Ecto Market

I would like to discuss what is happening with the current ecto market.

Ecto price:

Trader sells: 7.5k
Trader buys: 5.5k
Players sell: 6.5k

Now what is bothering me is that almost all players are selling ecto for 6.5k. There is a very high volume of ecto trade.
The market is very volatile at the moment.

Which leads me to believe that there is either much money to be made or big losses due to ecto market crash in the short term.

Factors that could be affecting ecto prices now this is what we want to discuss so we can make good investment decisions.

My thoughts is a fear of a guild wars market crash since the volume of trade is so high. it still did not stop me from invested my cash on hand into ectos though.

What are your thoughts on what is happening in the guild wars markets.

If it can be farmed it isn't an investment.

GW market died many years ago when they replaced non-inscrib golds with inscrib golds IMO. Virtually everything is worthless now due to how easy it is to 'make' perfect items. I can get 20 gold drops and have to merch 19 of them because it takes more effort then it's worth to sell them. Granted the introduction of greens helped the market along. For a while there was good money in selling greens, but as people got more proficient with farming them the prices dropped and they were no longer worth trading (for me).

Ecto - The ecto market will always be on a down trend. When I first started trading (low end) way back in mid 2005 ecto traded at 15-20k. By the time I'd made enough cash to worry about stockpiling ecto it was down to 10-15K. By the time I had no cash issues ecto was trading 8-10k. Now I have a lot of ecto and it trades at 6-7k. Ecto will always fall. Sometimes it'll make a jump upwards, but it never lasts. In the trading world we call it a 'dead cat bounce'

Half my wealth is in ecto primarily due to the fact it's my only few real wealth storage option besides Asian minis and armbraces. So, I have to take the rough with the smooth. If ecto nosedives I lose many millions in the space of seconds. That's just the way it is.


<It's all a little muddled, but I type as I think>

its been pretty stable at 5-7k in the past few years

What usually happens is that ecto prices drop when Wintersday starts and gradually recover starting after Canthan New Year. There might also be slight dips for the other major holidays like Dragon Festival and Halloween.

That pattern is based on the fact that players usually sell their ecto to other players, with the exception being major holidays when quick cash is needed for buying title stuff (tickets for nine rings, Wintersday gifts, ToT's, etc).

Anyone who trades on a regular basis will tell you that the market has *really* gone to shit over the past 8 months or so. It's hard as hell to sell pretty much everything, and even buying simple stuff has become a chore. One day last week, I stood in Kamadan for two effing hours spamming for two "I Have the Power" inscriptions. It wasn't that long ago that I would've had about five whispers within 15 seconds of putting up my WTB.

I think the same thing is happening with ectos - it's hard to sell them. Not to mention that a good chunk of the "buyers" are idiots offering the same amount that the mat trader pays. So it's my guess that there are a fair number of players saying "screw it, it's easier to sell to the mat trader".

I'm curious to see what'll happen when Wintersday arrives. It wouldn't surprise me to see ectos back to 20/100k. It might even happen at Halloween.

Have u ever tried WTB "I have the Power" 10k (or so) ....
I have lots of items that players want to buy - but i really dont want to "waste" my time by trying to sell to them - maybe i want 4k for it - and the buyer only want to pay 2k - and if we might agree on eg. 3.5k - then i have to switch char - and find the item for him - maybe spending 5 min - just to sell one "stupid" thing for almost nothing..
Buyers want everything to be cheap - so many players merch stuff - or just dont want to spend time selling items.
If people payed a decent price for stuff (even if its common things) - then they would not have to spam a long time to buy items.

Next time you need something - try to pay a good price for it - and most importent - use the "WTB xxx xxxxx 10k" - then sellers can easy decide if they want to spend time finding it and selling it to you

There was a time when Runes were considered an investment lol

The Monk and select Warrior runes remained close to or were capped by the Merchant pricing for extended periods back in '05 to '07 or so.

The ecto market is simply supply and demand-based... If people suddenly all want FoW armor, the price goes up (a bit). When a major ecto-farming method is nerfed (after permasins got kicked out of the UW) the price shot up from 4k to the current 7k. Over time, the investment has had its swings, but the supply side is quite limited, and there is a huge buffer of people who want to buy (more) FoW armors if only the price goes down.

So I'm not fussed about my ecto invests. After a major crash, I can always get more FoW or Chaos gloves

IWAY: monk runes have been 15-20k in the heyday of 55 farming, but the Superior Absorption has been a rock-solid 100k for years. Only when Anet revealed what it really did, it lost its magic, and thus its value.

As another poster stated, Ecto have been stable at 5-7k for years. There are far too many variables to track how and when the rise and fall will occur accurately, but if you see it drop to 5.5k or rise to 7.5 or so, it's almost a certainty that they'll stabilise around 6.4 again in a few days.

Your ecto investments are pretty safe, imo.

Ectos cost 10k from the trader right now. Just sold a ton in game to some players for 8k ea. Seems a strange anomaly; thought I'd document it here.

I'm trying to remember... last year around Christmas, was their standard value 13e=100k for a good couple months?

In both winter 2009/2010 and last winter 2010/2011 I watched this happen with ecto.

It would be ~stable around 7k each in player to player trade all year. Sometime between Halloween and Wintersday the trader prices would start to rise and push the player to player "average" up, too. It would stay higher than the normal 7k for a couple months and then return to about 7k again in late Jan. or early Feb.

The most reasonable explanation I ever saw for that effect was that during Halloween and Wintersday events a lot of players are farming repeatable quests that include gold rewards. That addition of new gold to the market makes the demand for ecto (to convert the new gold) go up. Around Jan/Feb, there's the Canthan New Year (I think that's what it is) where people burn up gold on the rings. So that adjusts the price back. (I'm not an economist and I'm trying to paraphrase something I read, from Yawgmoth if memory serves, somewhere in another thread in here.)

Seeing as my previous post was deemed uninformative I volunteer the following analysis to counter the various erroneous views expressed above.

Although previous posters seem to have a loose understanding of the concepts of supply and demand, the mechanisms and magnitude of impact of the various factors affecting the ecto market seems to elude them.

I will first point out the arguments which pained me the most.

On the contrary, high volumes of ecto trade indicate a healthy market. Ecto is a liquid asset and commodity currency so there is no surprise that it is actively traded, so the fact that volumes are high are in no way a warning signal.
I am also curious as to where you got data on the volume of ecto transactions...
As for volatility being high, ecto is currently experiencing a very stable year by historic standards so once again, you are just trying to sound sensational with no means of backing your assertions.
I must admit however, that volatility and high volumes taking place in a market simultaneously is a sign that the market is fragile and distressed, however no empirical proof is present whatsoever that this is in fact the case in the ecto market.

Durrrr.
Firstly, a market crash is by definition short term.
Secondly, whenever someone loses money on a trade, a separate counterparty gains an equivalent amount.

Once again, worrying that market volume is high is asinine seeing as it is usually a sign of a healthy market. US Treasuries for example, are prolifically traded and perceived as very robust and safe asset; much like ecto in my opinion.

Another annoying aspect of your post is you state these "facts" and then refuse to put your money where your mouth is.

So you are saying that any good for which supply is not fixed is not an investment. I think I'll let the reader figure this one out for themselves...

Also a bit of a generalization. A quick glimpse into the Sell section, or even your own thread, will contradicts that statement.
I personally despise inscribeable items but see no problem with others using them. A market for sought-after, uncommon gear still exists, keeping high end traders happy, whilst insc crap caters to the general hoi polloi and more pragmatic player.

Not true.
Here is a graph I plotted based on Ecto price data collected from Guru.



I wouldn't call the above price trend a dead-cat bounce. Although you are right that in real terms, ecto has most certainly fallen in value.

Diversification is a prudent strategy, but your current approach to your asset portfolio seems a bit crude especially if you appreciate that your exposure to the particular market is excessive.

Actually, as can be seen from the price chart, in reality the opposite occurs. And the phenomenon of ecto price spikes can be observed as recently as the Halloween event. This is easily explained due to the increase in demand for consumables and event items, thereby pushing up the demand for money (in this case ecto).

I'd say I trade on a regular basis and I think demand is rather upbeat recently. Perhaps your salesmanship has suffered a blow, rather than the market?
Of course if you solely trade low-end insc and weapon upgrades you'll have a hard time...

If you think that demand for Fissure armour and Chaos gloves is the predominant factor driving ecto prices then I think you should abstain from any kind of economic analysis in the future.
The function of ecto as a crafting commodity is dwarfed by its function as a commodity currency. Any trade in excess of 100k involves ecto [or armbraces] making it a vital medium of exchange.
When demand for items, consumables, minipets and anything else HoM related increases, the price of ecto inevitably goes up. Armour is only a small fraction of this increase.

As can be seen in the graph above, a certain trading range is certainly present for ecto prices but the corridor has been breached on several occasions.
You sounds like one of the clueless analysts presiding over the 2007/8 housing crash and relying on historical data and faulty models to predict the future. The past is not necessarily an accurate representation of what the future holds.

I do however agree that over the long term ecto investments are indeed safe. And while the GW1 economy is active, it will remain that way.
When it ceases to be so, it won't matter since trade will most likely grind to a halt anyway.

Like I said ingame, our opinion regarding the market trend may differ but your post is economically sounds. I wouldn't be surprised if that is Yawgmoth's analysis as he seems to be one of the few who actually know what ther are talking about.

Your knowledge of rudimentary economic concepts leaves more to be desired. In fact, your post is so blasphemous in the paradigm of monetary theory that I am curious as to which institution in Belgium you study economics at.
"at one time there is more money available in game and this makes high-end stuff more valuable, more wanted and more expensive"
Firstly, I think you should make a vital distinction between "price" and "value", and "nominal price" and "real price" - very basic terms for an economics student.
An expansion of the money supply without an equal increase in demand for goods results in inflation as the money market tends to a new equilibrium. This leads to items becoming more expensive in nominal terms, but not more valuable. This is true if the assumption of money neutrality holds, which in Guild Wars, given the lack of interest yielding accounts and investments, I'd say it does for the most part.

You are correct that money sinks are indeed an instrument to control the size of the monetary base and ease inflationary pressure by drawing liquidity out of circulation.

A distinction must be made not only between supply and demand effects, but also between monetary effects of inflation and level effects of demand/supply change for consumer items.

I now come to the section where I sum up my thoughts on the future price of Globs. Of course I do not claim that my analysis is correct and stipulate that any investment decisions made on the grounds of what i think are executed at your own risk.

Seeing as I have already elaborated somewhat on the dynamics and mechanisms of the ecto market, I will spare you the tedium of reading it again. I also omit any formulas and complex theory to make this more user friendly, if you wish to explore the topic further however, I can refer you to some excellent literature and research papers on monetary theory.

I expect that ecto will continue to rise in the future, although the current spike; namely a sharp, albeit short-lived, jump to the 13k level last night, is likely temporary.

The graph shows that holiday events do indeed serve to boost the demand, and price, of ecto due the an increase in demand for consumables, event items and an injection of additional gold into the economy through repeatable quests such as Every Bit Helps.

As Luny and Yawgmoth previously stated, the consequent Canthan New Year event and general slowing of demand following the start of the new year facilitate a normalisation of demand, allowing ecto supply to catch up with demand and once again reducing prices.

Over the summer months, the ecto market almost always enters a trough, most likely due to increased activity by the GW player base. Kids farm UW vigorously over the summer holidays, which results in a slump of Ecto prices. I welcome additional ideas and feedback on this hypothesis.

Now I expect that as GW2 draws closer, players will demand increasingly more currency in order to fuel their purchasing needs. Consumables, Survivor and Vanquisher titles, minipets, armour and hero equipment will all keep demand steady, if not increase it.

Many prospective GW2 players are now buying the GW1 expansion packs (which are dirt cheap at the moment) to bring their HoM up to scratch and thereby ensure some flashy rewards in the sequel.

In addition, many players who quit years ago are now returning to also furnish their HoM, further increasing the consumer base.

On a side-note, the return of these formerly inactive players now brings numerous, dormant rarities to the high end market. This once again boosts demand for ecto and armbraces as fresh Asian minis and discontinued gear hits Ventari's shelves.

In terms of supply, I don't expect much of a change. Although Anet has made it their mission to reduce botting and gold selling which is likely to contribute to higher ecto prices. Also, I expect more active UW farmer to either begin concentrating on their HoMs or quitting, discontinuing the farming as GW2 looms ahead and less time remains to accumulate wealth. All in all, supply may be constricted as well, adding to the upward trend in ecto prices.

In retrospect, I may have take this thread way to seriously but the level of economic thought prevalent in the topic so far has forced me to intervene.

Done stroking your e-peen?^ I found most of what you said very interesting and informative, but was turned off by your incessant need to belittle other posters. Surely someone as informed as yourself could do just that, but without the sarcasm?

And now you decided to throw yourself into the line of fire as well?

I believe sarcasm is one of the greatest pleasures in life, and I am also congenitally an immense douche.

In all honesty their disregard for the most fundamental concepts of economic theory warranted a passive-aggressive response.

I don't think I would enjoy posting that as much as I did if it wasn't dripping with sarcasm.

If you didn't want to dabble in economics why did you refer to the quantity theory of money? Just copy/pasting a formula from Wikipedia, followed by "'nuff said" doesn't really qualify as economic analysis.

Also, inflation does imply an erosion of purchasing power of every unit of currency, in this case gold. Always.

Inflation is the rate of change of the price level so I don't see how your statement makes sense. If you mean real income should rise, that's already indexed for inflation, meaning that purchasing power would then indeed increase.

Also, I wasn't aware that Guild Wars players have an annual salary? What income are you referring to exactly?

Firstly, Dictionary.com wasn't complied by economists.
Secondly, the fact that you didn't make that distinction is exactly what makes your statement erroneous.

Supernormal profits are reaped from market inefficiencies such as information asymmetry. I, for one, am pleased that such inefficiencies exist or else I wouldn't be rich. Either way, I don't see how this is relevant to the ecto market, unless you are just trying to throw some economic terms out there to prove you have at least some inkling of economic theory.

If fewer people were active, there would also be less ecto farming and therefore the equilibrium price would likely stay the same, or at least shift lower by a lesser extent.
Much like I am "making a guess" or hypothesizing, so are you. In my opinion it is much more likely that people play more actively in the summer seeing as the majority of the gamer demographic is students who have summers off.
I will attempt to find data on the activity of the player base over the course of the year to resolve this with some empirical evidence.

Economics is far from exact, but that doesn't mean you can violate well established criteria and twist the scaffolding of economic theory at will.

This thread is becoming interesting, and I do hope it doesn't wind up dissolving into such a flame war that it must be closed.

I'm particularly curious about Jason's graph. Would you be willing to share a little more detail on how/where you collected that data? I've often wondered if there was any kind of graph like that, but I need to know more about where the points came from before I decide how much faith to put in this one.

EDIT - If it helps, I remember having the impression that 1e~5k before they added skeles to UW in Halloween 2009. By Wintersday 09/10 it had risen to more like 7k and seemed to stay there. (Don't trust me without checking, as I'm working from memory.)

My humblest apologies if anything I said or did stirred any of the pots in here! I wasn't even trying to, I swear!

Find attached the dataset I compiled.

The price data was drawn from Guru threads in an attempt to reconstruct the monthly fluctuations in trader ecto prices.

I did not attempt to standardise the price to an equal interval within each month. This means that the price may be drawn from any point in time during that month.

I wouldn't be laughing if I were you. You keep getting your ass served to you and yet you still come back for more.

Can't say I ever had any respect for you so I don't really care.
I trust that the intellectually capable readers will be able to discern the correct definition of inflation for themselves...
Also I am flattered that you think I am a teacher. By the sounds of it, I am most certainly capable of teaching students at your uni.

I already covered this in my previous post. Seems like you need to work on your English comprehension too.

Do capital gains through trading count as income? How do you propose inflation should be taken into account across panel data with temporal, as well as cross-sectional data?

Also, what you are saying is that players must constantly increase the hours farmed everyday to keep up with the inflation. Which I actually agree with.

Nevertheless we are discussing the effects on a commodity; ecto, rather than incomes. The income aspect is pretty straightforward, seeing as even you managed to figure it out.

As a matter of fact Fisher is far from correct in many cases but once again, I don't see how this is relevant. Also, despite your claim of it being self-explanatory, I doubt you truly understand the depth of the monetary theory behind it.

I believe you mean "role".
Seeing as ecto is so widely traded and has a clear trader value as a benchmark, I'd say you are correct that the effects of information asymmetry are negligible on it. Other non-standard phenomena such as volatility clusters, conditional non-linearity and momentum are most likely present however. I would rather not get too technical if you don't mind.

Thank you, I would say that graph alone has made more of a contribution to the thread than all your posts combined.
And if you prefer pulling data and "facts" out of your ass instead, go ahead.

To make any money of ecto, you buy armbraces and use them as currency, ecto are sub optimal in high end trades due to this. They are what they should be imo, the game is 6 years old, and had a couple market crashes already. I remember when they were 25k a piece, as well as when they were 100g a piece, but honestly the decline hasn't hindered my "income" whatsoever since I would rather stock pile armbraces than ecto. Keeping around 750-1000 ecto is all you will really ever need unless u are buying specific HIGH end items, in which case it would probably be better to use armbraces any way.

The corridor might have been breached, but it always tends to fall back in line. This is obvious, I didn't think it needed stating.

My comment was never meant to be an absolute deceleration of safety, more a little reassurance for anyone who thought Ectos were going to fall in value considerably (which you agree with, incidentally).

There's no need for the condescending tone.

Once again, you based your reassurance on the observation of historical trends.

I agree that so far a corridor has been maintained but what I was disagreeing with is your seemingly dogmatic assertion that if ecto prices hit 7.5, they will inevitably normalize to 6.4 (for some reason) in a few days.

There's nothing wrong with the fact that it didn't happen, the behavior I predict won't necessarily take place either, but I had a problem with a prediction based on a wide and unreliable channel.

The increasing emphasis on HoM and approach of GW2 is very likely to break the tendency formed over the past years and cause a so-called 'paradigm shift'.

Apologies for the condescension, the striking parallels your comment had with respect to the views on the pre-crisis housing and MBS market aggravated me.