Some things in life never change. Heart will always be the best band of all time. Tyler will always be dangerously underweight. And gem prices will always spike after a new content patch, often by 100% or more.
The best way to profit off of (relatively) short-lived price increases is to stockpile ahead of time. While it's clearly too late for that, there are still plenty of opportunities to profit off the rare gem market before demand dies down. It's not too late.
Regardless of whether or not you're a jewelcrafter, you've probably noticed that the market is going crazy. The red gems everyone wants are scarce enough to result in doubled (or even tripled) prices. And because people aren't gemming red because of the cost, more folks are buying orange, purple, and to some extent even blue, green, and yellow gems. Why? Socket bonuses are pretty attractive, and if you're expecting to have a piece of gear for only a week or two, why spend 300 gold, especially when you can get a decent boost out of a gem that costs a tenth of that?
A market snapshot
When looking at the gem market post-4.3, it's easy to focus on Inferno Rubies and their little brother, the Carnelian, because red gems are by far the most expensive. But if you're prospecting for gems yourself (as opposed to buying the raw gems on the AH and then cutting them), only one-sixth of the gems you'll find will be red. Indeed, determining the profitability of jewelcrafting requires you to consider the average of all six gem colors.
Rare gems World average as of Dec. 11 (courtesy AHSpy)
The gravy train
To be fair, the increase in the prices of rare gems -- especially Inferno Rubies -- shouldn't have been a surprise to anyone. Any new patch that includes 5-man instances or a new raid is bound to drive demand through the roof, especially in the opening weeks. Level 85 players are getting a lot of gear upgrades, many of which need gemming. And thanks to the Raid Finder feature, some of these level 85 players are going through a series of upgrades in the same gear slot.
We see these kind of jumps in gem prices any time there's a new tier of content available. And similarly, we know these jumps are usually short lived. Prices are going to be high and stay high for several weeks. But as the patch wears on, fewer people will be getting upgrades, and gem prices will return to normal levels.
The moral of the story: Don't make any long-term decisions based on this short-lived spike in demand. Jewelcrafting isn't any more profitable now over the long term.
Profits again gated behind work
If you're looking for an easy score as a jewelcrafter, you may want to forget it. Lazy JCs can make money, sure, but the real money is had through prospecting. It's similar to inscription that way.
For that reason, jewelcrafting tends to be a profitable endeavor at most times of year. It's hard (and boring) for one person to satiate an entire server's demand for gems, even if jewelcrafting is all he does. That makes it an easy market to get into for newcomers.
Most of the Cataclysm-era jewels you see on the Auction House were born through the process of prospecting -- that is, taking Cataclysm-era ore and destroying them to find raw gems. There are three different types of Cataclysm ore, and they all prospect into gems at different ratios:
- Obsidium Ore ~24% chance for each common gem; ~1.25% chance for each rare
- Elementium Ore ~18% chance for each common gem; ~5% chance for each rare
- Pyrite Ore ~18% chance for each common gem; ~7.5% chance for each rare; 100% chance for one to three Volatile Earth
- Obsidium Ore 5.76 commons and 0.3 rares per prospected stack
- Elementium Ore 4.32 commons and 1.2 rares per prospected stack
- Pyrite Ore 4.32 commons, 1.8 rares, and 2 Volatile Earth per prospect
- Obsidium 130.3g prospected - 88g raw = 42.3g profit
- Elementium 169.7g prospected - 88g raw = 81.7g profit
- Pyrite 211.3g prospected - 150g raw = 61.3g profit
If you're spending your time prospecting low-priced Elementium, then you're probably going to see a 100% return on your investment. That's pretty darn similar to the return of milling.
But don't just jump into the deep end without understanding the risk. While the most popular gems -- Inferno Rubies, Carnelians, and Ember Topaz -- will sell all day long, less-popular gems like Dream Emeralds and Alicite may fester on the AH, even at competitive prices.
It's also important to consider each step of the profitability of each step of the jewelcrafting process individually. If ore prices spike, it may become unprofitable to prospect, even if the secondary step of cutting gems is a moneymaker.
Finally, if you do decide to take the leap and try to cash in on high gem prices, take a look at some addons to minimize the time you spend on the most tedious steps. For prospecting, I really like the Panda addon. Just make sure to turn on your auto-looting option if you're spending any length of time prospecting. It's in the Interface menu: Interface > Controls > Auto Loot.
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 firstname.lastname@example.org and email@example.com.