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Insider: Some Arbitrage Ideas to Ponder

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I’ve talked about arbitrage in the past. From Wikipedia, arbitrage can be defined as:

“The practice of taking advantage of a price difference between two or more markets: striking a combination of matching deals that capitalize upon the imbalance, the profit being the difference between the market prices.”

These exploitable price differences become more and more scarce as technology evolves. Think about times before the internet–-few people had perfect information, leading to a world of opportunities for arbitrage. In the 21st century, the opportunities are dwindling. Many remaining arbitrage areas are left behind due to their inefficiency, therefore making it difficult to actually make a worthwhile profit.

In Magic: the Gathering, there are a superfluous number of markets. So much so that it’s nearly impossible for every market to align in a state of perfect efficiency. Information still travels through word of mouth, much more slowly than any Wall Street news for example. The result: plenty of arbitrage opportunities.

Where are these opportunities? Some are obvious, but others may not be readily intuitive to the casual player. I’d like to talk about a couple arbitrage transactions I’ve made of late as well as another idea or two worth thinking about.

International Arbitrage

Remember when the Tempest Medallions all suddenly jumped in price on mtgstocks.com?

The card has always been a popular EDH staple, but suddenly someone decided they should no longer be $6 cards. They attempted to buy out the market which triggered a spike to nearly $15. Fortunately, the price settled back down to around $10 average on TCG Player.

In other regions this spike never really existed, or if it did the market recovered much more quickly. Consider Magic Card Market, the European equivalent to TCG Player. On that site, copies can be readily purchased in the 4-5 euro range, which is roughly equivalent to $6. There are dozens of copies on that site that are cheaper than TCG’s. Clearly there is an opportunity to buy copies at a cheaper price in Europe to sell for profit here in the U.S.

The Barrier: Shipping costs. It’s too cost prohibitive nowadays to ship cards internationally when margins are this thin. In order for this to work, a massive purchase would be required. This involves risk with international shipping, customs, and fees. Currency conversion is also an issue.

The best way to overcome these barriers is to make purchases while traveling internationally for some other purpose. Otherwise it’s extremely difficult to make this worthwhile.

But I often wonder if our community could ever get together and break down these barriers? Couldn’t we have a forum where people posted their international travel plans? Perhaps with a sufficiently large purchase, the community could make this arbitrage worthwhile.

Foreign Language Arbitrage

Many people argue that Japanese and Korean foils are the way to go when “pimping” out a deck. But Japanese and Korean foil copies of Eternal playable cards can be very difficult to find and therefore very expensive. There’s a reason why the sweetest Japanese foils I’ve ever found came from Asia… they’re obviously more common there.

In fact, often times I find sellers in Singapore, Japan, and Korea naturally selling Japanese and Korean foils for extreme profits. While these sellers are slowly overcoming the inefficiency that has led to this arbitrage opportunity, the market hasn’t fully equilibrated yet.

Even German copies of older cards carry a premium here. Recently I traveled to Germany for work. While there I acquired two German Lion's Eye Diamonds at no premium to English versions.

Upon returning to the US I managed to trade one and sell the other for roughly 20% premium due to their scarcity in this region of the world.

One interesting idea I have is to exploit these discrepancies somehow with Russian foil cards. These have gotten a lot of attention lately, and I am beginning to wonder if Russian foil cards are even rarer than their Asian counterparts.

Surely someone in Russia could have easier access to Russian foils. With Russian foil premiums being so substantial on some key cards (e.g. Jace, the Mind Sculptor), there must be a chance to conduct arbitrage here. All it takes is an active QS member in Russia, perhaps…

The Barrier: International shipping and currency conversion fees are again the main barriers. Finding selling outlets for obscure foreign cards can also be difficult--it took me weeks to find people interested in my German LED’s. But the opportunities exist and a concerted effort put together by our community could help us overcome barriers.

Intra-country Opportunity: High Buy Lists

Currently I am enrolled in eBay’s “eBay Bucks” program. It’s a nice way eBay encourages buyers on their site. They basically give you 2% cash back on all your purchases, payable as a gift certificate to buy more stuff on eBay. Genius, right? If you’re not enrolled, perhaps you could send eBay a message and ask how you can enroll--I was “selected” to participate by eBay so I don’t know if this program is open to the public yet.

Getting eBay certificates is nice, but getting cash would be sweeter. If only there was a way to convert eBay Bucks into real cash…well, I found one easy way: arbitrage!

I purchased the following with my eBay Bucks:

How did this random assortment of cards help me to convert my eBay Bucks to cash using arbitrage? By selling to ABU Games’ Buy List, that’s how! Here’s my order (ignore the other sales I made):

I spent $61.57 to make my purchase on eBay. Selling these identical cards to ABU games, I received $74.52. Subtract 2.9% and $0.30 for PayPal fees, $1.69 for shipping, and $0.18 for the bubble mailer (I buy in bulk) and I was left with $70.19. This means I used arbitrage not only to convert my eBay Bucks to cash but also gaining over $8 in profit in the process. Plus don’t forget I made another $1.22 in eBay Bucks from spending my eBay Bucks!

The Barrier: It takes time to scan ABU’s Hot List, search for obscure foils on eBay, make purchases, submit a buy list order, and mail the cards. Plus there’s always the risk that ABU acquires the cards they need from someone else while you’re waiting for yours to arrive in the mail.

There are still a handful of foils on eBay under ABU’s buy prices. Check out some eBay listings for Flame Rift:

The opportunity for profit is there. Some vendors like ABU Games have decided they’d rather pay a little more for some cards they desperately need than take the time to surf the web and find cheaper copies themselves. This leads to exploitable arbitrage opportunity.

Profit is Profit, But Remember…

Making profit is always nice, but remember that making profit through arbitrage takes a lot of time and planning. In my examples, I managed to combine my arbitrage with another opportunity so that the time investment was worthwhile.

But I can’t advocate sitting down and sifting through every vendor’s hot list in hopes copies can be found cheaper online. That effort is great and return is marginal.

Perhaps a unified effort from our community could help overcome this somehow. I’m eager to hear if anyone has some examples of how they found a way to exploit arbitrage in an efficient way. I know the opportunities are plentiful, and it’s just a matter of finding the best way to exploit them!

Sigbits – Arbitrage Opportunities

Sometimes a vendor with a high buy price can’t find the cards they need, while a seller doesn’t know about this higher buy price. These are my favorite arbitrage opportunities because they represent easy money. Here are some ideas.

  • Unhinged foils are good for this because of their obscurity. Many don’t realize how valuable these can be, and some vendors have a difficult time maintaining stock. I recently picked up an EX Foil Who // What // When // Where // Why for $25. ABU is paying $36 for NM copies and $29 for EX copies. Since the risk of someone suddenly selling a set of these to ABU is very low, my acquisition provides an easy opportunity for arbitrage profit.
  • Other obscure foils are also solid targets, especially form older sets. These are so rare that dealers have to offer higher buy prices to actually maintain a small stock. This leads to randomly high buy prices like these. Good luck finding a Foil Foil on eBay though. I have no idea how to search for this card exclusively without finding every single Prophecy foil for sale.
  • Older Promo cards are also solid pickups. Got an oversized Baron Sengir? ABU Games will pay you nearly $20 for it. How about a Hobby Japan Krovikan Vampire? That’s an easy $27 if you can find one. Not all obscure cards on vendors’ buy lists will be easy to find, but there are often enough out there that someone somewhere will sell you one for less, simply because they don’t know where to look. This imperfect information leads to market inefficiency and allows you to make risk-free profit.

-Sigmund Ausfresser
@sigfig8

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Sigmund Ausfresser

Sigmund first started playing Magic when Visions was the newest set, back in 1997. Things were simpler back then. After playing casual Magic for about ten years, he tried his hand at competitive play. It took about two years before Sigmund starting taking down drafts. Since then, he moved his focus towards Legacy and MTG finance. Now that he's married and works full-time, Sigmund enjoys the game by reading up on trends and using this knowledge in buying/selling cards.

View More By Sigmund Ausfresser

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10 thoughts on “Insider: Some Arbitrage Ideas to Ponder

  1. So..that first foil Flame Rift you posted…is mine…luckily (for me) it expired. Guess I’ll send it in to ABU. Thanks for the heads up Sigmund.

    1. Lol, what are the chances of that?! Yeah, I’ve learned that ABU has really high buy prices on some pretty random foils. Always good to check their site before listing on eBay I guess. Mtg.gg is your friend.

      I recently pulled my In the Eye of Chaos off of eBay because I noticed ABU was paying $20 and change for them.

  2. Yeah, those foil prices are pretty wild. It\’s definitely spurring me to revisit my pile of semi-playable old foils.

    Sig, these things look mainly like things to do on the side and not full-time Magic bankrolling – which is great, since it looks like easy diversification. I\’d imagine that this does not scale all that well? On the other hand, Saito seems to do really well just acquiring Japanese foil cards and flying them over to here.

    1. Doug, thanks for the comment.

      I agree this is not a full-time way to make money. It’s time consuming and return rates are very low…often below 10%. But during a quiet time of the year it’s one way to explore during downtime.

      I can’t tell if this would scale or not to be honest. On the one hand, ABU’s high foil buy prices are usually offered for only a few copies. Good luck trying to sell them 50 foil Old Fogeys for profit. On the other hand, the foreign language arbitrage may only be practical WITH scaling, as in the Saito example. Could you imagine opening boxes of, say, Innistrad in Russia then coming to the US and selling Russian Liliana’s, Snapcasters, and Geists. Foils of those cards are sure to skyrocket in price as they become older and older. At some point there must be a break-even point. But currency conversion and fees are a pain. That’s why I suggest trying this only when combined with other efforts, such as a business trip.

  3. i think its easier to just scour tcg for cards under buylist, but taking advantage of travel/ currency is a good idea when possible.

    started a tcg seller account. fees close to 10%, that means many sellers asking @ buylist or less than 10% have no idea what they are doing imo. a great place to find deals.

    1. This ignorance really drives opportunity to profit. People sometimes mock the concept of paying for a subscription to this site. But on the other hand there are people who readily sell their cards for below buy list prices not even including the 10% fee. It boggles my mind…but to each their own.

      Hey, wouldn’t it be sweet if there was an application that could scour TCG Player and fine cards below mtg.gg buy price? Perhaps it could even organize lists for you based on retailer so that you can easily submit buy-list orders and instantly take advantage of this arbitrage. Doug and Kelly should work on that :).

      Thanks for commenting!

  4. as for EU/US, i’ve been doing the proxy man for this kind of exchange. Turns out the shipping cost for a whole bunch of orders instead of X times is OKish for the people I deal with.

    What I miss sometimes is a proxy man in the US for all those under EU BL price “US only” auctions or BIN.

    A “meet and match” subforum is maybe an idea to get ?

    1. Joel,

      Hmmmm, that’s an interesting idea. I sense an opportunity brewing. Perhaps volunteers from the community can first be verified (legitimized) and then act as liason for each region. Orders still have to be of significant magnitude, and I sense potential for some logistical headaches. But with increasing shipping prices across borders (at least the US shipping costs went up), there must be some arbitrage opportunity here.

  5. Hi Sigmund, I wanted to know your opinion of Jace the Mind Sculptor being in FTV 20, what effect do you think it has on the worldwake version long term and short term?, What would you do if you had some?

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