Understanding the WoW Token market

Ladies and Gentlemen: Fox Van Allen is back, and so is the auction house column. Praise be to Yogg Saron, may he blanket us in his eternal darkness!

Approximately four years ago, I wrote a column at the site that shall not be named chronicling my rise to auction house glory. It was a rags-to-riches story: A humble shadow priest with good hair began Cataclysm with next to nothing, and ended the expansion as a in-game gold millionaire with even better hair. Money! Fame! A boomkin concubine! I had it all.

Now honestly, in the old days, I was stumped about what to do with all that gold. I bought my friend Chester a Spectral Tiger mount off the auction house, and I bought one for myself too. I bought a motorcycle and a mammoth. I had all the shiniest enchants and all the priciest trinkets. I spent my money like a drunken lottery winner, because WoW gold had little real value to me.

Of course, my shopping spree happened in a different era. In April of this year, Blizzard officially launched the WoW Token, and it changed everything. There is now a mechanism for cashing out in-game gold and turn it into WoW game time. You can’t turn WoW gold into U.S. currency directly, of course, but this is definitely the next best thing. With the right amount of auction house know-how, anyone can earn enough gold to, effectively, play World of Warcraft for free via WoW Tokens.

I know WoW Tokens are controversial, but personally, I strongly support them. I think it’s great that people who want to skip the in-game grind can pay $20 and enjoy the game. And I think it’s especially great that I can directly benefit from this, saving $15 in real money every month. (You Blizzard Watch fans benefit directly too, as I reinvest that money into drinking supplies for the Fox Force Five weekly Twitch live stream leveling show. Yes, that was totally a shameless plug.)

Bottom line is this: You should be buying WoW Tokens with in-game gold when you can to save real-world money. If you want to buy in-game gold instead, bless you for making that possible for me. I hope you enjoy whatever item you’re spending the money on. But either way, you owe it to yourself to understand the ins and outs of WoW Tokens before you jump into the market. It’s a major purchase, after all.

What are WoW Tokens?

WoW Tokens are, arguably, Blizzard’s most important in-game monetization effort. On the “cash in” side, $20 U.S. buys you a WoW Token, which you then sell on the auction house for a fluctuating price, currently hovering around 23,000 gold. On the “cash out” side, that same amount of in-game gold can be used to purchase a WoW Token off of the auction house, which is then redeemable for 30 days of game time on your account any time you want to use it. That’s it. You cannot purchase a WoW Token on the AH to resell it (it’s bound to you), you cannot redeem a WoW Token purchased with real-world money for game time (why would you even want to, you’re wasting $5) and you cannot give a WoW Token to a friend. (You can, however, gift your friend the gold necessary to buy one.)

Who sets the price of WoW Tokens?

As you may know, you don’t get to set your own price when buying or selling a WoW Token. The auction house tells you the “market price,” which you can either take or leave. Individual actions do have an effect on this price, however, because they influence the algorithm that calculates the perfect price that balances both supply and demand. It works a lot like the stock market, where each transaction typically pushes a stock’s market price up or down a cent or two. Each seller needs a buyer, and the price constantly adjusts itself until that happens.

If you have a rush of people trying to purchase game time with in-game gold and a limited supply of people selling Tokens on the auction house, the cost of that transaction will increase for the buyer. That means you’ll need to spend more in-game gold for the same 30 days of game time as before. If a rush of people tries to add gold to their accounts, meanwhile, the opposite happens. That market imbalance will drop the gold value of a WoW Token.

In the stock market, there’s an old adage about catching falling knives and how dumb it is to do that. When a stock is falling, it will likely to continue to fall; it’s difficult to perfectly time the bottom of the market. WoW Tokens are similar. Don’t try to catch a falling price: The right time to buy a WoW Token is right after its price starts rising modestly. If you’re trying to sell a WoW Token for gold, the best price to do so is right after the price starts to fall modestly. We know this thanks to the market’s pattern.

What is the WoW Token market like?

The folks at wowtoken.info have done an absolutely terrific job of tracking WoW Token prices in-game since their launch in April. The data below was pulled directly from that site. If you’re buying or selling WoW Tokens, it’s a great resource for the latest market pricing. They also have a ticker-style Twitter account, @WoWTokens, which I personally think is worth following.

When Blizzard launched WoW Tokens, the opening price was artificially set at 30,000 gold – it was as good an initial guess as any. And for a few hours, that price held. But ultimately, game time buyers were sated faster than gold buyers. Within the next 24 hours, the price of a WoW Token dropped nearly 10K. WoW Tokens would eventually hit a record low of 17,907 gold.

Lately, the WoW Token’s value in in-game gold has bounced back. The two-week trading range has been roughly 21,509g to 24,310g, with prices hanging around the upper end of the range as of late. Prices are becoming much more stable because the market is falling into balance. Huge daily swings in price are probably done until something major, like a new patch, disrupts the market again.

Where do prices go from here?

It’s impossible to know for sure what will happen to prices moving forward, but we can make a few educated guesses. We’re currently in the patch 6.1 doldrums – people seem to be showing slightly less interest in playing WoW because of a lack of new content. No new content to gear for means that people aren’t spending a lot of in-game gold. This has driven the gold value of game time slightly higher. Expect a slow-but-modest rise to persist through until patch 6.2 drops, because game time buyers with big pockets have very big pockets, and it’s smart to cash out if you comfortably can.

Certainly, new content will have a huge impact on the WoW Token market. People will suddenly have a need for in-game gold as they seek expensive enchants and new bind-on-equip gear. At the same time, though, demand for purchasing game time with in-game gold will also increase – new content means people will want to get in the game and play it. It’s hard to say which will win out for sure, but you can definitely expect some short-term volatility in pricing.

If you’re looking to buy in-game gold, the next few weeks before patch 6.2 hits looks like it might be a good time to do it. (Ideally, you should time your purchase around 7:30AM EDT, since that seems to be a typical daily low point.) If you’re looking to buy game time, you might want to try waiting until a few weeks after the launch of 6.2 if you can. At that point, people will still want a lot of gold to spend in game, but the desire to purchase game time will likely be more muted, making it a better buy for you.