Ok peeps magic armour is now craftable.  If you going PvM you will want a set of this as there is a damage reduction of a massive 75%  It doent effect PvP at all. Coloured armour and most likley Leather will be the PvP armour.  Magic weapons will most likely just be for both.

To make magic armour you need to make an iron piece - lets say breastplate first.

You then need virtue stones - To get these you need to convert jewels lets say a ruby = 1 virtue stone after you get a few of them you can then convert your iron armour into magical armour by clicking the virtue stone.  There is a catch however you will need bods to raise your blacksmithy above the 100 mark.  These are likely to be a random drop off critters.