldowns. And the process of maintaining production
requires gold but that is entirely financed from the returns made from selling
your last batch of production.
Hence, the demand for gold to put into projects that
generate a return is very low. Of course,
someone may want to borrow a few thousand gold to level a crafting profession,
but that is very rare. And plenty of
people may want to borrow gold to buy their prized mount, but no-one will lend
that gold given the low probability of seeing any of it back let alone making
any sort of a return on the loan.
Indeed, i greatly suspect there is a surplus of gold that
sits in banks doing nothing. Not often,
in a healthy economy, that the supply of money exceeds the demand for money.
Therefore there is no requirement for a Banking system in
World of Warcraft – i.e. there is no need to invent an institution to bring
together the suppliers of excess gold looking to make a return with those
demanding loans to invest in projects.
To take this one step further, to invest in a project to
generate a return it is always useful to have an idea of what return can be
generated without taking any risk. I.e.
the Risk Free rate of Return. In the
real world US investors buying Treasuries, or UK investors buying Government
Gilts, or German Investors buying Bunds would know what their risk free return
is. This risk free rate of return can
then be used as a benchmark to determine the rate acceptable to receive in more
risky projects.
With the exception of the old Obsidian Shuffle there is no project
out there that can generate a consistent risk free return that i am aware of. Can anyone else think of a process that
generates a consistent return (i.e. sells an item for a profit to a vendor)?
If there is, then that would be where surplus gold could go
to generate a return.
for this and other ideas on the glyph market please follow the link to the free Croda's Inscription Gold Guide
for this and other ideas on the glyph market please follow the link to the free Croda's Inscription Gold Guide
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