Back to 296/1

Looks like profit taking is nearly over?

I hope that this rapid appreciation in L$ value will not have any negative impacts on the economy.

I hope this negative slide of the linden value won't hurt buyers too much.

I'm loading up on popcorn, because the fireworks are about to begin...

Those hypsters who proclaim the Linden has returned and point to the recent run up in its valuation fail to grasp one simple fact about markets. When "anything" has a quick increase in valuation, it is usually feed by speculation than broad base support. Which means when the tap of speculators dries up, the value will come crashing down.

Now if the Linden gained value of a few L$ day after day over several months, the anybody could claim this a supported rally and its valuation increase is justified. But if anybody goes back an looks at the charts, the L$ was @ L$330 until June 28th-29th. Then it began its rapid increase in valuation of 30/basis points in about 1/week. I don't think that a 1/week rally has broad support through out the economy. So just as fast as the L$ has run up, it will come crashing down. Sell into rallys and buy into crashes.

1 it's not a negative slide in value

The Linden is gaining value regardless of whether you buy sell or don't touch lindex. What you are calling a loss of value is the USD is able to buy less Lindens because they are more valuable this has an impact on tourists increasing their vacation costs.

2. Buyers got buy fine at 260 last fall I don't think 290 is gonna pain them lol

I'd call it a record but it's NOT the first time you've been wrong after the fact. lol It ran up in 3 days and it hasn't come crashing down yet and it's been a wk.

Umm dunno what you're all plotting down here in the Economics forum but sales are at an all time low for furniture, home and garden stuff --despite twice repricing this week.

Well you all got your wish, now when my business goes bankrupt along with others because of all this speculation, you all can have hundreds of sims to yourselves and no one to play on them except well you all to speculate the value of Linden up and down based on the consistency of your stool...

honestly.... just stop posting....

lol

Troy

+

If I recall it went from 300 to 330 just as fast. I could say the same thing the other way around that when it went to 330, there was not enough selling support to keep it there. Also the fact that once it reached that point, it didn't keep losing 2 to 3 points consistently. If we sit at 295 to 300, I'm find with it. Leave it alone already. Are we going to keep seeing these posts every day even if the value would strengthen even more? What if the value went to 280?

You have to remember that this is typical of RBD... Come to a conclusion, use some of the facts to support it, ignore any facts that happen to prove him well and truely wrong.

For instance, RBD is ignoring how the value was stable at 290-300 for months before the sudden slide... and that the sudden slide was due to 2 events... the announcement that LL was making a change to allow them to sell L$ directly at some point in the future, and the introduction of limit buys.

*cue the "but it slid from 170 down to 300..." whine*

RBD also likes to bring up the slow slide from the past... ignoring that things have changed and the current market conditions are now so different that using the past to predict the future is going to lead to flawed conclusions.


No... RBD has decided it WILL crash, and is posting selective facts in the hope that people will believe him and panic the market... leading to a crash. It's scaremongering, pure and simple...

Yup, we'll see him in here the next few days when the $L is usually loses strength this time of the week.

Give it time. I obvious the end is near. There is a bigger and bigger wall of L$ building up around L$300.. Its just a matter of time before new money and new L$ sales begin to seek a lower price to execute their transaction instead of waiting for the wall of money to be chewed through. Greed, Fear, and people who want their money now will cure this speculation bubble.

Its a negative slide in value from where it was at. What you are calling a 'raise' in value is being able to 'buy' USD for less lindens.

Its a negative slide in value from my point of view, a positive one form you. But them I'm sure 'selling' lindens at a rate of 330/1 USD didn't hurt anymore than 300/1 USD.

I'm watching this trend and at this rate, 1 USD is not 'valuable' enough for me to put money into the system for lindens. One more buyer put off by the depreciation of value, one less rampant shopper. If things keep going this way, expect shop profits to shrink.

When I was a kid the flying monkeys in the Wizard of Oz used to scare the crap out of me.

I liked those monkeys.

They actually remind me of the rampant anti-security orb crowd.

The L$ value is so often taken in isolation of what is happening in game, that it is almost as though some of the posters have forgotten about it.

Let me provide a simple example.

Avatar a is planning on developing something on LL which requires a large block of land.

Avatar b. picks up a large tract of land for a low price and puts it to sell.

Avatar a. sees this opportunity and buys the land quickly. Doesn't have sufficient Lindens so takes what ever price is available.

Having bought thsi plot avatar a now needs to build and buy so needs to purchase more lindens. A part of the project can start quickly, so buys more lindens at any price.

In the mean time. avatar b who has made a fast sale repurchases land and resells. Avatar c comes along to buy land... etc...

Avatar b now decides to cash out some of the profit and sells at limit. This sits on the lindex until such time as traded.

The amount of money coming into the economy is probably marginally greater than the sell side. But more importantly the 'demand' for the Linden is higher. This is because the 'need' for Lindens (to make a purchase 'now' is higher than the need for US$ now.

There are plenty of transactions going the other way where the need for US$ is greater than the need for L$.

But both of these scenarios are completely ignored by far too many threads.

There is a much broader economy than the stipends, limit buy, limit sell orders and tier, all of which are important I agree, but not exhaustive in any way.

Trying to bring land prices into the discussion would be more helpful, as this fluctuation has a dramatic effect on the L$ supply demand.

I have seen land prices over the past few days have dropped significantly in some sims. This indicates to me that there are people needing L$ to cash out to pay tier. The overall land sale averages may show a different story. But this is massively skewed by large plots of land selling prices.

This possible need for Lindens, could be argued to pointing to a 'sell of lindens'. However, these plots of land are being bought quickly and land is beginning to rise slowly again. Much of this purchasing is likely to have been done by people who need to purchase Lindesn quickly 'at any price' to fund the purchase. So the net effect on the Linden is likely to be minimal this period. Longer term property trends may dictate something different. To ignore completely Land trasnactions in discussion is to miss a major impactor on the L$ value.

What about 'retailers' 'builders' and 'designers' in SL. Many are saying work and business is slow. That again has an effect on the L$ value. If they pay tier, it matters, if they pay rent it matters. If they pay tier, they may need to cash out their land. If however they are renters, they may well need to purchase more Lindens to cover rent in SL.

Many retailers rent space and strangely a slowing of the economy may, I use that cautiously, may lead to a short term demand for Lindens at any price. Long term this would likely to not be the case. Again ignoring the situation for retailers is to miss a massive part of the economy.

The builders and designers are possibly being hit by a fall in demand. I don't know if they own or rent land, but their experience is being completely ignored.

The vast majority of these posts, are, as I have already said 'ignorant of fact' and high is selected information.

Is the idea to destabilise the L$, as a day trader teh answer has to be yes, as the only margin made in day trading is a volatile L$. Whether the volatility is up or down, makes no odds, (assuming the trder makes the right call) but volatility is essential.

What about stability?

I don't believe LL particularly want a strong or stable L$, despite the pronouncements to the contrary.

If they wished to, they could very easily create strength by permitting or even demanding mainland tier payments to be made in L$.

Sure they need to cash out to pay RL bills, but they wouldn't have to create L$ to pay for the remaining stipends and other SL payments made. They would also not need to keep making so much first land available to create these lindens. They could auction property in L$ not US$.

A combination of private sims being paid in US$ and mainland transactions paid in L$ should see some kind of an equilibrium being created, as the private sims finance the RL bills and the mainland L$ payments fund inworld payments.

The precise figures I am nort privy to, but I believe this would stop much of the rush for US$ tier. The major private Sim owners, sure, will continue to trade to make tier, but more players would be either given the option or forced to pay tier inworld, they may well even need to buy lindens to finance it.

As I have posted previously, exchange rate fluctuation can be managed far more easliy when not day trading.

The long term prediction of the L$ is affectd by not just these issues, which are apparently ignored, but as (if not more) importantly by the plans LL have for the game, which are not disclosed. This is a list of potential which includes massive cash injection, to closure and every variable in between.

I think there should be a new forum for Day traders to make their predictions, which are of interest normally as a joke thread, but some posters do have cogent and very interesting views, but have little to do with the economy and more to do with their small part of the game. So have, in my opinion hijacked what would have been a useful forum area.

The remainder of the economy forum should be open to those who are funded/funding ingame where the areas I raised earlier are of interest.

Oh and just to clarify. I have made a 'need it now' L$ purchase recently and will be buying again very soon. I wont be cashing out to pay tier either this month. I only cash less than I have put into the game, if at all. So from a personal perspective I woud like to see the L$ fall, until such time as I woud like to cash out completely, when I would like to see the L$ strong, so in reality I will use limit sell and buy and immediate buy and sell as appropriate, but not to gain on the trade, but to 'manage' the ingame expenditure.

Furniture and home items are mostly bought by new land owners, or people who have just upgraded their land holdings. The flood of new users that has come in because of the elimination of credit card verification isn't going to be buying land, because they have no way to pay for it. The rate of release of new sims and new islands seems to have slowed in the past month or so (and the island growth that IS happening is largely fueled by the ongoing trend of large merchants to move to private island sims), despite the increased rate of population growth, again suggesting that the new users aren't rushing to become part of the landed gentry.

Users without credit cards either won't have any bought Lindens at all, in which case they won't be buying much of anything unless they earn money in-world, or they have Lindens which they got through one-shot purchases through sources other than LindeX, in which case they might be buying clothing and other wearables, but not things like land that require ongoing payments to LL.

In the long run, those of us who sell houses and furnishings have to hope that a reasonable percentage of the new residents get hooked on SL, and decide to buy land. Or they can choose to rent land with money that they earn in-world; that's fine too -- they'll still be buying household goods.

I see you are incapable of either reading or comprehension. I'm well aware that from your point of view the current movement of the linden is bad. What your amazingly ignorant of is point of view is irrelevant to the fact the linden is gaining value. I'm sure you wouldn't argue Apples are losing value if you went to the store and found they cost more, why do it to the Linden?

It was worse last week when there was up to almost 5 million Linden at 297/1. The weekend still cleared that up. I think, to be honest, we'll see what we're seeing the next few weeks, 295 to 300. Probably be nearer to 300 the next two days and the weekend closer to 297 to 295. Should be a repeat of last week unless we see some kind of strange announcement by LL again.

I bring this question up: Who put up nearly 5 million at 297 and then over 3 million at 297 again this week? Thats a lot of dough and I bet its the same person. If that amount was posted several weeks ago, it would've scared the market worse than 340/1.

I don't get it. If the value of Linden goes from 330/1 to 300/1 doesn't that mean it gained strength regardless of who's point of view (seller or buyer) it is? If LL shut down and lindens were worthless I certainly wouldn't call that a raise in value when it's value was equal to 0. Perhaps the only thing that fell would be the purchasing power of the dollar when buying Lindens.

No, it doesn't. Previously buyers could manage to get more lindens for their USD, which increased the shopping strength. The current depreciation of the linden dollar takes the spending power down. Less lindens to the dollar will result in less lindens bought. This leads to less shopping power and merchants suffer.

If the L$ moves from 330 Lindens to the US dollar to 300 Lindens to the US dollar, that is called a strengthening of the Linden Dollar.

The effect of that change in the internal economic conditions of a currency do not change the fact of a strengthening.

More simply.

The £ trades today at 54 pence to the US$. If tomorrow the £ trades at 50 pence to the US$ that is a strenghtening of the pound and a weakening of the dollar.

Put even more simply. I receive more of item a for less of item b, means that the value of item a has increased.

Lets try that in L$/US$ terms.

I have 100 US$ and I get 33000 Lindens for that 100 dollars. If the next time I try the exchange I only receive 30000 Lindens, that means the Linden has got stronger. I receive fewer lindens for my Dollar. Put conversley I originally have to pay 33000 Lindens for 100 dollars, but now I only have to pay 30000 Lindens for 100 dollars, well in any logic that tells me the Linden has got stronger.

Aside from that aspect.

The argument of the spending power of the US$ in SL is potentially right, but that is an economics argument, not a semantics argument.

The argument is however simplistic in that it assumes people have more money invested in Lindens than they do in out of game currencies. (I will ignore tri-party exchange rates to illustrate this point).

Scenario....

I the owner of my avatar actually require out of game currency to pay my bills and feed myself.

My whole RL income is generated from SL revenues and I require 100US$ every week to pay my RL expenses. To reiterate, I do not need L$ to pay my RL bills, I need US$

I am aware that most of my customers use a 'foreign currency' the US$ to fund their purchasing in my SL store.


At the beginning of this month I recognised that I would need to generate a profit of (lets keep it simple and ignore the exchange fee) 33000 L$ a week to cover my RL expenses. So I work out my sales volume needs, do my analysis and set my prices accordingly. Lets say it works out that I need to sell 100 items a week as the average price per item is 330L$.

This week I sit down again (yes I love to micro-manage) and I see the exchange rate is now requiring I only earn L$30000 to make my RL expenditure. I can therefore either drop my prices by 10% (Again keeping it simple) or I can afford to sell 10% fewer items and my RL expenditure will be met.

Anothe avatar owner (the consumer) works the other way round. They have a weekly budget in RL of 100US$ a week to spend in game. Week 1 they get 33000 Lindens week 2 they get 30000 Lindens. The only shop they spend their money at, is mine and they spend all their budget there, My RL budget is the same, my L$ needs have shrunk. I still get 100US$ a week.

The personal circumstances of an individual user will be different, I personally am investing in SL, which means that on the strengthening L$ I am loosing week by week, because I have to pay more US$ for what I am trying to do, but the flow of income in and out of game does not automatically mean that every one in SL is worse off. Infact the avatars in game I am working with are better off, as I have fixed price contracts with them.

The US$ trade value is the indicator of this and ther are no meaningful figures available for US$ transaction values, as has been discussed on other threads.

Its a weakening. If the trend keeps up then there will be fewer linden buyers, and the linden dollar will TRULY strengthen, returning to 330+/1 USD.

Simply put the USD value is dropping compared to the linden, which will put off new players.

Lets break that down....

simply put the USD value is dropping compared to the Linden....

I stop there for a momet. You are quite correct, which conversley means, the Linden is strengthening against the US$.

Now to look at the opening statement.

Its a weakening. If the trend keeps up then there will be fewer linden buyers, and the linden dollar will TRULY strengthen, returning to 330+/1 USD.


As illustrated in my own example, far too simplistic, but aside from that.

You have stated that the L$ is strengthening but appear to be arguing that it is really a weakening because of what you believe will happen in the future. You then re-argue a case you have already conceeded, that a strengthening of the L$ is when you receive more US$ for the L$ not fewer.

There is a tortured logic behind all this.

To ignore your use of terminology of weakening and strengthening. You are appearing to suggest that because the L$ value has gone from 330/1 to 300/1 it is really inact going to 340/1 because of a future prediction.

That is akin to saying there is no fire because the fire brigade will be here soon to put it out. It would be true to say the fire was out if the fire was put out by the fire brigade but somewhat 'head in the sand' to ignore the fire in the first place.

If the L$ changes from 300/1 to 330/1 that is another set of circumstance, but the dialogue is about a changes from 330/1 to 300/1. which you now concur is a strengthening.

Saying it's a weakening is as incomplete and silly as most of what Jamie, RDB etc. say Jonas. If something's weakening against something, the other is strengthening against it, at least in exchange markets.

The US$ is weakening against the L$, sure. But you can't simply say that it's a weakening. From your perspective it's a weakening, or it's a weakening of the US$ against the L$. For those of us that use L$ to pay our tier and/or make a profit it's a strengthening of the L$ against the US$.

New players will buy or not as they choose. They might wish it were back to the days of 330 if they've been here long enough, but I wouldn't put L$0.01 on that - one of the great enigimas to my mind of SL is the lack of history. Take the upgrades from 1.4 to 1.5... some of us remember that and shudder. Some say it was worse for 1.1 to 1.2, but a big chunk of residents don't remember the change from 1.9 to 1.10 and still have their first big upgrade to come... Pulling out data that "Oh it was better a month ago" doesn't matter to most of them, they deal with what's there now and make their choices that way. Just how much do you think it will put them off, they're still getting a pretty good return on their US$10 or whatever they put in after all.

I was going to add some logic to this forum, but when it got close some mysterious force twisted and stretched and tortured it until it was impossible to follow. I'm glad I'm not the only person with this problem; there are a whole bunch of posts here that my feeble brain just can't follow.