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  1. #1

    Question Long Run Saronite Speculation: Is buying below vendor price even safe?

    Well I suppose it is considering all of you are so I'd like you to point out the flaw in my logic.

    Lets say I buy 1000g worth of saronite ore at 12.5g a stack (vendor price). Next, assume worst case scenario that 3 months after cataclysm launch, saronite ore prices are still low near vendor price. You all say, "Well if that happens you can just smelt and sell to a vendor for no loss!" But in reality wouldn't you be getting less gold back do to inflation? Your "nominal" gold would be 1000g, but your real gold may now only be worth 950g. Know what I mean?

  2. #2
    Mornia's Avatar
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    But if you didn't buy it, you'd still have the 1000g which would be worth less anyway.

  3. #3
    I suppose if you tie up all your gold in saronite what you say is kind of correct as you could have invested in something a bit more lucrative. But if you only a percentage of your gold is tied up in saronite and have spare liquid capital left over to invest or use in other gold making ventures your really losing nothing as Mornia said.

    Storing gold in a product that even only may inflate in price, where your guaranteed at least your initial investment back, is better than simply leaving it liquid as there is no way to increase the value of liquid gold if it's sitting around in it's liquid state.

  4. #4
    Quote Originally Posted by Thefluffyrocker View Post
    Storing gold in a product that even only may inflate in price, where your guaranteed at least your initial investment back, is better than simply leaving it liquid as there is no way to increase the value of liquid gold if it's sitting around in it's liquid state.
    Exactly Inflation does not effect Liquid Gold. Inflation effects item worth. As people over all have more gold they become willing to spend more and in turn the people selling start to expect more per item than before. So yes what you can buy for 100g now may cost 200g in the future. So on a basic level the "value" of the item has not increased but your Net worth has.
    Not all treasure is silver and gold but it can be sold for silver, gold, and a little copper.

    I Has Stuffs and you can too

  5. #5
    Ayplauj's Avatar
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    Dizzy, Fluffy and Mornia have hit the nail on the head. The other aspect to consider with saronite is relative availability. Right now, people have been mining and selling saronite throughout the wotlk expansion--thus, there is a huge amount of supply available now. Most people with stockpiles are liquidating their wares to make room for cata mats.

    The assumption people are making and acting on by investing in saronite now is that there will still be a relatively high demand for saronite (as people level new toons' JC/blacksmithing up to 525) while the amount of available saronite will drop dramatically in the next few months. This coupled with inflation is why people think saronite is a good investment now.

    One method for assigning an expected value to this item is by creating a weighted average based on the likely different scenarios for saronite ore prices. This is subjective, but can be more useful when expert opinion and analysis is factored. Example:

    Scenario 1) Saronite Ore remains near vendor value. Likelihood: 10% 12.5g x .1 = 1.25g
    Scenario 2) Saronite Ore rises to 25g a stack due to inflation. Likelihood: 70% 25g x .7 = 17.5g
    Scenario 3) Saronite is in high demand plus inflation, price goes to 40g/stack. Likelihood: 20% 40g x .2 = 8g
    TOTAL = 26.75g

    From this analysis, one could state that the average expected value of your 12.5g investment in saronite 3 months into cataclysm is 26.75g. Obviously, you must weigh this value against how confident you are about the relative likelihoods of the three scenarios panning out to make your investment decision.

  6. #6
    Aeg's Avatar
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    I have so much saronite ore in my guild banks that when more comes up on the AH now I am just buying it to smelt/vendor right away even at 12.5g a stack. I am doing this purely to help remove more of this ore from the marketplace increasing demand later on. Is anyone else at this point?

  7. #7
    Mornia's Avatar
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    I've not used any of my saronite stockpile because I could smelt and vendor it later If I need to - I don't need to do it now. The only reason why I might want to do that is to create storage space. I just keep buying and storing and if it doesn't work out, I'll vendor it when I know it's the right thing to do.

  8. #8
    Quote Originally Posted by Aeg View Post
    I have so much saronite ore in my guild banks that when more comes up on the AH now I am just buying it to smelt/vendor right away even at 12.5g a stack. I am doing this purely to help remove more of this ore from the marketplace increasing demand later on. Is anyone else at this point?
    After filling two 4 tab guild banks and their respective personal banks I have begun smelting for profit just to keep it off the market as well. True if I left it up there is a chance someone will undercut further increasing profit from selling to a vendor but there is also a greater chance someone else will be able to buy it out for profit.
    Not all treasure is silver and gold but it can be sold for silver, gold, and a little copper.

    I Has Stuffs and you can too

  9. #9
    Meyer's Avatar
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    I have to admit that i just take it slow on this item. If you look at it directly its a riskfree investment - but an inflation protection? Not really imo.

    I have 3 guildbank tabs with this item = 98 * 3 = 294 stacks.
    Cost = vendorprice for the bars = 12,5/stack
    Total investment = 3.675G

    I don't know about your gold/inventory status but with the use of 3 guildbank tabs im able to hedge under 2% of my current gold (and thats just the cash - add the value of the items i have stocked that number is less then 1%).

    The investment only have an upside (only downside is all the time you have to spend melting and vendoring) - thats why it's nice to have, but to be honest i think I already spendt to much time on this item when i look at the potential profit. 200% payof is still less then 10.000G - i'll take it thats fore sure, but it's not something thats going to rock my world

  10. #10
    Sterling's Avatar
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    Interesting discussion. Saronite's vendor price has always intrigued me, it just seems so high. Strangely, Elementium Bars vendor for less than Saronite, I wouldn't be surprised if Blizzard nerfed the vendor value of the bars. That would pull the bottom out of everything and the result would be interesting.
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