When the price of Oxygen isotopes suddenly spiked about a week ago, people started asking why it was happening. The first thing that was easy to notice was the volume spikes. Something like 700 million units of "oxytopes" were purchased in Jita ten days ago as I write this, plus smaller amounts in each of the other markets, depending on their relative volumes. When the sales volume of oxytopes stays flat and even for months, it's pretty easy to see spikes.
The rules around being on the CSM forbid you from profiting from knowledge of upcoming changes to game mechanics. CSM members have been kicked off the CSM for breaking this rule on several occasions, most recently Larkonis Trassler. However, the rules don't forbid you from avoiding loss with your knowledge. This is a subtle distinction, but one that you'd appreciate if you worked in the field of -- say -- law. Word came down months ago, for instance, that the Goons had ended their subsidy program to assist their members with the purchase of super carriers. A few weeks later, details about how super carriers are going to be nerfed went public, first as a rumor on EN24, then in public statements made at EVE Vegas.
Then, about six weeks ago, word came down that the Goons were looking for a way to fund their ship replacement program without using moon goo. I asked on this blog if any changes to moon goo mechanics had been made public, and I was pointed toward this video which establishes it as a long-term goal. Several of my Goon friends (yes, I have these) also pinged me to make sure I definitely, definitely understood that upcoming moon goo changes were public knowledge. ;-)
Paying for the GSF reimbursement program without moon goo is a not-inconsiderable problem. I have very good reason to believe that this reimbursement program costs GSF more than 50 billion per month in a month without large doctrine fleet losses. Given the number of tech moons known to be under GSF control, however, this is easy to pay for. If my math is accurate, that tech is worth at least 150 billion per month.
How do you replace 150 billion a month?
That brings us back to oxytopes. There's a very cute early 80s comedy called Trading Places. I am now going to spoil the ending of this movie, but I'd say the statute of limitations has run out. ;-) At the end, two characters played by Dan Ackroyd and Eddie Murphy, previously driven into poverty by their two mentors, devise a scheme to manipulate the market for a commodity (oranges in this case). They begin by buying large quantities of orange crop futures. Then they -- with the unwitting help of their mentors -- produce false data indicating that the orange crop is going to fail. This causes orange futures to greatly increase in value. The price spikes, and the two characters immediately sell their orange futures as it does. When the U.S. Secretary of Agriculture goes on TV and says the orange crop is NOT going to fail, this causes the orange crop futures market to crash. The two characters step in at the end and corner the market, confident that once the unpredictability ends, the price will stabilize at its former level. As a result, they make two large windfalls, one at the top of the spike, and another when the bottomed-out depression stabilizes. This allows them to make back their initial investment several times over.(1)
Which is -- in essence -- what Mittens annouced on October 1st that the Goons are doing. Only, instead of falsifying data that the orange crop is going to fail, the Goons decided to make the crop fail themselves by setting the groves on fire. ;-)
Mittens declared an interdiction on Blue Ice, the source of oxytopes, and declared that the Goons would be destroying any ship attempting to harvest Blue Ice. There were a charming few hours when people stated that no, this was obviously a troll and wasn't something the Goons were going to do seriously. They just wanted to drive the price of oxytopes up for a few days, but they wouldn't actually destroy people trying to mine them, right? This underestimated the value the average Goon places on making other EVE players feel bad. Mackinaws and Hulks started dying in large numbers. 184 yesterday alone, if my count is accurate.
The oxytope market reacted predictably. The price is skyrocketing, though the overall trend doesn't plot well yet. So it's hard to predict where it's going to peak. When other players saw what the Goons were doing, they jumped into the market, buying up what already hadn't been bought out in the smaller regional markets. But of course this just serves the Goons's goal, accelerating and intensifying the trend that they started. Depending on how long the Goons keep destroying ships trying to bring in oxytopes and depending on how slowly they parsel out their initial stockpile, the surge in the oxytope market could last several weeks or months.
So, how much will the Goons make? That 700 million units of oxytopes is probably a somewhat conservative number, but let's stick with it. Conservative estimates work best for this. The average price of oxytopes before this started was about 450 ISK per unit. Let's say -- again, very conservatively -- that the average unit of Goon oxytope will sell for 2.5 times what they bought it for. Keep in mind that the longer the Goons keep this going, the higher that factor is going to go. But let's stick with 2.5 for now. Buying 700 million units of oxytopes would have cost 315 billion ISK, fairly easy to achieve when one is bringing in 150 billion ISK in moon goo every month.
That comes out to a profit of 472 billion ISK, or enough ISK to run the GSF reimbursement program for several months.
And with the 315 billion investment ISK intact afterward, there's nothing whatsoever stopping the Goons from running oxytopes into the ground for a few months, then doing it again with some other isotope early next year.
Second-order speculators are now driving up the Mackinaw market too, by the way.
I immediately started chit-chatting with riverini, the editor of EVE News 24 about this, making it clear what I thought the Goons were doing. He responded:
@RipardTeg Yeah obviously is a market manipulation scheme, we are not taking part on it, that's why we are not covering it, at least not yet"The thing that's really going to bake your noodle later" is wondering how many of those 184 Exhumers would have died yesterday if EN24 had covered the story. ;-)
EDIT (2/Oct/2011): My count for yesterday was one off. It was 185 Exhumers, not 184. How do I know this? Goons are keeping track.
(1) Using this multiplied investment to regain a posh lifestyle isn't directly shown in the flick, but can be assumed from the movie's last scene where the characters are shown enjoying such a lifestyle. Great comedy. Go see it if you haven't. I haven't done a thing to spoil any of its comedy value.