RuneScape:Wiki Post/Editorials/Junk and the New RuneScape Economy

=Junk and the New RuneScape Economy= by Robert Horning

What is Junk?
Junk can come in many forms. Most of what players are familiar with is the very low priced items that are the end-products of power leveling on your way to level 99. Some of the most obvious are things like unstrung yew bows or stacks of hard leatherbodies. One of the key aspects of this kind of junk is that they have to meet the following basic criteria:


 * 1) The item must be capable of being traded between players
 * 2) It must be made by a player via some manufacturing skill (aka Smithing, Fletching, Crafting, and Construction)
 * 3) Resources to make this item must be generally abundant and traded in fairly large quantities
 * 4) The end products are consumed in much, much smaller quantities than the number of items produced.
 * 5) The Grand Exchange must have the price of this item above the value that can be obtained via High Level Alchemy.

One of the common pieces of junk are armors of various kinds that are manufactured from bars and cowhides. An interesting exception to "manufacturing skills" that typically don't produce junk are Cooking and Runecrafting. One of the reasons for this is that the end-products typically are of greater demand than even the preliminary steps, and in the case of Runecrafting high level players can create multiple runes from a single piece of essence.... allowing that skill to remain profitable even if it isn't necessarily for low level players. The only possible exception to this exception is in the case of Body runes, which are generally used in very low quantities compared to how many are produced. Note the issues I've listed above.

Some surprising pieces of junk do come up from time to time such as Gold Bars. These can (and are) used for further end-products, but in the case of Gold bars they are the end-products of players engaging in power-leveling smithing via smelting Gold Ore. This is also a special case due to the Goldsmithing gauntlets giving such a bonus for smelting the gold ore that many players are willing to take a major loss in value to perform this action. Most other bars in this game will usually offer a modest to a rather substantial profit, due to the fact that the bars offer a much faster method of earning experience.

Of all of the factors I laid out above, the one that is by far and away the most important to consider is the price floor or bottom price cap placed on this item within the Grand exchange. The other factors should be fairly obvious, but it is this last factor that makes junk valuable to others.

Why do you keep Junk?
For some players who engage in playing Runescape and don't really get into player to player trades, you may wonder just what all of the discussion about junk is all about, and even more strangely... why in the world would somebody actually go out of their way in order to buy up junk... even so far as to buy junk from the Grand Exchange in large quantities? There is a reason for it, and a good purpose of it is already described in the junk trading article, but there is a deeper reason for it.

Mostly, some very high priced items such as a Santa Hat may hit a sudden surge in demand. Let's pretend for a moment that it is Christmas time (it may be when you are reading this article) and a whole bunch of players want to buy a Santa Hat to complete their costume for Christmas and winter parties. You can purchase this item on the Grand Exchange, and the price of that does go up and down based on players putting that item on the G.E. and those making offers there as well. Sometimes, however, a smart player will know that the price of that item will go up substantially, so they will hold out until the G.E. price goes up some more. As the Grand Exchange has a limit of going up only 5% per day (often less), this can take some time before a player gets to a price they are willing to sell their items for... even if they really do wish to sell that item like a Santa Hat.

Keep in mind that direct player to player trades have a hard coin limit in terms of the trading range and not +/- 5%. For expensive items like the Santa Hat, this is actually less than the 5% mark-up that you can get on the Grand Exchange. Indeed, Jagex seemed to have hoped that private off-exchange trades would effectively end with the introduction of trade limits and the Grand Exchange. That hasn't happened. What does happen is that the player who has the junk is now in a position to offer that Santa Hat for a price well above the G.E. price.

Keep in mind that the player who has the junk and the undervalued item like the Santa Hat really doesn't want the junk. They either made it from raising their own skills, found it lying on the ground (it does happen from time to time), or obtained it from previous trades. To use an example, let's assume the Santa Hat is currently available on the GE for 25 million coins, and the player who has this hat is willing to part with the Santa Hat for 35 million coins. To keep this as a balanced trade, the player who is buying the Santa Hat will put up the 35 million coins, but the player selling the Santa Hat will not only have to put up the Santa Hat, but also 10 million coins worth of junk as well. The purchaser now has what he wants, at the price he is willing to buy it for. This same purchaser has the option of either throwing the junk on the ground and literally throwing it away, trying to make a few coins by selling the junk at a general store or some other place that buys the junk, or keeping it for a future trade where they may need some junk. This is also how junk accumulates as well.

I mentioned above that the bottom price cap on the G.E. is the key feature here. If the bottom price cap were removed, this whole process of junk collecting would mostly end, and I argue that it is supported explicitly because of this artificial price control imposed upon the G.E. by Jagex. There may even be a good reason to maintain this bottom price cap, primarily to help stop a massive influx of inflation due to junk being converted into coins via High Level Alchemy or by being sold to shops, although I could argue that the amount earned in this manner is mostly inconsequential compared to other very major issues in regards to inflation that I will deal with in a future column.

Real-World-Trading via Junk
Now this is something that sort of hit me like a Limestone brick. I had no idea that it could be used in this manner.... until I happened to come across a very interesting price graph while doing some reviews and updates to some skill guides and saw what happened to the price of Unstrung symbols. If you look at this graph, you can see that for the most part this item is classic junk in the way that most of the items I've described above have been junk. This certainly is an end-product, and the process of turning this item into a Holy symbol is complex enough that unless a player is willing to put forth the effort, they won't bother. Certainly making large numbers of Holy Symbols from Unstrung Symbols is not something that gives you much experience, and the demand for them by other players really isn't there either. If you want a Holy Symbol, just buy it off of the Grand Exchange and make somebody happy that their effort finally came through and was remotely profitable.

What is interesting here is that this normally useless junk is being purchased in huge volumes in order to maintain the price at a high level. I thought about this and considered just what may be happening here. Just to make sure that this was something beyond mere ordinary shortages, I decided to buy up 2,000 silver ores, smith them, and make all of those 2,000 silver bars into unstrug silver amulets. All 2,000 sold out on the G.E. within about an hour. Notice this hit the upper price cap on the G.E. instead of languishing on the bottom as is typical. So what happened here?

Keep in mind that while the price was at the upper price cap of about 300 coins each, that the value of this item as junk also doubled in terms of its usefulness for purchasing high priced items. Using my above example, instead of buying the Santa Hat for 25 million plus 10 million in junk, you would only have to give away what is normally only worth 5 million coins, but is now temporarily worth 10 million. For some very high priced items like buying a dozen party hats, this in fact may be something very legitimate to try and get into in terms of raising the value of junk. The "legality" of doing this in terms of Jagex rules is dubious at best. I wouldn't recommend it, but it is important to know that it is being done. If a whole merchanting clan gets involved in trying to raise the price of this stuff for being able to sell some high priced items, it allows price graphs like the one above where the price is nearly pegged at the upper price cap for nearly two months, and really doesn't take all that much money in order to sustain such a price over a relatively short period of time.

As far as Real-World-Trading is concerned, this also is a Real-World-Trading vector as well. In my opinion, there are many other better ways to transfer coins into an account of a player who is interested in accumulating coins in consideration for real-world money, but it can be done. Consider that a player pays some Real-World-Trading company USD $40 to get an extra 30 million coins. What they can do is buy up some junk item like this unstrung symbol in fairly large quantities and then wait. The price of that item goes up, and then that player "sells" the junk back to the Real-World-Trader. Perhaps they'll simply sell it to the Real-World-Traders in a direct player to player purchase... and it will be considered "balanced" according to current trade rules as it will be traded at the current G.E. price. 30 million coins are transferred and everbody is happy... or are they? It certainly messes with the overall RuneScape economy in a whole bunch of ways and does cause other problems that come from the issues related to this price rise.

If this scares you that this kind of thing is happening, keep in mind that it is the price controls of the G.E. that allow this to happen. All I'm pointing out is that this is an example of what can happen, and not all price rises are strictly merchant clans or Real-World-Traders even if many of them have been blamed on the merchant clans. I do believe there are many more links between the "evil" merchant clans and Real-World-Traders as well, but the link isn't nearly so clear as it would seem, and not nearly so direct. Mostly, these are folks working together for a common purpose rather than directly paying each other off, even if they mess over other players in the process that they don't care about.

Under-priced junk
Most of what I've described has been in the Runescape economy for some time and shouldn't be a major surprise to long time traders on the Grand Exchange. On the other hand, with the introduction of "Personalized Shops", a very interesting and new form of junk has made its way onto the Runescape scene that simply didn't exist prior to September, 2009. I suppose it has been there all along, but it has become substantially more of an issue with the introduction of limited stock shops.

I'm going to be using the example of Pizza here as an example of something that has been hit hard with the new limited stock shops. Previously, all of the components for making pizza were available in fairly reasonable quantities from shops, and plain pizzas could also be purchased from the Warrior's Guild in unlimited quantities. With the introduction of limited stock shops, the price of pizzas has simply climbed through the roof. Uncooked pizzas are getting close to 1,000 each (a hint for players looking for a money making opportunity). There is an upper price cap on pizzas that in the past was usually not hit, but now the price of this item is simply stuck there. Jagex doesn't seem to want to fix this situation either, but I'm going to express the side-effects of this on the overall RuneScape economy if nothing changes or happens to this price.

It is sort of wrong to call this junk, as it really is more anti-junk. The anti-junk is to junk like anti-mater is to ordinary matter in physics. When the two come together, the economics of everything blow up and flies apart.... yet it happens all of the time just like matter and anti-matter come together all of the time too in real-life.

The anti-junk, in this case a pizza, is obviously undervalued and that there are players willing to pay much, much more than the current price of 300 coins per pizza. I'm going to say that the ultimate price a player will pay for the pizza is 600 coins each, or double the value. There is so much value difference to this that it can be used in trades where previously the "normal" junk was used. Let's get back to the case of the Santa Hat, where a player wants to buy the Santa Hat. Here it gets a little bit more complicated, but the end result is the same. The player who has the Santa Hat is willing to trade it for 35 million coins, but he also wants to get a stack of pizzas. He offers the Santa hat up for sale, but receives only 15 million coins plus 10 million coins worth of plain pizzas. For your information, that is really 20 million coins worth of pizzas if the price were allowed to float (giving 35 million coins in the ultimate exchange), but due to the upper price cap it still is a balanced trade.

What can really get complicated is to trade both anti-junk and junk simultaneously, but you had better hire a CPA to figure out the transaction just in case you might get scammed if you aren't careful. Getting your head wrapped around more complicated transactions can really get bizarre here. Keep in mind the primary purpose of both junk and anti-junk is to work around trade limit restrictions.... and I should note that they do this beautifully.

There we go, anti-junk is now just as valuable as regular "junk". Indeed, now there are incentives to do the opposite of the price spikes for some items like pizzas where the price is driven down temporarily to provide even more value to these trades.... including more Real-World-Trading price manipulation as well just like the above explanation about how to engage in Real-World-Trading for these kind of items. But it gets more sinister here with Real-World-Traders and why this new limited stock shop situation really is something entirely new to the RuneScape economy that has never existed before.

Simply put, a Real-World-Trader doesn't even want to bother with the price manipulation game. Simply put, they put an offer up on their Real-World-Trading site that simply lists various items like "Raw bird meat: 1,000 for 260,000 RS coins + USD $10"

In other words, these Real-World-Traders will offer what appears within the game as a balanced trade and something perfectly legal. Indeed, it is completely indistinguishable from other player to player trades of any kind that involve this item, including some friendly trades within a clan or something from a real-life friend to another. The only problem here is that the price of this item is so undervalued that players will be willing to purchase this item for cold, hard, real world cash as well. They don't have to log into your account.... they just arrange to meet you in some place via e-mail or IRC to carry on the transaction, and you offer your credit card or send the payment via Paypal or some other system. Certainly they could cheat you out of this money, but enough "legitimate" Real-World-Trading sites are set up that they do want to gain something of a reputation.... at least they would be willing to have this same customer for a return visit on a later time. Certainly other "real world" considerations beyond just money could come into play here such as offering a friend to do their homework in exchange for 1,000 raw bird meat or something similar that doesn't even involve money in a direct sense. All of this is real-world trading.... and violating Jagex's terms of service. In my honest opinion, this would also be one of the hardest kinds of Real-World-Trading for Jagex to detect other than perhaps the Real-World-Traders doing other illegal kinds of activities.

I'd also like to point out that this whole new situation also opens up all of the older Real-World-Trading practices that we all thought were long ago behind us. This includes bots (or underpaid gold farmers working in third world countries.... also a form of botting from the perspective of most players), stolen credit cards to pay for Jagex memberships to obtain some of these items, and general money laundering and other forms of real-world illegal activity that is involved with Real-World-Trading.

I sincerely think that all of this is due to the upper hard price caps found on the Grand Exchange, and if these sort of websites don't exist yet, it is merely a matter of time. I want to point out that I love the limited stock shop update as a general principle. It allows ordinary players to do mundane things like make pots of flour and be able to sell them for a profit on the Grand Exchange, and to make other things like ordinary pizzas for a profit as well. This seems like it could be an awesome thing for a whole bunch of people.... yet there is this very dark and ugly underside to this update. Jagex promised that they would release the price caps when they limited stock, yet they have been astonishingly slow to react to very real problems within the market as a result of this update. In my honest opinion, this was a premature update, and several other changes to the game should have happened first, including checking out what items would have been most impacted with this update.

Now that weeks have passed by since this update, I am disappointed by Jagex's response to legitimate and well formed complaints about this matter. As a player, it is important for you to see the reality of the current economic situation within this game and to find out for yourself if what I have said is true or if it is utter B.S., and then to respond in the proper forums about what you, too, think should be done here. This has a huge impact on everybody, even if ultimately you are self-sustaining and never use the Grand Exchange for any of your activities at all.

--Robert Horning