Prospecting Gems in Cata - How to Make the Most Gold

Intro:
This is a long post, but I feel it touches on several key concepts that everyone needs to know in the current economy.  The lessons here apply to any shuffle - not just prospecting ore.  I feel that Alchemists, Leatherworkers, etc. can all get a lot of value from the concepts in this post.  (Apologies for the lack of links, wowhead is down for maintenance as I post this)


Prologue:
I woke up early today and posted all my Winter Veil stockpiled mats before heading to work.  I also picked up the Red Winter Clothes patten on my tailor and spun off 60 of those.  I also did my normal post routine for Cataclysm, which includes checking the prices on my best selling items - Ore, Bars, Gems, & Volatiles.  If there's a huge undercut or any bait, I'll buy it up & then post.  Obsidium Ore was walled up like Fort Knox.  I mean there were probably 400 total stacks posted, with the cheapest 25 going for 135g / stack.

You might remember I got a deal the night before last buying 20 stacks of obsidium for 170g / stack.  Before then, Obsidium was sitting at about 210-250g / stack.  I got lucky there - last night, I prospected, smelted, and reposted the remaining ore at 190g / stack - and it all sold.  Minutes later - a wall was posted at 170g / stack, and the ensuing cascade started.  I got out before the market dropped.  So, when I saw all this Obsidium Ore on the AH this morning, I was gun-shy.  After a bit of mental math, though, I decided to jump on it and bought out 20 stacks, smelted a couple stacks, and prospected the rest.

I figured the shuffle was worth it.  The cheapest uncommon Cata gems are going for 45g /each.  Nightstone commands 150g, Hessonite goes for 70-90g, and the rest fall between 45 and 65g.  These are some of my best sellers in Cata.  With prospecting giving me a bare minimum of 4 gems per stack, this was a good deal.  Not a great deal - I didn't want to get over-invested to where I wouldn't be able to sell all the gems before that market fell.  But, still good.


Concept #1 (Research):
This story sets the stage for the rest of this post, and it highlights a very key concept -

At the Start of an Expansion, Prices for All Mats are High.  After Time Passes, the Prices will Fall until they Settle Down.

What does that mean for you, as a reader?  It means that all investment into these mats should be short-term right now, as they are currently still losing value.  That means you need to sell as much as you can at the best price.  Shuffling is how you maximize your sales.  Say you snag a deal on 50 stacks of Obsidium Ore, but only 10 stacks will sell each day as ore.  You figure you have 3 days to sell that Obsidium before the market prices fall below your purchase price. That leaves you with 20 stacks that you won't be able to sell during that time.  By smelting and prospecting these 20 stacks, you're diversifying your wares, ensuring that you will have sold all your original Ore (or the resulting mats) within those 3 days.  If Obsidium Ore won't sell at all, but gems are going fast - you can just prospect it all (or smelt some) - you get the idea.


Concept #2 (Diversity):
Building on the example above, we arrive at another key concept:

Diversity Increases Sales Volume.

This leads us straight back to the philosophy of PIE.  For those that missed the discussion of PIE, I'll recap.  PIE is defined as the amount of gold that people are willing to be spend on your side of your server today.  PIE is driven entirely by demand, and demand (for end goods) cannot be influenced by you.  Your goal as an auctioneer is to claim as much PIE as you can.  PIE will move between markets (cut gems, cloth, high level gear, enchants, glyphs, etc.), but it will always be there.  Research allows us to know where it goes, and Diversity allows us to follow it there.  Past that, it's all about who has the lowest price when a buyer comes through - Luck.


Concept #3 (Luck & Position):
There's not much to say about this last concept.  Luck is something we've all known since we were kids.  It's important to remember that Luck plays a huge part in auctioneering.  Don't misinterpret this as hand-waving.  There are ways to increase your luck in the AH, and they involve a concept I call Position.  Take the example of a deer hunter.  He sits in a stand from 4am until 9am, in the cold.  Silent, unmoving, looking over a feeder.  After hours, he sees nothing, and goes home.  The next day he does the same thing, and after 2 hours of sitting, shoots a 6-point buck.  We call this being in the right place at the right time.

 Positioning Influences the Amount of Luck you Have.

Positioning is an artform more than a science.  In WoW AH terms, it boils down to posting regularly after your competition (to maximize the time you're not being undercut) or not posting items at insane prices.  It can also be posting flasks early on raid nights and event items a couple hours just before the event starts.


On With the Flipping Point!
Alright - all this I told you so that you'd understand a somewhat counter-intuitive point I'm about to make.  You ready for it?  Here it is:

Sell Your Prospected Rare Cata Gems Now.

Now, I'll admit, I've been doing some of this, but I've been holding back a nice stockpile from my prospecting for when I get cuts from my JC dailies.  Seeing uncut rares going for less than 100g hasn't exactly encouraged me to list them on the AH.  A lot of people will call this bad advice.  It's not, and I'll explain why.

I mentioned a few paragraphs up what happened with the price of Obsidium Ore - the market dropped ~40% in a matter of days.  This will not happen with rare gems.  As more people hit level 85 and start raiding, rare cuts will see an increase in demand, fueling an increase in demand of uncut rares.  Where these prices will settle is server-specific, but I expect uncut rares to go for about what Wrath epics went for.  Reasons are that they're a bit easier to come by than Wrath epics, but are more useful.  Whether that price is higher or lower than what rare uncut Cata gems are going for on your server right now is irrelevant.

Irrelevant - why?  Because there's uncertainty and risk.  What's important is that in the next week or two, Elementium Ore prices will follow the lead of Obsidium and fall drastically.  At that point, shuffling will be a no-brainer, and after 3-8 days, everyone will catch on and you'll have to share the market. 

The result is that you can move more of these right now, at perhaps somewhat lower prices than you might get later - but later you'll have to share your market, and your sales.  Also, the cost to replace your stockpile of rare Cata gems will fall with the cost of Elementium Ore (prospecting) later, which lowers the opportunity cost of jumping in the market right now.

Now that you've read this Research on where Demand will be taking PIE, I hope you can take advantage of this and Diversify your sales into uncut rare Cata gems by Positioning yourself in this market early when there are fewer players in an effort to maximize your Luck & sales.  Your stockpile may be worth more later, but it will be less costly to replace, as well.

Good Luck!