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Part 2: Supply

Unlike the real world, where the supply of any item is affected by many forces like availability of raw materials, manufacturing capability, etc., on Gaia there is one and only one determining force for Supply: The Gaian Powers That Be (TGPB).

Why are MCs available for one month and one month only? Because TGPB want it that way. Why are store items always available? Because TGPB want it that way. Why are Evolving Item (EI) First Generations only available until the first evolution? You got it, TGPB want it that way.

There is nothing, absolutely nothing, that stops TGPB from giving every single person on Gaia an Angelic Halo. With a few keystrokes they could make it happen. So why don't they?

Because it would kill their profits. People buy and sell items and give Gaia real world money because they trust in what Gaia has said about the supply of items. If TGPB went back on their word, people would stop buying, at least in such numbers. This would affect Gaia's ability to pay its bills, and not in a good way.

Gaia wants to keep the trust of the players, so they stick to their word about the supply of items. Which means it's important for any investor to pay attention to what TGPB have said about current and future availability for any given item. Or not said. If Gaia has not said that an item will be permanently limited, there is a very real chance it may be available again, and you must keep this in mind when investing. As stated above, increased supply will drive down the price.

Items on Gaia generally fall into several categories of Supply:

- Unlimited, like store items. These are always available and more can be created at any time by giving the store gold.

- Periodically Limited, like RIG items and Cash Shop items. These items are freely available during certain times; unlike store items, they may be removed from the Cash Shop or not be in the current RIG so the supply may be temporarily capped. However, there is a very good chance that these will be available again.

- Limited, like Monthly Collectibles (MCs) and First Generation EIs. There are a set number of these items and there will never be any more.

The supply of limited items actually goes down over time, as players are banned or leave Gaia. The items become trapped in these players' inventories and are no longer available to be sold, so they are essentially removed from the economic system.

There are very nice profits to be made from all three categories of items, but in order to do so, you have to identify which category they fall into and use that to guide your buy and sell strategy. For example, the longer you hold a Periodically Limited item, the more its price may rise, but the risk that it will be rereleased and the price will plummet is also raised.

Part 4: Supply And Demand Working Together – A Hypothetical Case Study

As an example of how these two forces work together on prices, let's look at the release of a hypothetical new Cash Shop item, the Moss-Covered Three-Handled Family Gredunza.

When the Gredunza is first announced, the Supply is very low. The first people who read the announcement, fork over the Gaia Cash, and put the items on the MP do so at a high price, simply because there aren't any others available. They have the only few that exist – which means a very low Supply, which drives prices up.

At the same time, there's at least reasonable amount of Demand. No matter what the Gredunza is, there are people who want it solely to be the first to have it (the desirability I was talking about earlier). If it's a useful or attractive item, it can compound the desirability and raise the Demand, keeping that price high.

So what happens after a few hours? The price falls like a rock because as time has passed, more sellers bought more Gredunzas and put them on the MP. The Supply rises, the price falls.

As people buy Gredunzas from the MP, that satisfies their desires to have one, which lowers Demand. The Demand falls, so does the price.

The Sellers see the price is falling and buy fewer Gredunzas from the Cash Shop because they want to maximize the amount of gold they get for their Gaia Cash. This then restricts the Supply, which keeps the price from falling through the floor.

However, as the price falls, Demand also rises, as more players who weren't interested in the Gredunza at the higher initial price become a lot more interested in it at a lower price...which helps stop the price from falling.

Eventually these two forces reach some kind of equilibrium, which we often call price stabilization.

When Gaia announces that the Gredunza is going to leave the Cash Shop, the price usually takes a sudden jump as buyers who are investors buy them up in anticipation of future Demand – a Demand that the Supply can no longer increase to meet, because the Gredunza is no longer being sold. So we have Increased Demand and Decreased Supply, and prices rise.

While the Gredunza is out of the Cash Shop, assuming that it's still seen as a desirable item, the price will continue to rise – the Supply is not increasing, and in fact is decreasing as people buy them up and take them off the MP.

Several months later, during which Gredunza prices have been rising steadily, Gaia introduces a new RIG, with the usual assortment of New Items and Cash Shop Favorites (that's from their usual spiel when they announce a new RIG). And this time around the Moss-Covered Three-Handled Family Gredunza is one of the Cash Shop Favorites being offered. Supply is increased, so prices fall.

And so on and so on.

As you can see from this hypothetical example, even though this is not a completely limited item, there are plenty of times during its lifespan where there are good opportunities for profit. If you pay attention to Supply and Demand, you can time your buying and selling wisely and do very well. If you don't pay attention, you can lose just as much.