Saturday 31 May 2014

PLEX Price Crash

Eve's PLEX market is much like the real world gold market. Like gold in the real world, PLEX is
considered to be a safe investment, something that's always rising in price and a good hedge against inflation. While that might be mostly true investor speculation and manipulation can and has driven the real world price of gold too high, too quickly before.

It happened in the real world gold market in 1980. The price of gold went way up very quickly and then crashed hard.
In January 1980 gold hit a record 850 US dollars an ounce. After reaching those dizzy heights it then plummeted down and remained steady in the 300-400 dollar range for some years before starting to climb again to new levels. source gold price
The way I see it Eve's PLEX market behaves just about exactly like the real world gold market only more exaggerated. I believe the price of PLEX right now is just like the price of gold in the 1980s. The price of PLEX is rising too high, too quickly and will eventually crash too.

In MMO markets when the price of something crashes investors often panic, start dumping massive stockpiles and make the crash much worse before it starts getting better again... Usually not until after the really rich (no I'm not that rich) decide the price is low enough for them to start buying it all out.

Exactly when or at what price point a PLEX price crash might happen is difficult to predict though it'll almost certainly be very bad for investors with a lot of their net worth tied up in PLEX.

There's usually a limit where people decide the price is too high and the majority just stop buying. Such limits are often very close to (usually just under) a nice round number like 100 or 1000. For PLEX I figure the limit is 1 billion ISK per PLEX. My guess is most players will start severely curtailing their PLEX purchases when the price is somewhere in the 900-950 million ISK range.

Personally, I've already started cutting back on my PLEX purchases. I'm not at the point of shutting down accounts and I probably never will get there, but I've already severely cut back on purchasing PLEX for dual training purposes (since the price hit 700 million ISK).

Post inspired by Croda's What is the purpose of PLEX


  1. Here in Britain we're seeing an absurd rise in London house prices because it's regarded as a safe haven for capital.

    There's been a lot of chuntering from politicians and the central bank about this but imo the only thing that can fix it is if an alternative investment looks better to people.

    In order for plex to stop being a store of value something else would have to appear as an alternative. However most things in Eve go down in value. A deadspace mod might have been rare and special in 2008 but it's less so now. People have got more efficient at producing them.

    It's certainly not isk. When I started plex were 300m now they're 700m. From Dr E's presentation at Fanfest it's not general goods, inflation is negligible, in other words storing value in minerals or modules is like storing it in isk. (Barring certain spikes as game gets re-designed, eg revamp of meta modules might see some meta 1 and 2 modules go up sharply).

  2. its a tough call - unlike gold there is a real reasonable supply of Plex each month (US$ purchasing Plex which is then put onto the market) and there is a real consumable demand (purchasing Plex for game time).

    However, both this supply and demand would probably not move too much if Plex was 500m or 1bn.

    As you point out - it is the Plex held by "investors" that may be the swing factor. And Plex on the Chinese server, i am told, is at 3bn ISK.

    1. 3 billion on the Chinese server?! That's crazy!

    2. I would assume the reason for this is two-fold.

      1: The chinese are WAY BIGGER carebears than us. Everything I read seems to suggest this. The average player cares less about K/D, and more about ISK.

      2: Average wages are presumably lower (~10K in china vs 40-50K USD per year in western europe/america, where MOST of the players play from). This would mean less people have disposable income to purchase plex, and more people would like to pay for the game in ISK rather than RL currency (meaning higher plex demand). Lower supply + greater demand = 3B ISK/plex.

    3. That makes sense.

      My initial response "That's crazy!" was based on my own experience on the NA/EU server but after I'd had a while to think about it I came to pretty much the same conclusion.

      The Chinese certainly do have a reputation for being PvE oriented farmers so it makes sense they'd have more ISK to spend. And of course as you said real life economics are big factor affecting the supply of PLEX too.

      I'd modify your equation to:

      lower supply + greater demand + more ISK to spend = 3B ISK/plex