Today's article subject spawned from a discussion that began in the QS Discord chat. One of our members was contemplating stepping away from the game for a while and wanted to know the best place to park his money and/or what to trade into. As expected, a lot of people immediately jumped to Power.
The general consensus among most people in the Magic community is that Power is the safest investment you can make. As more players get older and have more expendable income, it makes sense that they would be willing to purchase the most iconic cards from the game's history, and thus the prices continue to rise. All pieces are on the Reserved List, so we don't have to be concerned about Wizards of the Coast reprinting them.
They are banned in all sanctioned formats except Vintage, though they are played in the Old School/93-94 format, and Timetwister is legal in Commander. However, that should immediately throw up a bit of a red flag. The most expensive non-premium Magic cards in existence are legal in barely any formats.
Now the beauty of Magic: The Gathering is that it is both a card game and collectible, so much of this demand could be attributed to collectors. If that is the case, then we would expect the NM or graded copies to command a huge premium over non-NM/graded copies. This tends to be the case—HP/MP copies go for around 35-50% less than graded or NM versions.
Of course, we also would need to prove that Power is actually selling. Here is where we run into a bit of a problem.
There are some important things to take away from these graphs. The most important is that when it comes to Power, the TCGplayer Market price—which is based off of previous sales—is typically much lower than the current selling prices. This implies that most sellers are asking more than what people are willing to pay.
Also, quite noticeably, the TCGplayer Market price graphs are extremely flat. While I understand that Power isn't likely something that changes hands all the time, many of these graphs show the TCGplayer Market price flatlined for months on end. That means that nobody is buying Power at these new, higher prices.
It is important to note that TCGplayer is just one marketplace. Searches for Power on eBay sold listings do show some pieces are selling sporadically, which is interesting given the fact that TCGplayer has a fee cap of $50 while eBay does not. Though most of the eBay sales are significantly lower than the TCGplayer average price, except for graded Power, which we can safely attribute to the collectors' market.
If Power isn't selling at these new prices, it seems reasonable to assume the prices are overinflated. Thus, buying Power at these prices is a poor investment strategy.
Comparing the TCGplayer Market price and the TCGplayer median price, we see around a 15-percent difference. However, if you remove Mox Jet, which has an extremely high TCGplayer Market price of $3199.95, then the average difference jumps up to around 29%. It's important to point out that the "average" price from the graphs above did not match up with the TCGplayer median price.
Trading for overinflated Power is even worse, since your typical buylist prices on most cards fall to around 60-70% of the retail values. That means that if our fellow QS Insider was looking to trade into Power, they would have to give up a whole lot in order to shift to this "safe" investment.
There are also some individuals and stores that are heavily invested in Power already who likely have a fair amount stocked up. Should any of them need to liquidate, they would have to drop the price considerably to achieve any sort of sales velocity.
On the other hand, those who are heavily invested also have incentive to try to prop up the price in order to cash out when they decide to. Thus, they may create artificial demand by buying up all cheaper copies of Power; however, because the demand is artificial, when they do sell, the prices will drop.
Value Heavily Influenced by Scarcity
Another major concern I have with Power is that its value is so heavily influenced by scarcity. After all, we know the print runs of Alpha, Beta, and Unlimited. There are only 22,800 copies of each piece of Power (1100 Alpha Rares, 3200 Beta Rares, and 18500 Unlimited Rares) and another 15,000 of the Collectors' and International Edition versions.
Let's not kid ourselves that there won't always be people willing to counterfeit valuable goods—and the more valuable a good becomes, the more willing people are to make fakes for a quick buck. These cards were all printed in 1993 and are simply made up of cardboard and ink. While WotC did think ahead and provide some anti-counterfeit measures, these are not impossible to overcome with enough resourcefulness and desire.
WotC has shown that they are smart enough to go after those who make counterfeits. However, when an item's value is so heavily based on rarity, even a relatively small number of counterfeits hitting the market can tank the value.
Given a typical Magic uncut sheet has 121 cards on it, for a counterfeiter to double the number of available pieces of power in the world, it would only require 189 sheets, which frankly isn't that many. We have seen counterfeit problems pop up several times in the past five years, and there is no reason to think these people will stop trying.
The QS Discord discussion regarding this topic was very interesting, and a fair number of members chimed in with their views and perspectives. I found myself very much in the minority.
The purpose of this article isn't to incite fear for those who do own Power. However, I recently finished a book by Peter Thiel, one of the co-founders of PayPal and a billionaire, that mentioned that if you want to be successful, look at the lie everyone else believes.
In this case, that lie would be that Power is the best, safest investment in Magic finance. Obviously, that is my opinion. But even if I failed to sway you, and you still believe Power is the way to go, I hope this article will encourage you to reexamine some of your underlying assumptions.