What/who determines what the value is of RS gold?

This question just suddenly popped up in my head, a couple months ago the price was around $0.6 and now it increased with 20 cents. What does actually affect the value of Runescape gold and how does it go up and down?

 

supply and demand

 

it is supply and demand like stated above so if in a moment in time the market gets flooded with a lot of gold, gold will get cheaper

 

Missed when it was like .60 before mobile came out. I should've stocked up ugh

 

To some extent the websites have monopoly price setting power. They all price match in an oligopoly sort of market formation, but if the larger sites colluded, they would all follow imo. Mainly supply and demand though.

 

Pretty helpful thread overall, I definitely learned something here.

 

game updates affect prices too

as mentioned by Sasha, mobile was a good opportunity to make some sweet $$$

 

Think gp will ever hit 1$ again?

 

Supply and demand with focus on oligopolistic behaviour.

 

Gp has hit over $1 multiple times in the last few months? I mean hell, it's literally over $1 per mill right now?!

 

Supply and demand is thrown around, but it's hard to visualize exactly what it means. Let me try to simplify "supply and demand" in the context of RS Gold.

There are basically 3 important types of people in the RS Gold business:

#1 - Suppliers (these are the guys that earn the gold, sell it to websites)
#2 - Gold Sites (People like myself)
#3 - Customers (End user who buys for personal use)

So, look at what happened with Mobile Runescape. Before release, the equilibrium price for suppliers to sell to sites settled around $0.6/M. Since the number of suppliers / customers remained about the same for a few months before that, the price was pretty constant. The number of gold sites is basically irrelevant to gold price.

Now suddenly, Mobile Runescape comes out. The suppliers are earning the exact same amount of gold as before. For them, Mobile Runescape changes nothing. They still win the same amount of stakes, or from their side hustle in-game. But the customers suddenly increase. So supply stays the same, demand goes up.

So what happens on the market? Suddenly the gold sites start competing against each other for the suppliers. They don't have enough gold for the orders they are getting. They are sold out. So what does a gold site do now?

They raise the price on their site, so that they only take higher profit orders. Then, they start offering higher prices from suppliers, because they need gold to fill their orders ASAP, and there isn't enough for everybody's orders. So now, this increase in customers has resulted in the Gold Sites listing GP at a higher price, and the Gold Sites paying higher price to Suppliers. So the market price of GP has gone up.

The same can happen in reverse. Customers can decrease, maybe because a new popular game comes out (Fortnite). Suddenly the Suppliers can't find buyers for their gold, and start competing against each other by selling cheaper to Gold Sites. Supply and Demand sounds like a buzzword but really it's just a very basic concept that always plays out in a market format.

 

Good explanation, it’s easy to understand when it’s just 1 company but when’s multiple shops are selling its hard to visualize

 

The amount of shops simply affect the spread between wholesale price and retail price. At this point there is enough competition that most shops are taking fairly similar profit margins.

As a general rule, the # of shops should only have an impact on the spread between wholesale and retail price. If competition is low, the spread is high. If competition is high, the spread is low. Right now, competition is fairly high, so buyers/sellers enjoy paying only a small markup for the convenience of using a reliable gold site.

In the past, when the market was much less mature (2011), competition was low. Not many people were running a professional gold site. So the ones that were operating were able to sell gold for double their buy price. Even more early after Free Trade launch. Soon a bunch of shops started opening up to cater to the RS Gold Market, and margins started coming down.

 

Supply and demand.
GP coming into the game
GP going out of the game

Jagex introduced the taxes, lits of RWT happens through the duel arena which got updated with a tax on stakes, which causes gold to leave the game. If 100B goes through the arena in 100m plus stakes, 1B gold has now vanished - this causes the price to rise.

Now, take the duel tax and add in the updates lately including mobile, the player base is at a consistent 100,000 +

Over the last 2 years, Jagex has implemented a way for some amounts of gold to leave the game with the rising demand of more players.