WoW gold inflation

When you surf the internet for World of Warcraft related information, you can see them everywhere: Google ads for World of Warcraft gold. It seems nobody cares that it isn't allowed to buy or sell gold in WoW according to the terms of service. And it also seems that Blizzard in spite of occasional loud proclamations of another 1,000 cheaters banned isn't really doing anything against the big gold traders, like for example sue them. Anyway, yesterday one of these little Google ads struck my eye, offering "crazy prices, $53 for 1,000 gold". Wow, hadn't realized how cheap WoW gold has become. That explains why even the most stupid purple items on the AH sell for 500 gold.

If I remember correctly, the first of these WoW gold sales, over a year ago, had an "exchange rate" of about 1$ for 1 gold piece. Now the value of the gold piece seems to have gone down to 5 cents, although it probably is still a bit higher on the younger servers. That is a pretty bad rate of inflation, of far over 1000%.

Now lots of people have already written about the bad effect of gold farming on the WoW game economy. But I was wondering about the real world economic effects. How many gold pieces can you reliably make per hour in World of Warcraft? I don't think you can earn much more than 30 gold per hour (even if some other Google ads promise to sell you the secret of making 50 gold per hour for $9.95). At 5 cents per gold piece, that is only $1.50 per hour. Assuming that half of that goes to the gold trading company, and half to the gold farmer, you end up with less than a dollar per hour. The average wage for a factory worker in China is already 40 cents per hours, and a young person skilled in using computers can probably earn a lot more. Employees in an Indian call center earn entry-level wages of $2 to $3 per hour. Manufacturing wages in Mexico are about $1.50 per hour. Earning your wages by farming gold in WoW simply isn't all that great a way to make money any more.

Then there is market saturation. At these rates, there can't be all that many repeat sales. Spend $100 on 2000 gold, and you can buy yourself an epic mount, all the bag slots in your bank, 16-slot bags everywhere, the materials and recipes to skill up a tradeskill of your choice from 0 to 300, a complete set of blue gear, and you'll still have gold left over. The only thing you could still possibly spend money on would be purple items, but there simply aren't many interesting purple bind-on-equip items. For example I use a blue one-handed sword from a Scholomance quest, and have never seen any better sword on offer in the AH. There are better weapons, but they are all bind-on-pickup, and thus not available for gold or dollars.

So unlike real-world inflation, which can go on forever, I predict that World of Warcraft gold inflation is going to hit rock bottom and stop. I don't think we will ever see 1,000 gold sold for $20, because that sum simply wouldn't pay for the computer, internet access, WoW game and subscription, and the work hours needed to farm 1,000 gold. Remember we are talking about professional gold farming here, people have to deliver the gold every day, they can't rely on getting lucky and finding ultra-rare purple stuff.