Sorcery! Money is conjured from thin air!

They are generally from regions where it is cheaper. So 9 keys for Stardrive makes no sense for you, but in say, Russia, it might be a pretty big profit since they get most games much cheaper.

If games are not region locked,like Riptide,they can be bought very cheap in Russia. The keys...well...sometimes a bit shady...

Stardrive
RU: 424 pуб (13.44 USD)

Dead Island Riptide
RU: 599 pуб (18.99 USD)

Usually people in steamtrades gets the games for very cheap prices, and also prices when trading for other than games seems a bit disaccording or in other words, when your trade for paypal or tf2 keys no one will actually give you more than half the price of your game so most of times a 10$ worth game is sold for 5$ in paypal or 2 tf2 keys for example, and is not an unfair trade since you can change back those keys or wallet for games at half their price

2.5$ you say ? I trade a lot and if you buy keys from paypal from someone, they sell them at the rate of 1.6$ / key. As to how they make profit, they usually buy games when they are on sale and sell em later on when the price is normal. And about the games that are not on sale and still are sold at low price in keys, you can call those a bad investment because a seller won't decide the price but the entire market does as it is dependent on both sellers and the buyers willingness to buy it.

You can think of keys being the money itself, alternative currency :3 If you want to trade a game but noone offers anything you want, you can try getting keys instead, and then get something you do want for keys at a later date. Or sell the keys to someone for cash. Which still may be easier than selling the original game for actual cash in the first place. And works a bit like currency exchange. But you won't be able to sell they keys at 100% store worth because what would be buyer's incentive for that. That causes the exchange rate of keys on "free market" be actually lower than it is in the valve store but it is certainly fascinating how this all works out.

And yes as far as new non-region locked titles go it's most likely the money is conjured based on pricing difference between regions. Consider this: atm 10 € = 13 USD but many games would cost 10 USD in US store but 10 € in European store.. so even Americans could pull off such trades with Europeans with profit to both sides, but obviously with a lower profit/savings margin than if Russian regional store is involved.

Beside cheap games in Russia, there are signals Steam is used to lauder money and make some stolen-CC deals.

Example: there's a TF2 item called Earbuds, which TF2 community decided was worth around $30. Once upon a time, there was a MASSIVE buyout of those earbuds for $30 from sellers, only to get them back on a market for $10...

You call "selling below market price" sorcery?

Then I'd really like to know what you think about bitcoins :P

Money coming from thin air is nothing new. It's not really real anyway, someone just creates it ;D