Conjured Currency Arbitrage

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Recently, I have read several articles by people and their ability to pick up magic cards at steep discount in their travels.  Today my plan is to show you how you can deliver big returns by using the power of the dollar in your favor no matter where you are.  You can even take out the flight cost.

One thing Magic Financiers tend to overlook is how opaque the magic market actually is.  Everything is about information, and when it comes to speculation you sure as hell better be informed.  I think being informed is the easy part,

the difficult part is getting that information immediately when trying to execute a trade or a decision regarding your cards.  There are certain standards everyone tends to use.  I’m pretty sure I’ve only traded with one person at my local game shop (lgs) who did not use tcgplayer mid.  Personally I prefer this because it’s more fun to trade.

When it comes to trading what really matters is economies of scale.  According to Wikipedia: In microeconomics, economies of scale are the cost advantages that enterprises obtain due to size, output, or scale of operation, with cost per unit of output generally decreasing with increasing scale as fixed costs are spread out over more units of output.  As an individual we each have our own markets that we participate in.  Some examples would include your LGS, Ebay, PucaTrade.  How do you move your cards and at what cost?  Different markets have a different cost.

So, how does one take advantage of information?  I’m going to show you how to take full advantage of your hard earned US Dollar.  Just like a magic card your dollar is a commodity, and it holds a relative value.  The differences of these items, and in which market can cause for a large spread in pricing.  Think of a magic card as a derivative, its price is floating due to supply and demand.  The same thing happens with your dollar relative to other currencies like the Yen.  This creates arbitrage opportunities.

At the time of writing your one USD is worth 119.63 Yen. The next step is to find Japanese stores who ship overseas and sell online.  The one I use for this example is Hareruyamtg.  Next, you need to compare apples to apples.  In my calculations I take the relative cost in local yen of the same MTG cards in English.  Yes, we could do this for Japanese cards if we wanted. Knowing each of the legs of the calculation what we will come out with is a USD price on an English card.  In my example I use MTGprice.com as my pricing data (I like an index for pricing).

After all my calculations I was able to identify five out of 12 cards that were great opportunities to build in paper value if purchased today.  If executed correctly a real return with a bang for your buck. Those cards were End Hostilities, Clever Impersonator, Hardened Scales, Sarkhan, the Dragonspeaker, and everyone’s favorite Siege Rhino.  Of the five I would probably purchase Clever Impersonator, Sarkhan, the Dragonspeaker, and Siege Rhino if I was to execute the trade today because they had the best margin.

Card Name MTG Price USD Hareruyamtg (JPY) Hare (USD Conversion) Difference
End Hostilities (Eng) 1.7 200 1.671821449 0.028178551
Ashcloud Phoenix (Eng) 3.93 700 5.851375073 -1.92137507
Clever Impersonator (Eng) 3.27 300 2.507732174 0.762267826
Hardened Scales (Eng) 0.91 60 0.501546435 0.408453565
Sarkhan, the Dragon Speaker (Eng) 11.73 1300 10.86683942 0.863160578
Siege Rhino (Eng) 8.39 800 6.687285798 1.702714202
Sorin, Solemn Visitor (Eng) 13.6 1700 14.21048232 -0.61048232
Bloodstained Mire (Eng) 9.61 1300 10.86683942 -1.25683942
Flooded Strand (Eng) 15.01 1800 15.04639305 -0.03639305
Polluted Delta (Eng) 14.16 1800 15.04639305 -0.88639305
Windswept Heath (Eng) 11.01 1400 11.70275015 -0.69275015
Wooded Foothills (Eng) 10.67 1500 12.53866087 -1.86866087

What about shipping costs you ask?  I even calculated all of those as well.  Surprisingly at a per card basis it’s really not that expensive.  Again doing all the calculations and conversions I came out at an added cost of $.15 USD at the high end and obviously going back to the economy of scale $.05 per card.

There is definitely arbitrage opportunity here for a trader to create a lot of value for themselves.  Yes, arbitrage is a guaranteed return, it would all come down to your execution.  Do you have the economies of scale to do the transaction, and do you have enough outlets to move your product?  Only you can answer that question for yourself.

Hopefully you have enjoyed my article, please feel free to contact me with questions and feel free to provide comments.

4 thoughts on “Conjured Currency Arbitrage

  1. Seems wrong

    So instead of using the website data to get the actual selling price, you use an index which has nothing to do with the selling price. You also left out any fees or shipping costs when you sell the cards, which is entirely HALF of the frictional costs in the deal. You left out import tariffs that would be charged on any sizable number of cards ordered, and you left out the costs of insurance both in buying and selling cards in the quantities you are implying. Not to mention taxes.

    In short, it looks like the entire premise of your article is wrong, and only makes makes sense if you eliminate over half the numbers that have a direct impact on the profitability of trading. Reputation = 0

    Reply
  2. Tyler P Post author

    Thank you for your comment. I will agree I left a lot of other items out, but there are a lot of variables. Why economies of scale is important! Everyone’s margin is different, and an arbitrage won’t necessarily be the same for every person because I don’t think everyone gets the same information at the same time.

    Actually an index is more useful to an aggregate market then a specific selling price for finding relative value. I actually wish I could find a good mtg index for japanese yen on english cards. That would of been more relevant. I did use website data for the Japanese pricing. I could have went to several sites and created my own index…However, its kind of hard to read japanese even with google translate 🙂

    The cards outlined were only an example. You could find cards with a much larger margin, and could wipe out what you would consider half of the frictional costs. Don’t use low margin cards. Again, economies of scale, to make this work efficiently it would be a big investment and a lot of risk. I don’t necessarily advise doing it, but just showing you an alternative in the MTG Finance world. I actually employ a lot of these strategies in my personal trading with indexes and sales prices.

    Reply
  3. entró

    I know this web page provides quality dependent posts and other data,
    is there any other website which presents these things in quality?

    Reply
  4. Tyler P Post author

    Entro, there are a variety of blogs I read. One website I enjoyed using until they changed their content to a tiered paid subscription was mtgprice.com…I also really enjoy reading articles over at MTGgoldfish.com . Hope that helps! We try to offer a different point of view general to the relative realm of MTG if we can.

    Reply

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