Understanding Commodities in the World of Warcraft

WHAT IS A COMMODITY?
A commodity is a good or service that is subject to ready exchange or exploitation within a market, typically these are heavilly traded goods or services. This is however a very broad term, and sometimes requires a qualifier. In World of Warcraft I tend to sort items into simple and complex commodities. Simple commodities being those commonly refered to as materials and trade goods, such as ore. Complex commodities being those items crafted from simple commodities. Having said that, what commodities should you be on the lookout for?

IDENTIFYING POTENTIAL COMMODITIES
The simple question is, what professions and therefore markets are you involved in? Are you looking at expanding your business in new areas? In a purely subjective way, it’s easy to see the potential for Ore. Ore can be made into bars, then crafted into gear. But the interesting and potentially more profitable option is Prospecting, turning that ore into gems opens a whole new avenue for sales. You can make cut gems, or sell them uncut. You can also craft Jewelry. In both the smithing and jewelcrafting options, you can of course disenchant the end products and that adds another dimension entirely to the usefulness of the ore. Because again, you can sell the raw materials or enchant gear (either manually or with scrolls).

THE PITFALLS OF CLEARING THE SHELVES
Identifying what commodities you are interested in is only part of the battle and Of course, the most profitable option is a combination of methods. This however raises several complications, most notably the demand for the ore. Someone with a serious operation could easilly go through several hundred stacks of Ore in a day. This level of consumption can cause all manner of mischief in the auction house, because demand for the commodity has changed dramatically over a short period of time. And now, related goods and services can potentially be affected.

To take our example of Ore, if there is only a handful of Pyrite stacks on the AH, and no Elementium or Obsidium, gems suddenly have a potential to appreciate in value. Conversely, if there is an excess of Ore available on the market the price naturally begins to go down, and with it gems become similarly more widely available. It’s a tight rope, because if you buy everything out you may cause a little short-term spike that you can exploit today, but it can cause farmers to redouble their efforts, thereby flooding the market with cheap ore tomorrow, ensuring margins become slimmer.

Of course, having a fair grasp on these potential issues and understanding the ramifications of your actions on competitors and suppliers alike gives you some options for all out psychological warfare. Trade chat for example is a potentially deadly tool, particularly for a well known trade prince. When one is spotted buying or selling massive amounts of commodities it can cause an artificial spike in demand. There is the The Falling Sky scenario for example, barking in trade chat that you have massive amounts of Pyrite and you need to clear out your stock (presumably before it’s too late). There are those who will invariably see this type of message and respond with outright panic, they begin to speculate in their heads “if HE is selling, that must mean that epic gems either aren’t coming or they aren’t coming from Pyrite ore!” From there, it’s a short trip to the conclusion “I’ve GOT to get rid of my Ore while there’s still time!”

It’s not guaranteed, but frankly you can never underestimate the predictability of stupidity. There will always be those who panic. It’s also important to understand this type of subtle attack can effect anyone, we’re all succeptible to the power of suggestion. In short, commodities are the lifeblood of the Auction House. And it would behoov any would be gold monger to keep a careful eye on those commodities deemed most important to their business. Just remember, to breathe. And when in doubt, Don’t Panic!

XOXO
Khaas the Insane