Saturday, March 26, 2011

Why You Can't Afford NOT to Stockpile Pyrite

So I feel like I may be stepping on Alto's toes, or just being unoriginal, posting about the "Pyrite Stockpile" right after he did a rather excellent write up (see, Epic Gems in Cataclysm), but I believe I have a unique view on the whole debate that I would like to share in the hope I can bring people over to the stockpiling side.

The gold making community is divided between those of us who think epics will come from Pyrite ore, and those who think Blizz will take a unique route. There are excellent points on both sides of the debate; some argue Blizz will go with the tried and true method of prospecting for epics, as that ensures JCs will be able to get them, others say that there's no real precedence for prospecting as you couldn't do so in BC, so Blizz might decide to go with a third, wholly unique option on how to get the gems. Honestly, I think these arguments are irrelevant.

Look at it this way: either Pyrite will prospect in to epics, or it won't. There's no third option. Likewise, you'll either stockpile Pyrite, or you won't. No other alternative (even keeping a few stacks counts). That leaves us with four possible outcomes when epic gems are released:

1) Prospectable Epics + Stockpiling
2) Prospectable Epics + Not Stockpiling
3) Not Prospectable Epics + Stockpiling
4) Not Prospectable Epics + Not Stockpiling

Scenario 1) is obviously the best. You've stockpiled and it's paid off big time. You will be rolling in gold. This is what people stockpiling are hoping for. Scenario 4) is purely neutral. You gained nothing, and you've lost nothing. This is what people not stockpiling are hoping for. Scenario 3) is what those of us stockpiling are dreading. All that gold we sunk turns out for naught, and we're left with bank tabs full of "useless" Pyrite. But wait, it's not useless! Pyrite still has some excellent prospecting tables, and we're likely to recoup a large chunk of our gold through the normal channels. Scenario 2) is what those not stockpiling should be dreading. Turns out that epics do come from Pyrite and you've totally missed the boat on this one.

The way I see it, the worst case scenario for those not stockpiling is much worse than the worst case scenario for those stockpiling. By not stockpiling, you are risking not making what will likely be an obscene amount of gold. By stockpiling, you're risking losing *maybe* half of what you have chosen to invest (given the downward trend in prices of Vol. Earth and Rare Gems). But if you buy cheap enough, you can probably cover a good portion of your potential losses.

The difference is that the loss those not stockpiling are risking is an "opportunity cost" loss, i.e. they're risking earning potential, while the loss those stockpiling risk is an actual loss of wealth. This is why I wouldn't recommend sinking a substantial amount of your wealth in to this risky venture. However, if you can tie up a few thousand, ten thousand, or hundred thousand investing in Pyrite Ore, the potential reward vastly outweighs the potential loss.

This is certainly a matter of personal preference, but as yourself this: When we find out where epics come from, would you rather be kicking yourself for not stockpiling Pyrite, or kicking yourself for stockpiling Pyrite?


  1. Nope, not stepping on toes brother, it's all good! I do appreciate the link!

    If you haven't read the comments on my post recently, check em out. Bobbins had a new viewpoint that I didn't even think of, so once again, another possibility (and this one seems VERY viable as an epic gem option).

  2. I've made a similar comment on another blog before, but I think it's very applicable here.

    You cannot say that the potential reward outweighs the potential loss because we don't have any numbers. There is no probability of gems being in pyrite and gems not being in pyrite.

    If this was the 10th or the 100th expansion, maybe we can do some regression and statistical analysis to come up with some fancy numbers, but we don't. It will be the 3rd generation of epic gems, and the only trend so far, is that there is no trend, so if you look at it this way, epic gems won't be prospectable at all! There are literally 459172398127983 other ways Blizzard can implement them.

    I think your point about the value of pyrite is very true, but again, we don't know Blizzard's intentions.

    If they add transmutes, what will be the material cost for it? Inferno Rubies will hold value unless epic gems are made VERY easily accessible, but it very very much doubt the others will be worth more than their vendor value unless the transmute to epic red requires gems of other colours (which is possible since anything is heh). It's only 4.1 and I'm already vending my expired cuts for convenience sake and we still have several months to go.

    What if they want to control inflation and fix the major source of this problem, the vendor price of uncommon gems? This will dramatically affect the price of pyrite.

    Then there's the Volatile Earths. Undoubtedly, with a new tier of blacksmithing stuff, the demand will rise, but one also has to consider the the sheer quantity of pyrite being held for that day.

    Regardless, I've been buying pyrite for no more than 60g a stack, up to 4 bank tabs so far. The pros and cons of stocking pyrite has been covered enough. I think the more interesting question is, what are you going to do if they release epic gems in say, 4.5 (3rd tier), and pyrite ISN'T prospectable? What if Blizzard decides that they need to make them more accessible and add epic gems to pyrite prospects later on?

    TLDR: Noticed someone buying Dream Dusts, GNEs and then Illusion Dusts from me so I thought he must be levelling. Spent the next 5 minutes completely buying out everything between GEE to Dream Shards and relisting them up for 1000% of its usual price. Made the poor (rich) guy pay some ~8k gold to level to 450.

  3. Hi Anon,

    You make some good points, but I think you've missed the point of my post. Perhaps I should have said the "hypothetical" gains outweigh the "hypothetical" losses. I agree completely that we have no idea if epics will come from pyrite and that there's no strong precedent for that happening. Obviously though, these arguments have not convinced you not to stockpile, nor have they convinced me. There are a lot of "what ifs" out there in regards to epic gems, but the easiest one to deal with is "what if epics come from Pyrite?" And my answer to that, and the goal of my post, is "better safe than sorry." I would much rather tie up 10-20k in Pyrite ore only to learn it won't prospect in to epics, than to NOT spend that gold and find out they will, at which point it'll probably be too late to stockpile at good prices. Stockpiling Pyrite is a risk, there's no doubt about that. I'm not saying, nor do I advocate saying, that Stockpiling is a safe bet and is sure to make you tons and tons of gold. It's a risk, but I think it's a risk worth taking.

    And to briefly answer your hypotheticals, if we can xmute epics, it will probably take rare gems and volatiles. So stocking up on some of those might not be a bad idea, though the same "will they or won't they" risk applies here. Changing the vendor price of uncommons will certainly affect the "floor" price of all ore, but I don't think it will seriously affect the price of Pyrite as we'll be looking to the price of epics to figure out when to buy or not (and if they're not prospectable, the price of Vol. Earth). Going along with that, we could expect to see a huge surge of Vol. Earth and a likely price drop if/when people start mass prospecting Pyrite, though again, not sure how that influences stockpiling. The smart thing to do is not dump your VE, or use it in other crafted materials if you can. As for the final hypo, I assume you mean if epics come out and are not prospectable from Pyrite, but then some time later the devs decided to change that, what would happen? I'd assume most people would have attempted to move the Pyrite they stockpiled, then kick themselves when it turns out you can get epics from them. Maybe a few would hold out for the slim chance that what you are suggesting will in fact happen, and those guys will become rich indeed.

    And finally, that was a brilliant goblin move you pulled with the enchanting mats. Well played indeed. I'll have to keep my eye out for something like that.

  4. I love the ideas and exchanges about what is Oportunity cost, and what it is not. What is and what is not.

    IMO, what is the value of pyrite? What is the potential loss, and can you afford it. We can all afford the gains. The second concern is what is the cost to existing business oportunities as you engages your storage and fill w/ pyrite. Lets face it, if you had 10 toons w/ 10 guilds all maxed out with 26 slot bags on them and in tha bank and and 6 tabs in every guild bank, you could still run out of space. I know I could at least. I would have one BG tab of copper, just for the next round of levelers or... or... or... etc...

    Perspective is defended by all, but the reality is the truth exists in HOW each person interprets the potential loss, and how they interpret the absolute loss of storage.

    Les Say 100K invtested into 2 guild bank tabs FULL of STACKS of pyrite. Now that the cost and the storage is quantified... Answers can be qualified based on those 2 factors. Me, 100K ehh, w/e its cool, and 2 GB tabs, fine, i will make another alt and spend 10K to make another 6 tab GB. In the end i will still have a 6 tab GB to play with, and what I would estimate to be worth at least 75K, and maybe only able to recover 50K or less out of.

    ZOMG!!!! THATS A 50K risk, and 10K cost, maybe more...

    NAHH, its pixels man... and thats fun stuff for me

  5. 1 - You make a lot of gold, and personal stars for being so insightful.
    2 - You make a decent amount of gold, but you miss out on a chance to make a lot of gold.
    3 - You lose a lot of gold.
    4 - You make a decent amount of gold, and miss nothing.

    You can afford not to stockpile Pyrite - you can't afford not to buy it when it's cheap. Place & Hedge your bets insofar as you can stomach them.