Is The Modern Market Broken?

With several high-profile cards spiking in recent weeks, Chas takes a broader look at the price behaviors we’ve seen recently to determine what they say about our broader market structures as a whole.

Snapcaster Mage. Blood Moon. Cavern of Souls. Goblin Guide. Oblivion Stone. Goryo’s Vengeance. Heritage Druid. Olivia Voldaren. Inquisition of Kozilek. The list goes on.

Four or five Modern staples are doubling in price every week, and players are starting to get upset. People are pointing the finger at dealers, speculators, and even the folks at Wizards of the Coast. It’s nice to see Tarmogoyf under $200 again, but what’s the point of Modern Masters if none of the best decks actually get any cheaper?

The last time Modern had this many price spikes, Scalding Tarn was $100. The time before that, the Ravnica shocklands were selling for $30-$50 apiece. Is this another blip on the radar, or has something actually broken the Modern market? Let’s find out.

Who Started The Fire?

Are speculators at fault for making the Modern market go nuts? Magic finance content has never been more prevalent, after all, and we’ve all seen those photos that crop up on Facebook or Twitter where people lay out thirty or forty copies of Inkmoth Nexus that they managed to buy just before the spike.

As nice as it would be to lay all of the blame at the feet of your local binder grinder, however, the truth isn’t that simple. While speculation is part of the problem, other factors play a much larger role. Consider:

Modern Masters 2015 was just released. While many people drafted MM 2015 a few times and stuck their best pulls in a trade binder, other players opened a chase rare and decided to build a Modern deck around it. Even if MM 2015 only created one new Modern player at each game store, that would still give us several thousand people who didn’t need Snapcaster Mages and Heritage Druids before but do now.

Grand Prix Modern Masters weekend was the biggest Magic tournament weekend in history. Thousands of competitive Magic players opened tens of thousands of Modern Masters packs a few weeks ago. I have no doubt that many people had a great time going to one of those big events and decided to get into constructed Modern play so that they could keep attending GPs.

Want to win a PPTQ this month? Play Modern. From June 6 through August 16, all PPTQs are either Modern or Sealed. While Sealed will likely prove to be the more prevalent format, many of the savvier grinders are focusing on Modern because the amount of variance and number of competitors at a given event are likely to be lower.

Grand Prix Charlotte was Modern. Modern prices always rise in price whenever there’s a high-profile Modern Grand Prix. People are after the last cards they need in the days leading to the event, and whatever decks end up looking the best on camera (especially in the Top Eight) always see their key cards spike at least a little.

There was no spring Modern spike due to reprint fears. Modern has experienced a bullish month like this June every spring since the format was created. It didn’t happen this year because most players were scared of MM 2015 reprints. Once the set was fully spoiled, everyone who had been holding off decided to buy the missing pieces for their Modern collection all at once.

Standard Rotation is coming. Almost every card from Theros and Khans of Tarkir Block is dropping in price as people eagerly await Battle for Zendikar. While some Khans of Tarkir Block cards should start to rise again once Magic Origins spoilers begin in earnest, Standard is likely to remain a bear market all summer. What are most people looking to get in exchange for their Standard cards? Modern staples!

So why are all the prices going crazy? Because more people are playing Modern, and the existing player base knows that buying staples is safer now that the threat of imminent reprints is much lower. Simply put, people are buying Modern staples in order to use them in decks. There isn’t anything nefarious going on here. Regardless of whatever else has been happening in the Magic card market, player demand is what has been driving card prices through the roof.

What About Those Evil Speculators?

I’ve written about speculators before, but it’s worth talking about them again here. First off, no speculator (or even a group of speculators) can cause a sustained price spike by themselves. Why not? Well, here’s an example of how a buyout works:

Imagine a seventy-five cent card called Giant Banana. It’s a couple sets old, and it sees a little bit of play in Commander. An interesting Modern deck 4-0’d a Daily Event yesterday with three copies of Giant Banana in the main, so you decide to buy $200 worth of them and clean out most of the major retailers in the process. You then post about the card all over social media, hoping to get a few other speculators on board with your buyout. A few of them buy $50-$100 worth of Giant Bananas, and many smaller-time speculators and savvy traders grab a playset or two just in case the card is legit. In a single afternoon, all the Giant Bananas on the internet disappear. You then attempt to sell a few of your copies for $10 each, and now it appears as though the price has spiked more than tenfold overnight.

At this point, however, hundreds of copies of Giant Banana come out of the woodwork and are put on sale. If there is no actual demand for the card, we find ourselves with a race to the bottom as players and dealers alike try to undercut each other. If a speculator wanted to complete the buyout at this point, they’d have to buy hundreds more copies of Giant Banana every day at a significantly inflated price. They might have to own a significant share of all the Giant Bananas in the world before actually succeeding in permanently affecting the price of the card. This isn’t tenable for even the biggest Magic retailers.

In a world where hundreds of players are trying to build the Giant Banana deck, however, things unfold differently. As all the extra copies come out of the woodwork, they’re bought three or four at a time by players who want to use them in the exciting new deck. These cards disappear into private collections, and the retail price of the card stays high. The card’s value finds a new price point based on what people are willing to pay. The original speculator makes a lot of money, too.

It’s rare for a card to go from $0.75 to $10 like in the Giant Banana example, though, which is why most of the spikes we’ve seen recently have involved cards going from $5 to $10 or from $10 to $20. This change from my example makes it less likely that any one speculator bought more than a couple playsets of any given card. Not only is the cash outlay much greater once you leave the realm of bulk rares, but most of the cards that have spiked recently simply weren’t available in mass quantities before shooting up in value. All it takes is one person looking for a playset of a card like Raging Ravine, realizing that there are only about twenty copies left anywhere online, and telling a few of his friends about it to cause a ‘buyout.’

Even in the cases where a true buyout does occur, I doubt the long-term price of any cards have been affected. Most speculators flip their purchases as soon as they come in, and it’s the long-term equilibrium between the highest-price buyers and lowest-price sellers that dictates the value of a card. If we assume that all of these cards are going to get to their market-driven prices eventually, than the only thing we can really blame speculators for is accelerating the timetable.

Compare the price chart of Oblivion Stone to that of Liliana of the Veil. Both cards are significantly more expensive now than they were at the start of the year thanks to real-world Modern demand. Liliana is up to $100 from about $70, and Oblivion Stone went from about $15 to $33. Liliana is too expensive to have been bought out by speculators, though, so its price chart shows a sure and steady climb to a plateau around $100. Oblivion Stone shows steady gain, a massive spike to $45, and then a quick drop back to $30. Both cards got to their ‘correct’ values sooner or later — they just took different paths to get there.

This is not to say that speculators are entirely blameless for the Modern spikes. Demand raises prices, and that includes the people who ‘speculate’ on a card by buying a playset in order to build their collection or ensure that they have something good to trade away at the next major tournament. If you buy cards that you aren’t planning to use right away, you’re a speculator, and you’re affecting the market.

One place where speculators have been making more of a real impact lately is with Modern-playable commons and uncommons. Lantern of Insight saw a major buyout last week, as did Terminate. Because these cards start from a lower price point, they’re much easier for speculators to buy out. These uncommon buyouts aren’t an exception to the market forces I described above, but they remove so much existing stock at a time that they can cause some fairly major short-term ripples.

This kind of moral dilemma is where capitalism itself gets kind of problematic. It would be better for everyone if people only bought the cards the needed. As long as people are speculating anyway, though, it makes sense for you to stay on top of the market and try to buy the next hot Modern cards before they spike. That’s the best way for you to personally ensure that you’ll have a top-notch Modern collection going forward, though it may come at the expense of someone else.

Fixing The Modern Market

If you haven’t figured it out by now, I don’t believe that the Modern market is broken. A confluence of events caused player demand to increase all at once, and some speculators are taking full advantage of that by causing prices to spike faster than they otherwise would. The overall cost of building a Modern deck is still pretty close to what it was at this point last year, though, and I expect that prices will even out a bit over the next few months.

A lot of people disagree with me on this point, though. I asked the section of my Twitter followers who believe the market is broken what they’d to do fix it, and most responders said they’d increase the number of reprints by a significant amount. Some went as far as to say that the collectability of the game was broken beyond repair and Wizards of the Coast would have to do something drastic in order to keep Modern alive.

I’d love for Magic to be cheaper, but killing (or drastically curtailing) the secondary market isn’t the way to go. People spend $4 on a pack of Magic cards in part because the cards have value, and maintaining an Eternal format that supports a handful of $50+ cards is a great way of convincing people that their Standard collection (which now rotates faster than ever!) will have value over the long haul.

If Modern Masters sets were printed twice as often and they contained twice as many staples, the secondary market could collapse. People would buy fewer boxes, singles prices across all formats would drop, and the stores that now put on the largest awesome tournament would have less of an incentive to tour the country. Wizards of the Coast knows this, and they aren’t going to saturate the market with Snapcaster Mages and Lilianas anytime soon.

If they put me in charge, the main thing I’d do differently would be to switch all of the FNM promos over to Modern staples. It would encourage more people to attend FNM, keep the prices of cards like Kitchen Finks and Heritage Druid down, and act as a mini-Modern Masters in terms of increasing the Modern player base. Seems like a win all around, right?

I’m not in charge, though, and I doubt WotC is going to change things up anytime soon. Modern staples are already being reprinted at unprecedented levels, and the best thing we can do is take advantage of that and build up our Modern collection for the long haul. Here’s what I’d recommend:

Keep a large collection of essential commons and uncommons. Lantern of Insight suddenly becoming impactful was almost impossible to predict, but cards like Ancient Stirrings, Terminate, Heritage Druid, Inquisition of Kozilek, and Kitchen Finks have been played in tournaments for years. It’s better to get a set when they’re cheap and hold them forever than have to buy in post-spike.

Buy whatever you need from Modern Masters 2015. Modern Masters 2015 staples have hit bottom and a few have begun to rebound. While there are still a number of sealed MM15 boxes available online below retail, I’ve heard from multiple sources that Wizards of the Coast has ceased allowing stores to place re-orders on sealed Modern Masters product. Supply is about to dry up, and prices will slowly begin to rise again.

Sell whatever Modern cards you aren’t using into the current spikes. If, say, Goryo’s Vengeance jumps to $60, sell them immediately. While most of the newly-spiked cards will stay close to their new prices, some people will be able to get out in the day or so after the spike before the cards drop back to their equilibrium point. Don’t sell your Snapcaster Mages no matter what, though. It is going to be the second or third most valuable card in the format for a long time.

Buy whatever you need from Return to Ravnica block ASAP. Very few of these cards have spiked yet, but Abrupt Decay has finally started creeping up. Even at current retail, that card is a steal right now. I’d also like to own a set of Deathrite Shamans (in case of unbanning), Voice of Resurgences, Worldspine Wurms, and a full set of shocklands.

If Modern is going crazy at your store, ignore it and trade into other cards. I’m targeting Revised dual lands, which are falling in price right now. Khans of Tarkir fetchlands aren’t ever going to be cheaper than they are right now either, so I like going after them as well. If you can get cards like this in exchange for the Modern flavor of the month, you’ll be happy over the long term.

Don’t forget — format excitement is cyclical. Today, everyone is playing Modern. Next month, it might be Standard, or Legacy, or something else entirely. As the great Warren Buffet says, be fearful when others are greedy and greedy when others are fearful. Be smart, don’t panic, and take your time. Your Modern collection will thank you later.

This Week’s Trends

  • Elves was the surprise winner at Grand Prix Charlotte last week. As expected, many of the deck’s important cards spiked after the big win. Ezuri, Renegade Leader and Heritage Druid lead the party, and Cavern of Souls keeps getting more expensive. Chord of Calling’s spike has been slower, and you might still be able to find these under $5 each at your local store. It’s worth a look. Nykthos, Shrine to Nyx is another card with a bright future that you should be able to get on the cheap during rotation.
  • Goryo’s Vengeance also made a shocking appearance in the Top Eight. The deck’s namesake card saw a major price bump, Worldspine Wurm doubled in price, and Nourishing Shoal went from $0.50 to $5.50. I’m staying away from these cards until I see the deck put up more consistent results, but I’ve long been a Goryo’s Vengeance proponent. Also worth noting: the deck ran four copies of Temple of Malice. Maybe we all should buy a playset of the Temples after rotation just in case?
  • The last Top Eight surprise: An Ad Nauseam deck running Angel’s Grace, Lightning Storm, Spoils of the Vault, and Phyrexian Unlife. No shock that the Internet promptly sold out of all of those cards while the deck was featured on coverage. Again, I’m either staying away for now or selling into the spike. I want to see the deck perform again before I declare all of these wonky cards to be new format staples.
  • Lantern Control has also seen a popularity surge thanks to some LSV videos and a decent GP finish. Lantern of Insight and Ancient Stirrings have gone from bulk rares to $2-$3 cards over the past few days. Fish them out of your collection if you’ve got ’em.
  • Despite being one of the consensus best decks in the format going into the Grand Prix, there was very little Jund near the top tables. I still think that Jund is good, but nothing has convinced me that U/R Twin isn’t still the format’s top dog. I’m holding Jund staples, but I’m betting Kolaghan’s Command starts to drop a little. It’s a good long-term card, but I’m not convinced that Modern demand alone will continue to prop up the card’s value.
  • Magic Origins spoilers have started to roll in! It’s a little early for a set review, but I’m going to stick to my guns and suggest that you not pre-order any of the planeswalkers. Yes, even that one. I know, I know, they’re super-awesome and I want them too. It has almost never been right to pre-order a planeswalker, though, and even if one of the five ends up being a minor bargain, do you trust yourself to make the right call? Might it not be better to buy another couple of fetchlands instead and trade for the planeswalkers you want in a month or two when the price comes down? That’s what I’m going to be doing.