Guild Wars 2: The Gold Market Isn’t a Market

By Shamus
on Sep 12, 2012
Filed under:
Game Reviews


I was wrong when I claimed that the Guild Wars 2 gem trade was a real market. Yes, it LOOKS like a market. It feels like a market. But it’s not really a market. The prices are controlled at the top by a single human being and not by players, which means they can become completely un-moored from their true values and go drifting off into irrelevance.

Since the game is in state of economic flux post-launch, this has already happened and will probably continue to get worse.

Here is how I made such a profound blunder:

On the trading post where you can sell items to players for in-game gold, it has this little feature that just sets prices for you, which you can disable and use whatever prices you like. So, it offers just a simple “buy” and “sell” button with some fine-grain controls for those who want to speculate. I assumed the gem exchange worked the same way.


I saw the price graph above and I just couldn’t imagine a market where buyers and sellers didn’t set their own prices. I bought some gems at the offered price, and I assumed I had glossed over some advanced-mode checkbox somewhere.

I mean, what’s that graph for? If buyers and sellers don’t set their own prices, this graph is just a record of what ArenaNet is selling things for. It would be like a grocery store having a bar graph so you can see how much the price of this loaf of bread has fluctuated in the last week. I can’t haggle over the price, I can’t time-travel, and ArenaNet offers no information on when they change the price or why. This graph is largely useless other than as a curiosity. Actually, this is even worse than the bread example. Bread might go up or down as the price of wheat or gas fluctuates, but gems are an abstract good with no production cost. Their price is completely arbitrary from the shopper’s perspective.

I got some in-game spam this morning:


Right now on the legal, in-game gem exchange you can get a single gold for about $6.25 worth of gems. At that price, 20g would set you back $125. Going through the gold farmers you can get the same thing for half price. That’s enough of a discount to entice would-be shoppers, which means I don’t think this system is any better than what they have in World of Warcraft.

So, no, I don’t think the Guild Wars 2 gem exchange is nearly as impressive as it seemed at first. My bad. It’s still a great game, but I spent 1,600 words talking about a system they don’t have and clearly don’t intend to offer, so I thought I should make a correction all official-like.

It’s a shame. I think an opportunity was missed.

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From the archives:

  1. Mephane says:

    The point of the graph is, as far as I can see, to be able to judge the gold offered for your gems and vice versa against the regular trend. You see those spikes upward (weirdly it does never go down by a comparable amount below the average), that is when you would not want to buy gems, but if you want to sell for maximum effect, wait until such a point and sell then.

    • Skyy_High says:

      Pretty much this. There’s a guy running the scenes making sure that people aren’t manipulating the market like day traders to make profits, but as far as I know the spikes and dips are responses to players buying and selling gems.

      • Thomas says:

        But isn’t the point of this post that players can’t set the price they would want for gems? So demand has no affect on the market unless some man is twisting knobs, making the graph artificial.

        Unless you’re suggesting that they’ve made a system where a computer regulates the gem-gold trade price based on market demand which would be a fairly cool middle ground

        • Carson says:

          “..a system where a computer regulates the gem-gold trade price based on market demand..”

          Yes, I believe that’s how it works. That’s how the material vendors worked in Guild Wars 1, isn’t it? I suspect that every time anyone buys gems, it bumps the price up a minuscule amount; similarly, whenever anyone sells gems for gold, it bumps the price downward. Over time, there will be a trend based on whether supply exceeds demand or vice versa (and, of course, at the moment, the trend is definitely upwards).

          It’s a neat system, but it certainly means that gem:gold conversions do not simply circulate gold in the economy. If demand for gems exceeds the desire to sell gems for gold (which I’m sure it does at the moment), it will be a genuine gold sink.

          • ultrajones says:

            That is exactly what it is. A gold sink. Although demand for Gold does fluctuate, it rarely ever comes even with the demand for Gems. It fluctuates on its way DOWN. So, if you wish to try and make money by buying low and selling high, you have to watch it like watching grass growing to find that singular moment when the price (in gold) for Gems hits an unusual low, and you MIGHT be able to make a few copper by turning around and selling those Gems for gold really fast before the value of Gems drops below what you bought in at, and STAYS there for weeks or months or even possibly forever. The reason is that EVERYONE wants to avoid paying real money for Gems, and very few people find it beneficial to blow their hard earned money on in game gold that will inevitably drop in value as soon as they buy it (with Gems). It is not necessary for ArenaNet to adjust the valuation of the Gems in respect to gold, because the value of Gems for real $ remains the same. See? It’s a gold sink.

  2. ghost says:

    Take a look at puzzle pirates and its doubloon system. It does what you want. They’ve been doing dual currency, where one is earned in-game and one is bought with real world money for a long time.

    Puzzle pirates has (or at least had a couple years ago when I was playing it actively) probably the best working economy of any game I’ve ever seen. And it was not what the game was about – it was just going on in the background.

  3. WWWebb says:

    The admins can certainly fake an economy. They just have to do it on the gems side instead of the gold side. They know how many gems they’ve sold (the total supply), and how many gems people are redeeming for stuff (the total demand). If they’ve just released some fancy new hats, they can see the demand for gems spiking and increase the price.

    Things are trickier on the gold side because, as you pointed out, people’s gold-per-hour calculations change as they level up. As everyone on all the servers levels up, you can expect the total supply of gold (which they can keep track of) to go up and gold to be worth less. Still, it does allow them to track average and max amounts of gold-per-hour-per-level. Then they can know how much gold most users of a certain level will likely have (and set the prices of items bought with gold accordingly). They’ll also know which characters are on constantly and maxing out their gold-per-hour…and be able to track who those characters are pooling their gold with and shut them all down if they’re behaving like gold farmers.

  4. Sagretti says:

    I’m not sure there’s a way to compete with the gold sellers without wrecking the in-game economy. Gold sellers will always undercut the “official” price until it becomes absolutely unprofitable to them, which may never happen. However, if the developers set gold sale prices cheaper and cheaper to try and beat them, gold will flood the game and cause insane inflation.

    • Muspel says:

      That’s not how it works. The gem market still doesn’t CREATE gold, because you’re buying the gems from other players. That means that there’s no inflation involved.

      • Sagretti says:

        The point of this article is that this isn’t a market, you’re not actually selling gems to other players. Something at ArenaNet, a person and/or some kind of monitoring program, observes the market and adjusts the prices. I don’t think it’s even possible for players to trade gems to each other.

        • Muspel says:

          The point of the article is that the prices are set. But it’s still very possible for the market to “run out” of gems if not enough people sell them, considering that Arenanet has said that the market is you trading your gold for other people’s gems.

  5. Olly says:

    “The prices are controlled at the top by a single human being and not by players, whcih means they can become completely un-moored from their true values and go drifting off into irrelevance.”

    Nitpick aside, I am saddened that what sounded like a great system in your first post is actually just the same old style of other MMOs. Though they have put a coat of gloss on top of it I guess.

  6. Agreed with the posts in the previous post about the benefit of an actual market as seen in a lot of F2P games (especially the ones that got that way via transition or is that just my skewed sample talking?). Something like STO with a limit on currency generation from in-game activities for a premium coin type (used for many premium items) and a real-money currency purchase mechanism for the more ‘buy the game’ coin type used in F2P (extra character slots, vanity items, bag space) is ok. Tying them together with a system where sellers of each currency can offer trade prices in an open barter system is great and allows players to control the conversion between a limited but time-spent currency and a money-spent currency (allowing players with an excess of either real-world commodity access to both stores via market chosen fair exchange).

  7. Ciennas says:

    Bet you ten monopoly dollars that it’s never going to be discussed by the guys running the show. I wonder if this is just going to be for the duration of the launch period, or what.

    Course, I can’t play the game at all anyway, but boy up until this moment it sounded like something I could genuinely get behind.

    Now there’s a slight hint of ‘eh…..’

  8. Atarlost says:

    What is it with game developers and complete inability to grasp Capitalism?

  9. Justin says:

    I play an FTP MMO that runs on a concept kind of like what was discussed previously. While we do get the occasional farmer, they don’t last very long simply because unless you hack accounts, the market cannot be undermined. Keep in mind, it has it’s problems, but gold farmers are not one of them.

    There is a two currency system. One type is used for purchasing from NPCs and cannot be traded between players. The other is used for trade between players. The “Trade” gold is introduced into the economy only via one instance (capping at around 60 gold for a toon) and via items from the cash shop. It then enters the economy in trade for items with other players or specific in game services. Those services in turn strip it from the economy to try and hold inflation down.

    What few gold farming attempts I’ve seen on my server tend to fail within a week. The only unfortunate note I can make is one of those services that strips gold from the game can lead to a “pay to win” balance issue in PvP. Still, all in all it’s the most stable economic system I’ve found in an mmo.

  10. Abnaxis says:

    I don’t understand why “there is a bank taking a cut” translates into “Anet controls the entire market” in the absence of any other information. To me, the gems currency exchange doesn’t work any different than real world currency exchanges where I don’t get to insist the ECB give me a euro for $1.00US rather than $1.29US (as of this writing). What’s the real practical difference?

    • Omobono says:

      This isn’t the bank taking a cut on the transaction, however.
      In a free market system, the guy with the gems goes to the trading post and tells the world at large that he wants x gold for his y gems, and it’s up for the buyers to decide if they want the gem at that cost. On the current system, the guy with the gems goes to the trading post and gets told that he can only sell gems to other players at the price decided by Anet.
      This would be like an european bank and an american bank getting told that they HAVE to respect the market rate, instead of being the agents that set it.

    • Shamus says:

      I can’t place a buy order. “Here is one gold, the moment someone is willing to give me X gems for it, take it.” You can do that on the trading post. You can do that in a stock market. You can’t do that here.

  11. Brandon says:

    That’s really disappointing. However, I still like the idea of being able to buy gems with gold, because I have absolutely no interest currently in spending more money on the game, but there might be something that I want to buy later, that I will just buy with gold (changed into gems)

    Honestly, if I was going to buy gold for my character, I would much rather give my money to the people who run the game than the gold farmers too. If that meant I could only afford 10 gold instead of 20, so be it. That is a huge disparity, but you take a risk buying from gold farmers.

    There’s also still time for them to tweak the gem system. It could be that this system of it being controlled at the top might just be a temporary thing while the game is still getting off the ground, and later on it will be switched. Who knows? So far I have been really impressed with the game though, so I do have some hope they might fix this.

  12. Hitchmeister says:

    Having the hand of an ArenaNet employee guiding the market fluctuations of gem prices is probably a good thing. If it were completely automated and subject to the whims of the behavior of players, the system is small enough that an organizable group of players (like Something Awful or 4chan, for example) could get together and manipulate the gem prices just to drive everyone else crazy. At least with the current system there’s someone keeping it sane. And at the same time viable — ArenaNet makes money because the price is high enough for their profits, but low enough that people will buy them.

    • Cybron says:

      They wouldn’t be able to make any real changes. They don’t have a monopoly so they can’t force prices up. They can’t make any real change unless they’re willing to just throw money at it then sell low to bottom out the gem prices, in which case I think ArenaNet counts that as a win, because they are having money thrown at them.

      • Yeah, real auctioneering practices in WoW and such are ultimately hemmed in by basic forces like supply and demand. If I buy up all the Silk and sell it for 100 gold each, never mind the huge up-front capital investment, no one will buy Silk period: It’s just not that valuable. Ultimately what usually happens is that dedicated auctioneers buy up from the people who are looking for a quick buck. The person who is bought from gets the quick buck at exactly what they hoped for and the person who buys it expends a lot of capital and risk in order to make money. Win-win on that front. As borked as most MMO economies are, they are nowhere near as badly borked as real world ones…

      • Thomas says:

        This is what he’s suggesting I believe. That’s why he suggested 4Chan or SA I think because it would be a pointless act that harms yourself only at the benefit of inconveniencing other people. And it wouldn’t be a win for the devs because people would have less fun.

        Look at EVE. People literally do there best to screw up the economics for the heck of it (and game time is a real movable tradeable, capturable object in EVE so the market is directly tied to a real price value)

    • Zukhramm says:

      But it’d be just a like a real economy!

  13. daemon23 says:

    Now that I think about it, the UI doesn’t really offer the ability for a true market–you can exchange gold and gems, but you can’t actually say “I will sell gems for X and no lower” or “I will buy gems for X and no more” as you can in the standard trading post. This doesn’t prohibit Arenanet from changing the model in the future, but you’re right that the graph is not useful information other than to tell you what the past pricing was.

    On the other hand, if the graph is accurate, there are all sorts of minor fluctuations in the price, which suggests there is some algorithm in the background which regulates the price, though the parameters are unclear. If it were determined what those parameters were, it may be possible that graph has some value.

    • Ofermod (Formerly Keredis) says:

      It might be similar to the way they did the various Dye/Scroll/Rune traders in GW1, where the more people buying said item, the more the price went up, while as people sold the items *to* the vendors, the price went down, simulating supply/demand.

      • Pickly says:

        I’m wondering if this is what the system is as well.

        It worked pretty well in original Guild Wars. (Some markets are actually organized like this, where a single person coordinates the sales of a bunch of people, rather than a bunch of parallel trades occurring.)

  14. Dreadjaws says:

    Well, to be fair, that spambot was at least pretty polite.

  15. Cybron says:

    Obviously you should send your original post to ArenaNet and tell them to implement it already.

    • Peter H. Coffin says:

      Since that’s exactly how Black Lion’s set up, it’s not impossible that this method WILL be implemented, once some condition is met: Maybe it’s limited until there’s a certain number of gems in people’s accounts, or enough people have bought gems, or there are enough transaction per day. We’ll probably never know that. But we do know from Basic Economics that small, low-volume exchanges are WAY more easy to gimmick than high-volume ones.

  16. Orthas says:

    EVE Online has a working dual currency. Their second currency is free tradeable, with the best game market tools and can be used to pay for the monthly fee instead of using real money.

  17. Trix2000 says:

    Somehow the mail about Pies caught my attention before all the other stuff in that picture.

  18. Atle says:

    From an otherwise mediocre film comes a quote of pure gold: “Assumption is the mother of all fuck ups.”

  19. Zaxares says:

    ANet does have one big advantage in all of this, and that’s that they can undercut the gold farmers at any moment by slashing the price of gems in real world currency. It won’t really devalue the intrinsic worth of gems because they can keep pumping out vanity items to generate continuous demand (see TF2 for a good example of this). They could also create items that provide greater convenience for players such as, say, a “Frequent Traveller Asura Token” that gives the player free travel between any Waypoint for a month, and charge 1000 gems for it. The key here is simply to make it SO unprofitable for the gold farmers to try and keep up that they simply stop trying.

  20. Friend of Dragons says:

    I have no real issue with this, as I’d say I’m playing the game at a slower pace, and thus my income is coming in slower and increasing slower than a good portion to the playerbase, so if the players determined the prices instead of Anet, I’d expect the prices to spike up out of my reach rather quickly.

  21. Mukk says:

    That is ridiculous. Let the game market be open. Manipulate how people acquire gems. IE ‘gems are on sale this week,’ or ‘we’re unveiling a cool new item that costs lots of gems.’ If someone wants to manipulate the market, take their money and let them try. It costs a lot of money to manipulate a market and recovering that isn’t always possible.

    • Thomas says:

      It might be sucky for some of the people who put money into gems though. There’s probably better long term game in giving a lot of people a safer experience than in burning a lot of people but getting money from the ppl doing the burning. There’s probably some middle ground though

  22. dndhatcher says:

    My assumption, based on what Anet said on gem sales before release, is that it works similar to the GW1 commodities brokers.

    It does not create gems, it just buys them from players at some % of what it sells them for with a starting price. When X amount sells without any being purchased, the computer bumps the price up a notch. When X amount is purchased without any being sold, the computer bumps the price down a notch. It is a market economy based on supply and demand, but it is not a free market economy.

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