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As for every year... there is caroling in the towns or shops...
Caroling Items:
Spirited 2k11 Caroling Cap
Spirited 2k11 Merry Mittens
Spirited 2k11 Puffy Shirt
Spirited 2k11 Puffy Pants
Spirited 2k11 Merry Boots
Spirited 2k11 Candy Cane Capelet
Spirited 2k11 Candy Cane Lantern

The Carol of Old Pete
This year, I'd like you to gather around while I spin a heartwarming story of human kindness: seems like Old Pete, Gaia's most famous hobo, has been overwhelmed with the spirit of giving.
As more Gaians donate items, the bar on the event page will slowly fill up and more lovely gifts will be given out!

Xmas Main Event Items (Donation Meter)

Ian:
Xmas 2k11 Event Ol' Pete's Sweater
Story:
To Old Pete, one man's trash is another man's dinner-- but dumpster diving can be dangerous. Back in March, Pete was chasing a half-eaten cigarette down a trash tunnel when the whole dang thing collapsed on him. Luckily, Ian and Rufus just happened to be walking by, and they lent the buried hobo a hand.

Rina
Cookie Crumbs
Story:
Rina's been high atop Santa's 'Nice' list every year since I can remember. This goodhearted girl is always happy to help the needy-- whenever she's trying out an experimental new recipe, she always lets Old Pete take a crack at it first. Sometimes it's a delicious pie, sometimes it's a chocolate onion quiche-- doesn't matter much to Pete, since he blew out his tastebuds long ago.

Liam
Fresh Nog
Story:
This summer, Liam hit the clubs for a night on the town. Oh, don't you worry, he didn't forget about Sam-- he was just there to have some cocktails and fist-pump a little. Old Pete happened to wander in, and Liam mistook him for some kinda rock and roll hipster. He expertly wingmanned Pete for a whole evening, leading to plenty of free drinks and female attention.

Diedrich
Xmas 2k11 Event Festive Antlers
Story:
Now, ol' Santa can't say much about this one, since the inner life of Diedrich is something very much beyond my grasp. But let me tell you this: a few weeks ago, Diedrich gave Pete some very important philosophical advice about the nature of life. What did he tell him? Well, that's just not for us to know.

Vanessa
Present Bow
Story:
Wherever Pete lays his head, well, that's his home for the night. Or the afternoon, due to his erratic sleep schedule. Recently, Pete laid his head on some wet cement, and the whole dang sidewalk dried into his hair. Luckily, Vanessa was willing to fix it for him, pro-bono.

Old Man Logan Grant
Pine Needles
Story:
Give a man a fish and he'll eat for a day; teach a man to fish, and he'll eat for a lifetime. Well, it didn't quite happen that way for Pete. Old Man Logan gave him a bucket of worms to help him learn to fish, but Pete just went ahead and cut out the middleman.

Nicolae
Xmas 2k11 Event Carl Slippers
Story:
With his bohemian lifestyle, Pete doesn't hold much regard for material things. So when he found an old painting hidden in an abandoned castle, he figured he'd pawn it for something useful. Nicolae was eager to help out-- he gave Pete some useful items in return, including two cans of beans and an old prosthetic hand (Pete named it 'Snuggles').

Sam
Tinsel
Story:
During the winter, it can be a little tough to find a warm place to sleep. Old Pete sometimes crawls under the hoods of recently-driven cars, since the warm engines keep him nice and toasty. Well, Sam discovered him under the hood of one of the junkers in her shop-- she felt for Pete's predicament, so she even built him a special 'sleeping car' so he'd always have a nice spot to crash.

Bludeau
Rudolph's Snot
Story:
Under his cold metal exterior, Bludeau just wants to be loved. And somewhere deep inside Old Pete's clattering skull, there's a burning desire for companionship. Or, heck, maybe there's not. But the point is, Bludeau was the first being to offer Pete the gift of unconditional love.

Dr. Singh
Xmas 2k11 Event Festive Spirit
Story:
Years ago, the Evolving Item Report took a strange turn when young Timmy took the show on the road, letting Old Pete co-host the show as he quested for meaning. Dr. Singh wasn't there for the shows, but she did control the paychecks-- not only did Pete get momentary fame, he's been getting monthly residual checks for 18 Gold!

The pattern of actual equipable item grants in this event are as following:
1 NPC grants an equipable item and the next two grant Alchemy components.
So the only NPCs that will be granting equipable items are:
~ Ian, Diedrich, Nicolae, and Dr. Singh.

Xmas Event (Alchemy)

For all those that haven't realized it,at random times during your donating of gold or items....you might receive an Alchemy component. Now the following Alchemy components can be used to craft the item in the formula beneath.
This item is an Evolving Item and the formula takes 10 of each component below.
The evolution schedule of this item (Gary's Island Adventure) is unknown.
(The formula can be bought in the Wing Shop for 12 wing stickers)
Gary's Island Adventure Formula ~> Item

Components (Alchemy)

Broken Ornament
Candy Cane Powder
Cookie Crumbs
Fresh Nog
Pine Needles
Present Bow
Rudolph's Snot
Tinsel

12 Days of Gaia Items:

Mistletoe Headband ( Day 12 )
Sugarplum Jingle Brooch ( Day 11 )
Gifted Giftwrap Hat ( Day 10 )
Frosted Holiday Cake ( Day 9 )
Steaming Mug of Cocoa ( Day 8 )
Perfect Present ( Day 7 )
Rocky Ranger BB Gun ( Day 6 )
Sugarplum Jingle Hairpin ( Day 5 )
Summon Gingerbread Fluff ( Day 4 )
Gilded Sleigh Skates ( Day 3 )
Tiered Tinsel Dress ( Day 2 )
Kitten Star Tree Topper ( Day 1 )

Once obtained all 12 items (and a few others that will be listed) you can make these through Alchemy:
Silver Sable Coat Formula ~> Item
Peppermint Stripes Apron Formula ~> Item

2k11 Christmas Item List

Special Housing Christmas Ornaments:

Several artists and developers have placed "Easter egg" type grants on their profiles. Each grant contains a unique holiday Ornament that can be placed in each individual's house. There are 32 unique Ornaments in all.

Staff Housing Ornaments list

Reaction: The caroling items look better than last year. I thought they would never top 2k9 spirited items for christmas. the 2k9 are my favorites, but this year's are coming a close second. The side event 12 days of christmas.... Oddly, this reminded me of the Back to School event two years ago. You have to log in every day in a row for a week to get a item everyday. This side event gave out more than just avatar items; housing, zOMG, and alchemy were handed out as well. I'm impressed. Then you can use all the items in Alchemy to make a new item. Awesome. The thing that toke me by surprise was the Staff Ornaments. Someone linked me to it in a thread. I thank them for that! If they hadn't I would never had known about it. The main event reminded me of the summer Pie Hard Summer event. Donation meter to get items.Grrrrreat. Another event that leaves me broke. Most of the items are for Alchemy. What a waste. Well... I helped Ol' Pete out.

My Stats:
Gold donated: 31000
Items donated: 114