Gold Standard (trade)
The gold standard explains a method for pricing raw materials in a game world based upon their raw material production and their comparative availability, determined by a single location's geographical relationship to those places where goods are produced. Before the system below can be employed, "references" must be placed in the game world, either arbitrarily or randomly. Additionally, details for the transport of goods must also be calculated. These details are necessary for the work that is explained and shown below.
In determining a price for raw resources — agricultural produce before coming to market, mineral ores, harvested oils, quarried stone and more — gold is a convenient standard because, first, it occurs naturally as nuggets or flakes, and is therefore tradeable without alteration. The first tokens of currency were fashioned of gold, with minimal hammering. As a material, it's rare, measurable and consistent — unlike, say, a system based on labour or grain production — especially since European-consistent cereals aren't produced at all in many parts of the game world. Gold is therefore practical where pricing is concerned.
With gold as the standard measure, we ensure that the value of gold itself differs only slightly from place to place. Otherwise, the effect on the price of gold wuold cause all other prices in the system to fluctuate wildly (and make the availability of gold the only meaningful factor in determining those prices). The method employed here, therefore, is to make gold 100 times less flexible than the price of any other material. "Flexibility" itself is a system-defined metric with its own logic, which we shall explain going forward.
Let's begin with the value of gold in the fictional market we've introduced elsewhere: that of Marzabol. On that linked page, we defined the number of gold references in Marzabol as 1.2 — after transport distribution. The total references in our localised "world" is 2.0, that Marzarbol has access to most of it. The total production of physical gold within this narrowed system is 2,640, or 1,320 oz. per reference. To handle this, we build the following table:
| local references | total references | production | unit |
|---|---|---|---|
| 1.2 | 2.0 | 2,640.00 | oz. |
This shows the initial structure of the table we want, giving us only those things we know as raw data. We can see this as a foundational table intended to be built out step by step, to explain the structure of the system. This gives space for each concept to be introduced and defined before moving on, promoting understanding without overwhelming.
Our next step will be to determine how much physical gold is flowing in and around Marzabol. To do this, we divide the production by the total number of references, then multiplying that by the local references. It can be seen below that the columns are identified left to right by letter, and top to bottom by number. The heading "local references" is "A1", so that the local references for Marzabol is "A2". The differently coloured line at the bottom is not part of the table, but rather seeks to translate the table into an excel spreadsheet.
| A | B | C | D | E | |
|---|---|---|---|---|---|
| 1 | local references | total references | production | unit | local availability |
| 2 | 1.2 | 2.0 | 2,640.00 | oz. | 1,584.00 |
| A2 | B2 | C2 | D2 | C2/B2*A2 |
Columns F and G seem to be a repeat of columns to the right, but for other goods that are not gold, these numbers given the world value of that commodity in gold, as well as the local value in gold. It's interesting to note that 2 references of wheat are considered by this system to have the same value as 2 references of gold. This leap means that the whole value of wealth in the world is not equal to the value of gold alone — but is, rather, a completely separate total. Prices are not measured by comparing the total weight of a given commodity — say wheat — against the total value of all gold. Rather, the total value of all wheat depends on how many "wheat references" there are... with each reference being equal to the value of the weight of gold in the world divided by "gold references."
Likewise, the number for "oz. per local availability" seems deceptively simple, because the value of an ounce of gold is correctly 1:1 with the price of gold. Wheat, in comparison, is produced in a vastly larger volume than gold; 2 references for wheat in Marzabol would weigh an approximate 89.7 tons, using medieval Earth as a comparison. The two piles would be the same value, but each ounce of wheat would be price correspondingly less.
| A | B | C | D | E | F | G | H | |
|---|---|---|---|---|---|---|---|---|
| 1 | local references | total references | production | unit | local availability | world value (oz. gold) | local value (oz. gold) | oz. per local availability |
| 2 | 1.2 | 2.0 | 2,640.00 | oz. | 1,584.00 | 2,640.00 | 1,584.00 | 1.0 |
| A2 | B2 | C2 | D2 | C2/B2*A2 | =C2 | =E2 | =G2/E1 |
