Why Plato is NOT Fretting about Gold Value
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by Derphoof
With the economic downturn, many people rejoiced at the sight of gold falling. People with lots of CAD stored away could easily convert it into gold at a better rate than previous rates. People with lots of gold, sold it off. That was so they could buy more gold as it fell or to sell off their gold while things were good. All of this seemed to come about with the economic twists brought on by the Q7 update. Prices skyrocketed, gold was bought left and right, and economies started to fail. As economies slipped into depression, while people were fretting, they took solace in the fact that the price of gold was dropping like a rock. But was it really?
What if I told you that Plato is kicking back and rolling in money? What if I told you that Plato was reveling in the fact that wages and gold were dropping? Contrary to popular beliefs, these statements are likely true. You see, the value of currency to gold in various countries can only be calculated by comparing a day's wages to gold. In this way, you can compare the strength of economies and the relative value of gold.
So let's take a look at the Canadian market, shall we? A day's wages currently stand around $33, give or take. Back when gold was soaring high, wages were as high as $250. During this time, gold was typically valued around $2,200. So a day's wages ($250) was worth 11.36% of one gold (250/2200=0.1136). So in basically 9 days, you would have gotten enough pay to purchase one gold. Today, at current gold prices ($730), a day's wage ($33) is worth 4.5% of one gold (33/730=0.0452). It would take 22 days of work to obtain one gold. So basically, that means that while gold has fallen in face value, it has actually become MORE expensive.
So what does this mean for Plato and the Market? Basically, the value of gold has actually skyrocketed. To try and work to obtain gold is highly inefficient. The only realistic way to gain gold is to buy it with RL money. In buying one gold, you have bought 22 days wages. That's outrageous! That is a HUGE leg up on the other people who are just working in the economy as usual. To buy gold with RL money is a much better investment than working in-game at the highest wage your country offers. So what does this mean for Plato? People are buying more and more gold! It makes more sense to buy gold because it is more useful and valuable than ever before!
People had long joked about the various sales and promotions to buy gold recently. They assumed that since gold was low, Plato was losing money. So they had to try and boost the sale of gold by any means possible. However, that may not be the case. As it makes more and more sense to buy gold, players soon realize they may want to take advantage of the situation. So perhaps instead of a desperte attempt, it is a brilliant financial move. With all of the gold sales and the sale of items like bazooka parts, people not only buy more gold but they use it much more quickly.
So is Plato really panicking about the value of gold and its decrease in face value? I highly doubt it. Perhaps it is to Plato's advantage to see this sort of economic downturn last as long as possible.
Right now, Plato is probably staring at his bank account, wondering how long he can keep this up.
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The price of gold fell before the inclusion of Q7s. In fact rocket factories induced a massive surge on the markets. The admins were doing everything to pump up the price of gold then, because the rest of the economy was still strong. Now that wages have fallen, and the price of goods has plummeted to near v1 levels, you are right, gold is fantastically valuable. Without new intervention it really caps the free players like never before.
Goran Thrax
Your article would make sense if it weren't for one huge glaring problem.
The Buy Bot.
All of the currency in the e-World doesn't circulate, it's constantly being added to by the Buy Bot.
At the current prices Plato is giving me about 2 gold a day, if they're somehow in the black with that their accountant is a magician.
That doesn't discredit the fact that gold is really high compared to previous levels. Like for me, I don't operate any businesses cause I never invested in them when I started. So as a free player, working in a slave pit, the value of gold is incredibly high.
Plus many free players don't operate businesses because of the amount of gold needed to upgrade them. The fact that wages are extremely low across the world entices people to buy gold, even if they never have before.
The reason you see a such a glaring discrepancy between market indicators such as wage and the value of gold is because the gold market is no longer operating freely. There is a bot that stopped the gold crash dead in it's tracks between 720cc and 730cc. Every market indicator we have at our disposal to predict an accurate market value for gold points to somewhere between 350cc and 450cc which is consistent with your calculations of the markets of few months ago.
Your right that the admins are certainly enjoying the current situation but the notion that it fell into their laps through natural market conditions is false. It's a major injustice to everyone playing this game from those who buy gold to those who have spent years building business empires.
Well we were running record high gold prices over the better part of the 6 months prior to the crash wages were high, market prices were high and a lot of currency was stashed away. Right now if gold prices were allowed settle in with current market conditions you could trade currency saved during the boom for 5 times the amount of gold that you could just 3 months ago. Thus reducing the dependence on RL purchased gold.
Hundreds of millions of cc worth.
~hyuu~
Sad, but true.
"Your article would make sense if it weren't for one huge glaring problem.
The Buy Bot.
All of the currency in the e-World doesn't circulate, it's constantly being added to by the Buy Bot."
True dat!
If only I could somehow accurately account for the buy bot. However, its impossible to know how much is bought by the bot.
Plus its impossible to tell how much money is taken out of the economy by purchasing upgrades to existing and new buildings such as factories and training facilities.
DELETE THIS ARTICLE! YOU HAVE BEEN WARNED!!!!
Seriously, if you think about the collapse of prices and the erosion of profit margins, then the demand for gold should be very strong (and it is). This is because as prices for Q1 - Q4 fell to net loss positions, people bought or invested in gold to upgrade to Q5's and Q6's etc. As the price of Q5 goods fall then there is more pressure to move to Q6's and so on.
So now we are at the point where any investment in a Q5 and below is worthless and thus you need to buy RL gold just to survive.
Exactly!
Great outlook on the finances in eRep, the Buy Bot is a consideration, but as you mentioned it is an unknown as is where the gold is going if not on the market and how much of it?
The big picture is that, some people dont care and will never spend RL money on Gold, some treat it as a console type game and drop like $50 once or twice a year because it keeps them off their consoles, then there are those that just keep spending money every time there is a sale on gold.
If someone buys a great deal of gold, then in theory they would be set to make a fair amount of CC in game, regardless of the prices of gold. So... if they can still make good coin in game, then the Gold to them is only getting more reasonable in price, leading to them needing to buy less gold with RL money.
Maybe not.. just a thought
once again nice piece
@Sm1tty - that's the problem. You buy gold and invest in companies. They work out and make CC for you and you can then buy more gold in-game to invest in more companies or upgrades or buffs etc. The problem is that the value of the goods keeps dropping killing profits meanwhile the cost of upgrades remains the same. Thus you are compelled to buy more gold with RL cash to stay competitive.
Then they create a new level of weapon or food item and the cycle continues. To be fair we nee😛
1) ability to buy gold or sell gold in smaller fractions (allow for a balance between bid-ask spread of gold)
2) ability to sell companies for any gold price (allows gamers to buy companies at their "fair price")
3) upgrades priced in CC not gold (value of upgrades commensurate with value of goods in the economy)
Basically, this game is becoming more of a casino and the rules are such that the "house" or Plato always wins.
Players need to be smarter to some extent and look for ways to avoid spending their gold on wasteful ventures and look at keeping the gold in game, such as buying companies from other users vs. paying for upgrades and try to sell their companies vs. liquidating them.
yes, and if you notice the price of gold bought storage to be equal to the cc bought storage, gold needs to equal 450 CC, higher than that and its worthless.
From that we can see that the devs never intended gold to be more expensive than 450 CC, however when it spiked past that point, they saw how much money they were making.
Brilliant stuff as per usual EPD. I think we could assemble all the world's great economists and we'd still be left clueless as to how to beat Plato and create a healthy global economy. Does anyone have any clue how well this game does financially? It's been around for a while, it certainly isn't losing its shirt.
ACTUALLY THIS IS FALSE.
caps for people to read this.
Wages just means that margins are lower. This is because WRM has increased in prices. Everything depends on each other. So, employees are making a bit less but WRM manufacturers are making a lot more.