Linden L$ Market Moves to L$270/US$1.00

What does it mean? How much lower will it go? What is the virtual economic community feeling on this issue?

It is interesting to note that the price, while it seems to be doing its best to hover at the moment, is moving ever so slightly down even on very high volume. What will happen during the next major dip in this frantic buying activity?

What do those who pay attention to the L$ exchange and in-world fundamentals think we're in for during the comming weeks and months? Boom times, or bust? And more importantly, why?

Not sure how low it will go, and makes no sense... I put my L at 5 above the lowest rate (atleast) and mine sells in days, so I think all the people think that if they don't have the lowest or it will not sell quick, but I have never been lowest (closest ever was +5, but usally +10) and it sells....

The sky is falling, no, wait, it isn't.

I don't think that fluctations on a scale of less than 3 months are meaningful "trends". And I don't think anyone knows why these fluctuations happen. Hell there are a few million people involved with RL market analysis and they have no clue either, and that's real money we're talking about.

I was actually thinking of this the other day, my thoughts and answer isn't quite on topic, but I will post it anyways.

I had been wondering where would I start to get annoyed with the price I can get for selling my L$, and if I were to be a buyer of L$ what would be my “dream” price.

As a seller of L$ I of course want to have the price (and demand) go sky high. But at the bare minimum I want to see prices stay around L$280/US$1.00 or less. I won’t start to worry until it starts breaking that level, which is where I need it to stay to keep my tier paid for based on my personal income in game. Purely a personal price.

But:

If I were paying a yearly membership fee id like to see the price of L$ around (hold on to your hats) L$ 348/ 1US$. This would fairly reflect that I get L$26000 a year and what I would get if I spent my $72US on money from the market not on membership fees.

If I were paying a quarterly membership fee id like to see the price of L$ around L$276/ 1US$. Again, reflecting what I pay to get my $7000 a quarter and what I would need to spend to get that same $7000 and paying the $90US on L$ not membership.

And lastly if I were to pay my membership fees on a monthly basis, I would like to see the price sit around L$210/ 1US$ (sellers wet dream). But in my opinion that is totally out of the question. If the price ever got to that point, I'd be dancing around my living room singing the praises of online commerce.

This of course doesn’t make any prediction of what I think the L$ market will end up doing in the future, but if most members are quarterly members, AND most members actually looked at what they get for their money, the price would seem fair hovering around L$276/ 1US$, which is, coincidentally, about where I would be content.

yeah, this doesn't mean much.

If I had 300,000 L$ and wanted to cash out quickly, I'd have to position myself at a lower price than the current seller in order to make the deal without waiting.

At any rate - if you had L$30,000 and traded at 267, that's $112.35 USD. At 270 that's *gasp* $111.11. Even ten times that number and the difference is minimal.

Two more points:

1) The value of a $L can't drop beyond a specific price point. If it does, it will be cheaper to get a dozen Prem accounts and take cash off of that.

2) With dwell in doubt, and developer bonuses going away, I think the value will actually increase, instead of decrease.

Well, in the days of Gom I'd have said there was a direct corrilation between availability and price.

Now that the lindex is up and running... well for instance what would happen if someone wanted to buy a massive amount of money. More than would be possible if there was a limited amount of L available based on people who wanted to sell?

Would LL sell that much? would they stop selling then until more people selling L had appeared? or would they sell that massive amount of L essentially creating L as needed? Even if they do have an upper limit, is it based on any realistic scarcity?

I've been watching the sell linden page for a couple of days like hourly..there were fluctuations between 273 and 265 the same day - mainly because some people here believe that they are specially clever by offering theirs at 273 when the best price is 269 - and right away the next ones jump on that wagon. On each day i posted my own sales at 268 and they sold too... loss for the smarties I guess.
However with <now> 120 extra sims for which i see no need , i'm sure they will fall down further.

I'm wondering who this most recent land flood is useful to besides LL myself. I guess that's another topic for another thread though.

Maybe there is a direct connection between the two topics.

If you look a little more closely at the trading data, you will see that the first fall from 252 to 265 happened when the telehubs were killed. The first spike with substantial amounts of L$ sold at around 270 happened the day when the bulk sales were announced. The latest volume trades around and above 270 happened, after it became obvious that Anshe had bought the first 70 bulk sales sims.

This might be coincidence. Correlations are always hard to prove. A possible explanation might be that we are seeing disappointed "Little Land Barons" giving up and cashing out.

Interesting theory. It seems silly for little land barons to quit though, unless they just love auctions. Even assuming that the auctions switch exclusively to this format, the in-world mainland liquidations market is AWESOME, and assuming the bulk buyers make good land masses, this should only make that market bigger. Why would they not simply change approaches?

Here's another theory on the timing. Perhaps the bulk sales were announced and the would-be buyer immediately started liquidating L$ to fund a 70 sim purchase.

I can't follow your reasoning completely here.

The old auctions were a way to deal in land with an investment volume of a few thousand US$. There were times when competition at the auctions was irrational and it was hard to make a profit. (I guess some of the bidders just did "love auctions" too much.) Most of the last 6 months or so it was a viable business model. To compete in the new market you will need a few ten thousand US$. Why is it "silly" for them to quit if they don't have that much free cash for investing or are not willing to invest those amounts in a volatile market? Of course they could become resellers for Anshe. But this is a different kind of business and some won't like it.

Or maybe I am having probs getting the exact meaning of your words. Can you elaborate a little?

Yes, that is a perfectly plausible theory, too.

The net effect in both cases seems to be a falling Linden$. This does not matter much to LL because all of their earnings are in US$.

except you can only get 3 accounts on a card, and 5 at an address, which effectively moots the *ENTIRE* farming argument

that depend elite

my adress has 2 address (1 buisness one residentual)
i also have access to 4 other residencies (fathers, mothers and 2 brothers)

as i own 2 cards myself and my father owns 8 cards (saving account - home account - buisness accounts -even 1 account just to keep an eye on my rent the bastard...) i could - theoreticly - get 30 accounts no trouble (i already do own a couple accounts - i bought 2 for family and have 2 for a buisness - even have one just so i could get the name sergeant detritus - gotta love terry pratchetts books - which i hope to use on a themed discworld sim someday as a host)

theres also another factor - each one of these peeps could go premium for a year (72 USD) and get back that via the 500l$ a week plus buy 512 first land and sell it for 6 times the price (i do beleive someone is already doing that)

u could then have 30x512 land tax free - deed it to a group - and have a massive estate to have a buisness on or even just an home

then this group could get extra cash by holding events - getting the vairous accounts to be 'hosts' and holding dances - tringo etc - the usual crap - and gaining via the dwell system

after reading through all this - i may just do that - but have it without the 'usual crap' and terraform a nice forest somewhere on the mainland - with some event spaces for theatre, readings etc

(ill leave the themed discworld to an island sim sometime in the future - more control over the land terraforming etc - if you are intrested in the discworld idea please join the 'Discworld Sim Project' group)

don't forget tho if LL suspects you are abusing their system, they could 'shave' a few of those accounts off ya, same with anyone

the accounts would be for family thou - my younger brother and his girlfreind already come online and my mother and older brother has shown intrest to - my older brother needs a better machine thou n my mother needs broadband - itll be a family plot - thats y i wouldnt use it to create ankh morpork - part of it would be offlimits and just for family only - and the event areas would be for charitable/honarable events

Sure. With in-world liquidations there's no need to put up even the amount of money it took to bid the single sim auctions. Buy some L$, use it to buy some land from people who value time more than L$ in their transaction, and sell the land (ideally) for a profit.

There has been an inflationary trend since almost 3 months. Linden Lab is in charge of money supply and money sinks, but has failed to create a balance. I was very surprised last night when I saw that telehub land on the auction block for US$ instead of L$.

I never understood when Linden Lab is putting a parcel on the block for L$ and when (or why) it is put on the block for US$ anyway.

As Linden Lab is not interested in L$ I am wondering why they bother with L$ auctions at all. They can manufacture L$ in any amount they need. They did that when buying back the telehub land. And know this land is turned into US$.

You could see that as if they are buying US$ by selling L$ (which does not cost them any). The land is just an intermediary step. Pretty deal.

Sweet deal for them. Buy land from people at inflated prices with our money. Then sell it for their profit after telling us proceeds would be used to recover part of our losses. Looks like the average player just got robbed for the profit of hub owners and lindens.

I don't think any hub owner made profit here. This was more like get away with one scar instead of two scars.

To me Robin's post indicate that probably those parcel mistakenly went on auction for US$ instead of the L$. So I hope they are soon going make up for this.

The motivation for LL auctioning big items (like a sim or 10) for Lindens could be to soak up liquidity from the economy. For example, the U.S. Federal Reserve Bank does it frequently, through the "Open Market Operations" function. It is one way of reducing the amount of money in circulation, which many believe contributes to inflation.

Some refer to this as a "money sink," and it is a common tool used by managers of large multi-player games when too much "plat" or game money has flooded the economy.

Just like LL, the U.S. Federal Reserve can inject money into the economy or take it out, simply by buying or selling stuff from its inventory. In the case of the Fed, it is their huge stash of Treasury bills, notes and bonds. In LL's case, it is their stash of sims in inventory or that can be created quickly.

Of course, Linden Lab could work like this. It has been suggested elsewhere.

The problem is: Linden Lab is not a Federal Reserve Bank but a business entity. If it sells servers (land) for L$ (monopoly money) and has to pay a setup fee and monthly maintenance and traffic costs herself for these servers, the company loses money.

You can justify that with: "Oh, but it is good for a healthy economy. People will come to SL and make business here. They will buy additional land/servers and in the end everyone will be happy." That might even be the case. But first an now LL would lose money. And I doubt that the company is in a situation currently where it does not have to watch its cash flow very closely.

The companies behind those other games you are mentioning base their business model on the monthly fees (subscriptions) of users. That is not the case with Linden Lab. The biggest share of its earnings are tier and maintenance payments for mainland and private servers.

They'd hit their daily buy limit long before being able to buy all the L$ listed for sale. Ignoring this gotcha I'll answer more of your questions...



At this time we're not selling L$ on LindeX, so no. LindeX matches buyers and sellers. If the sellers don't have enough L$ listed for sale, then the buyers will just have to wait until more L$ are available for sale.



Yes.

Cheers,
Lawrence

Thanks . Oops I forgot about the buy limit but the issues still could have come up with lots of people placing max buy orders.

I really appreciate the completeness and directness of your answer. It's been known to happen that an answer will completely miss the point, but definately not in this case. The answer is also what I hoped to hear.

One more thing though, you said you're not selling new L at this time. Is it a possibility in the future and if you do, will it be anounced? I know you would be fairly justified in trying to adjust the market, but it would make me a little uncomfortable.