Well. I log on world of warcraft today and after reading the patch notes, i see that there is no longer a cooldown on arcanite transmutes. Beautiful, an extra way to make a bit of coin for gear and training, not to mention saving for my epic ground mount.
Well, first of all, I hop over to the auction house, and purchase a stack of arcane crystals and a stack of thorium bars. I make up my arcanite, go to look at the current prices (so I can undercut them by a gold or two) and see that with the recent overload of arcanite on the market, the price on my server has dropped from 20 gold a bar to 10. No biggie, i can make more of them to make up for the lost profit. Then I see that there is 576 pages of arcanite bars, all in stacks of either 1 or 20.
I am stunned at peoples stupidity, considering the fact that there are only 3 different sellers on the first ten pages (believe me i checked) This is common logic here. If the consumers demand 10 units of product in one day, and you flood the market with 200, that leaves 190 units leftover as a loss of profit. Well, the longer you hold these excess units of product, you lose profit.
What is the first reaction that people seem to get when their goods don't sell the first two times? Drop the price. Seems smart, but then you realize that that sends the consumers into a purchasing frenzy. They NEED 10 units a day. But if the CAN get 30 a day, for the same price as the 10 they paid for yesterday, they will purchase 30. That is enough for 3 days. Now look what you have done! You have dropped the value of Arcanite Bars for three days, because nobody needs them. Even if all the bars get used up, the consumers need more. They buy more.
Well, that means the producers have to make more. This makes a beautiful boom for about a month, as the production and profit margins rocket upwards through the ladder (The ladder in this case being 1) The miners who harvest the thorium and the arcane crystals 2) The alchemists who transmute them into Arcanite, and 3) The consumers purchasing the Arcanite to make goods) After a month, the rocket shoots downwards.
I will use an similie here to explain things further. If you shoot a firework (the profit rocket) upwards, it makes a pretty pattern in the sky, pleasing people. But if you shoot it downwards, it starts a fire that can cause serious problems, take a long time to put out, and even a longer time to fix the previously mentioned problems. So, our rocket went up, made the people above the primary consumers happy, but now the rocket shoots down. Any armor, weapons, jewelry, and other equipment will also drop in value because of the ease to get the supplies.
If a chestpiece (made up example, not a blacksmith so I am unfamiliar with their recipes) takes 4 Arcanite bars, 3 golden pearls, and 20 ironfeathers, it will be marginally cheaper to make because of the reduced cost of Arcanite. If a blacksmith makes this item, they make more profit on it. But wait! Because it is cheaper to acquire the materials and make the item, the consumers are not willing to pay as much money for it. So now, the blacksmith loses money because he has to drop the price on his chestpiece.
Well, I assure you that it isn't just one blacksmith affected by this sudden change in prices. All of this is caused by the handful of stupid people who have mass produced Arcanite, just because they can. Looking back at this post, i look like a raving lunatic, but to the few of you who understand this mess, you aren't the stupid people. It's 12:33, so I am signing out. Leave some comments, but no flamng please. It just annoys people (like me)