I was reading the Pathfinder item creation rules recently and I was struck by one piece of the RAW. Aside from some exceptions, creation of magic items requires “materials” equal to half of the end market value of the item produced. These items are specifically left vague. One presumes this is for several reasons:

• So the rule books don’t have to be a grocery list of items required for magic item creation.
• So that reasonable substitutions can be made. Do you really need Medusae venom for ink for your scroll of flesh to stone? Can you not use distilled Gorgon Breath?
• So that you can flavor items depending on materials. A magic sword created from iron ingots, obsidian chunks, or the trophy teeth of a great beast will all look very different and might lend themselves to different secondary enchants.
• So that I can explain why the RAW explicitly allows for free item creation… Whaaaa? Yeah really. (but seriously, as GM you don’t HAVE to allow this any more than any other rules loophole but I think it’s kind of cool personally and would allow it.)

So according to the magic item creation rules you need half the market value of the item to be created in unspecified “materials”. And creating the item takes time based on item value (and in 3, 3.5 also xp). But since “materials” is left vague, there’s no reason at all that those materials can’t themselves be magic items as long as they are also appropriate materials for crafting the item in question. So magic ingots of metal, magic wood, magic silks, magic crystals, magic nuggets of pure elements – if you can imagine it, you can make magic items out of it. Again, that’s part of the goal of the system. Making a magic greatclub from any of the above makes wildly different items, each of them interesting and cool in their own way.

But here’s the catch: You can make a magic sword worth 16000 gp from 8000 gp worth of magic iron ingots and magic crystals. But how much does it cost to make 8000 gp worth of magic iron ingots and magic crystals? 4000 gp of “materials”. But can those materials be magic? Why the heck not? So you can make 8000 gp worth of magic ingots and crystals from 4000 gp worth of magic ore and uncut gems. But can those be magic? Hell yeah! You see where this is going, right? Start with a nearly worthless commodity and enchanting it into “unspecified magic version of itself” doubles its gp value. Rinse and repeat, doubling each time. And there is even historical precedent in fiction. You are literally spinning straw into gold there, Rumpelstiltskin.

You can just trust me and leave it at that. Kind of hand wavy but it clearly works and is RAW. As a GM you can deny it to your players, that’s up to you but that is the way the rules work. But if you don’t want to leave it there, let’s codify it a bit:

Ingot of Crafting
Price: Varies; Slot: None; CL: 1; Weight: Varies; Aura: Transmutation
Description
These gold ingots come in a variety of sizes and values. Any Crafter can concentrate on any number of them while crafting which causes the ingots to transform into an amount of materials appropriate to the craft the user is creating equal to the value of the ingots used.
Construction Requirements:
Cost: Varies; Feats: Craft Wondrous Item; Special: Caster must have access to the transmutation school of magic

So if you wanted a 500 gp ruby to use in your staff you could gather 500 gp worth of Ingots of Crafting, concentrate on the pile and poof! Ruby!

Clearly the market value of these Ingots of Crafting is equal to the value of materials they produce. First, it says so right in the item description. Second, if the Ingot was worth more, no one would pay for them over just buying the materials themselves. If the Ingot were worth less people would buy up all the ingots selling for LESS than the value of materials they produce (thus driving up the cost of Ingots to material value), turn them into materials and sell those materials. So: obviously market value equal to what they produce.

Note that this seems weird but absolutely works and has been borne out by many discussions about how DnD and Pathfinder magic works off market value in the past. The classic example that you can find discussed ad nauseam online is the 3, 3.5 pearl. If you crash or rig the pearl market, you STILL need a 100gp pearl for identify. It doesn’t matter if that pearl is a seed or a monstrosity. It only matters that it’s market value is 100gp.

Note: In Pathfinder, this may seem to be in opposition to the 3rd party Artificer’s Salvage ability, but it’s really not. The Salvage ability lets you turn a magic item that is not an appropriate material for an item you are crafting into half its value of materials that are appropriate to any crafting attempt. In effect it is making explicit that universal magic materials that are useful in crafting any and all magic items do in fact exist.

So the catch is: if you have an Ingot of Crafting you could use it as materials to make: an Ingot of Crafting worth twice as much (because it has half the market value of what you’re creating) and you could use that one to double again, etc… etc… until you have the value you need to make whatever item you want.

Doesn’t have to be exactly this. You could create enchanted iron ingots or ensorceled silk that give you a bump to your crafting roll when you use them as materials or whatever. The Ingots just are a simple obvious example.

BUT of course it’s not quite that simple. The additional crafting steps still take time, and in 3, 3.5 also xp. In order to make an item of value X, you need 1/2X in value. In order to make the 1/2X of value you need 1/4X etc… etc… and since crafting takes linear time (and xp), making the components for an item worth half it’s value takes half the time (and xp) the item does, and making the components for that item takes half the time (and xp) again, 1/4 the original etc…

This is a classic geometric series 1/2 + 1/4 + 1/8+ 1/16… = 1
So according to RAW you can craft any item you want for essentially free, but the catch is in order to do so you have to spend twice the time (and xp) making it. This means that rushed crafting of items still takes money/materials. It also makes sense that to create magic materials you would need the Craft Wondrous Items feat and perhaps access to certain appropriate spells, meaning that creating free items has additional prerequisites.

QED