Gold Capped: Upcoming Volatile Fire shortages
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!
Volatile Fire is quite cheap now but will not remain so after patch 4.3. Volatiles are a cornerstone of the crafting and economic design of WoW, as each one has several types of items that require it for production. When the prices of Volatiles increase, crafted goods go up in price and raw materials go down in price.
Very few people farm exclusively for Volatiles, as they're usually given a small chance to drop off things that are worth considerably more than the Volatiles themselves (like ore veins and elementals). That's part of why the Volatiles market is exceptionally susceptible to changes that change the way a lot of people play and loot. In this case for Volatile Fire, right now a ton of Fires are coming from people continuing to do Fireland dailies. Patch 4.3 is around the corner and will likely have something cooler for people do with their time than grind for entry level raiding and PVP gear. What can you do to protect yourself and profit from these changes?
Wait, ore goes down and crafted goods go up?
It's a little strange, but because Volatiles are used in such a huge variety of Cataclysm craftable items, many of which have very deep demand levels, an increase in Volatile price will very much be a downward force on the price of ore, leather, herbs, and cloth. If the cost for something like Ebonsteel Belt Buckles, made from two parts ore and one part Volatile Earth, rockets up by 20g each (or 5g per Earth needed to make a buckle), less of them will get sold. This reduces the amount of ore that people who craft these buy, which pushes the price of ore down.
This situation is mirrored by Volatile Fire, which is probably as low as it'll get for a long time. As people stop doing fireland dailies and start pushing into the new content (whatever it ends up being), the demand for fires won't decrease, but the supply will be reduced leading to a higher price.
Why won't demand decrease?
OK, demand will decrease naturally when the prices go up. People will be considerably less likely to buy them (or things made from them) if it costs 40g per Fire. The demand for Fires, had they stayed at, say, 8g, would not have changed, though. People use Volatile Fire for:
Crafted blue PVP gear
Crafted epic raiding gear
None of these things are expecting a natural (unrelated to the scarcity of Volatile Fire) reduction in demand in patch 4.3. In fact, I think the epic raiding gear will see an increase in demand. Especially if they make Chaos Orbs tradable and Living Ember purchasable with justice points or something. All those crafted pieces are an excellent replacement for leveling blues while working on an alt or off set. They are also probably going to release another blue PVP gear set with the same mats as the old one for people who want to jump head first into PVP.
Obvious Advice: Buy volatile fire
I've been clearing the Auction House out of all reasonably priced Volatile Fire every time I've logged in since I thought about this the first time a few months ago. Reasonably priced is a concept that will vary from realm to realm, but for me it's been anything below 9g. The question is how far up you think the value of what you're buying will go and for how long.
There are several things you can do with a large stockpile of Volatiles. Firstly, you can list them on the AH for considerably more than you think they're worth to see whether someone else trying to buy into this bet will pay more than you. You can do this before the drop in supply, but you'll be competing with all the natural supply for Fires and will probably almost never be the lowest price. Once patch 4.3 hits, you'll probably get more traction from your extremely high-priced auctions.
Don't forget that speculators will sometimes drive the prices above where they will finally settle after the event being speculated about. If you see Volatile Fire selling for more than Volatile Air (which is traditionally the most expensive Volatile), consider selling everything you got on the cheap for a sure profit in the short term. The reason this sometimes happens is that people think they can "control" the market by putting out so much demand that they single-handedly put a minimum price on it.
Less Obvious Advice: Don't try to control this market
No matter how much time and gold you have, it's almost always going to be unprofitable to try and "control" a market. People who do this tend to be more interested in the display of financial muscle than they are making gold, and tend to get taken for a ride before they realize what they've gotten themselves into. Don't be that guy.
Profiting from a change in supply or demand is easy. Buy low, sell high, and there is no step three. Controlling a market, however, is the act of imposing a minimum or maximum price by buying everything under your minimum or selling "unlimited" quantities at your maximum. It can be fun to read hate mail, but make no mistake: It's rare that this will make you money.
Take Fires as an example: If you decide that they're now worth 20g (because that's what airs sell for on your realm) and buy everything below that, you will have to buy a lot of Fire from people like me who are willing to let you take the bigger gamble by cashing out of our stockpiles now. Then you'll have to keep buying a lot of Fires from people that find it naturally doing their daily activities, as these people have a long memory and will often undercut more heavily until their internal sense of market value catches up with your new imposed numbers.
If you pick the wrong minimum price (say, 20g) and end up buying a ton of stock for more than it would have been worth without your actions (say, 15g), you'll end up losing money when you're eventually capped on stockpiling. If you had picked 14g as your price floor, however, you'd be fine. That's just aggressive stockpiling for a known event.
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.
