Gold Capped: Legally buy gold with the Guardian Cub

Every week, WoW Insider brings you Gold Capped, in which Basil "Euripides" Berntsen and Fox Van Allen aim to show you how to make money on the Auction House. Email Basil with your questions, comments, or hate mail!

If you buy a Guardian Cub with real money, you can sell it for in-game gold, effectively purchasing gold. If you're one of the millions of WoW players who are constantly cash-strapped in game, you now have the option of leaving the whole gold making process to others; simply buy a $10 pet that can be sold for gold on the AH. BOE gear, mounts, flying training, and alts are all expensive, and making money (playing the AH, doing dailies, selling valor point BOE gear, etc.) isn't the most fun use of some peoples' time. This change will be a welcome one for those who would rather spend the time needed to make $10 at their day job than hours grinding gold. Additionally, pet collectors who also play the gold making game will be able to get a pet from the pet store without having to lay out real money for it.

So how much will these pets cost, anyway? The answer will vary from realm to realm, but one thing is certain: The demand for the pets will spike out of the door, then fall off a cliff as soon as enough people have one. Also, repeat business isn't any more likely than for other Blizzard Store items -- I almost never see people sporting their Lil' K.T or sparkle ponies these days, and I imagine that few people still pay real money for them. As the demand drops off, these will sell for less and less gold. The supply is directly related to the number of people buying them from the store for resale on the AH. This means that the more gold the cubs are worth, the more supply there will be. Eventually, as demand peters out, people will be less likely to buy them for resale.

In short, if you want to buy gold without breaking the terms of service, get it while the getting is good. The gold per pet will go nowhere but down, unless Blizzard likes this system so much that it introduces more items like this.

Cash in, cash out?

You can use this system to cash into WoW and buy some gold, but you cannot use it to cash out and sell gold. You can't sell a pet for real money any more than you can any other in-game item or currency without trusting a stranger. Forgetting a second about those pesky terms of service, unless you can open a trade window and not hit the button until you're satisfied you're going to get what's being promised, any transfer involving in-game and out-of-game valuables is fraught with risk. Whichever party is going first has the opportunity to simply walk away without paying. Trade windows only work on in-game goods, and that means that while you can move money into WoW through the pet store, you can't move it back out unless you trust the person you're dealing with.

And then, of course, there's the terms of service, which specifically prohibit selling virtual goods for real money. That alone should be enough to deter anyone who has invested any serious amount of time into their account from risking it all on a couple of illicit dollars.

This "cash in only" design is common in the world of MMO games. The few that allow cashing out (like Second Life) risk coming under the scrutiny of the tax man. Plus, the ability to "cash out" would do nothing but cost Blizzard money.

First sanctioned gold buying?

Interestingly, this is not the first sanctioned gold buying system. It's the first accessible system billed as a method of buying gold legitimately; however, even before the tradable cub becomes available at the pet store, you can go out right now spend $500ish on an unscratched sparkle tiger card on eBay that will sell for between 200k and 400k gold. This is fully sanctioned by Blizzard, since you're buying something physical for real money and selling something virtual for gold. I'm sure there are a ton of other trading card items you could find buyers for in game, possibly for less than $500. This functions exactly the same way as the new cub, except that it's in much larger denominations. Also, Blizzard only unlocked the ability to trade TCG loot before using it fairly recently.

In addition to buying in via the TCG, some people have been known to do a form of arbitrage where they move characters across realms instead of goods across the neutral AH. They pay real money for a ticket each way but bring with them goods that are more expensive on their destination. Moving from high-population and PVE-progressed realms to medium- or low-population realms with low progression is usually the target that allows the greatest gold profit per dollar.

The downside to this is that while it's a way to leverage the price of a pair of realm transfers into some serious wealth, it requires you to be rich enough in game to be able to afford a bunch of BOEs. If you're wealthy enough to afford to load up a character with enough stock to make a decent profit, you could skip the arbitrage and just keep making money the way you did to get here.

Exchange rate

Illicit gold sellers compete with each other and will now be forced to compete with Blizzard itself. A quick Google search (not for the faint of heart -- it almost landed me a drive-by virus) shows that if you're willing to buy gold stolen from hacked accounts or farmed by bots, $10 will get you about 5000g. This is right in line with the other competition Blizzard is surely aware of, TCG cards from eBay. For this new pet store cub to be an effective competitor, it has to sell for more than 5000g. It may at first, but there will come a time when most people who want one have it already and the price drops below the point where it's worth doing instead of the gold sellers.

I'm hoping that Blizzard sees this the way I do and doesn't bother waiting to see whether players have positive feedback. Making pet store items available for in-game currency may cost Blizzard in terms of pet store sales numbers, but it hurts the gold sellers even more. If Blizzard can ensure that there's a new pet every few months the same way we have now that can be purchased for real money and sold for gold, they'll make hacking, botting, and cheating unprofitable. Short of banning buyers, that's all that can be done. This is an important step for the game because the activities of gold farmers are inflationary, and all the cub (and TCG loot) does is move gold from one player's pocket to another's.

Profit

If you're a WoW millionaire already and want to capitalize on the large-sounding shift in the market this heralds, here's my advice: Don't. You can't make money off predicting a price drop in WoW unless you can think of some way to short-sell cubs. You can't safely or legally profit in real life from your imaginary wealth, and you probably don't need even more gold, especially not if it costs 10 real dollars.

If, however, the price for the pets ever bottoms out, then maybe buy a few for resale and hope you picked the absolute bottom price. If you hold onto it long enough, you may be able to resell it for a profit. Don't do this unless it's gone so far below the illicit exchange rate that it's not even close to worth buying a cub for gold, though.

Maximize your profits with more advice from Gold Capped. Do you have questions about selling, reselling, and building your financial empire on the auction house? Fox and Basil are taking your questions at fox@wowinsider.com and basil@wowinsider.com.