Markets were mixed this week, with currencies and bonds mostly higher while stocks and commodities were mostly lower. Bitcoin gained more than any other asset class, while silver lost the most ground.
The Canadian Dollar was the only declining currency, down 0.3% to 22.5 mg. The JPY and USD each rose 0.6%, with the dollar closing at 23.2 mg, now 52.7% above its half-life curve. Bitcoin, the free market internet currency, rose 3.8% to close at 3.2 g. Volume was just 28 kg, the lightest in over a year. See below for more comments on Bitcoin pricing.
Bonds moved higher, with the short term SHY rising 0.7%, slightly better than the underlying USD, while the long term TLT added 2.2%. During the week, TLT pushed right up to, but failed to overcome resistance at 2.52g, falling back to close at 2.47 g.
Stocks were mostly lower, with the Nikkei, up 0.7%, the only gainer. The S&P 500 was down 0.5%, while the Dow Jones Industrials and the HUI Gold Bugs Index each fell 0.6%. The Dow settled just below its 355 g support level, but the HUI ended at the lowest level since August 8th, and only 2.6% above it's 22 year low of 5.205 g set three months ago.
Commodities were mixed, with Cotton gaining 3.4% and Copper rising 1.1% while the rest of the complex fell. Silver led the losers, falling 4.4%, while Crude oil was 1.1% lower. Platinum was down 1.5% to 32.8 g, now 5.6% above gold parity.
Silver gave up all of the prior week's gains and then some, ending at a new low for the month of 0.501 g/oz.
I have received many questions about the my use of Mt. Gox USD prices as the basis of my BTC chart. Because the USD represents about 72% of all BTC trading (with the EUR next at 9% and CNY third at 7%) and because gold is usually quoted in USD, using a USD price for bitcoins makes sense.
Of the exchanges reporting to bitcoincharts.com, 64% of the USD volume goes through Mt Gox, with bitstamp making up 30%, and btc-e handling 6%. So at this point, Mt Gox is still by far the largest single exchange.
Prices on Mt Gox are a bit higher than on the other USD exchanges. This may be due to greater difficulty in getting USD funds out of the Mt Gox system; if moving funds out was fast and easy, a large profit could be had buying BTC on bitstamp and selling them on Mt Gox, which would rapidly push the prices back into line. But speculators using FX trading to increase their BTC holdings, rather than seeking a profit in USD, probably find the tight spreads and higher volumes on Mt Gox make it the best platform for their needs.
Bitcoincharts has no way to track offline person to person transactions, and as these offer a great deal more privacy than the large online exchanges, they may be getting a significant amount of volume that goes unreported.
Even though Mt Gox prices are a bit higher than bitstamp and btc-e, I think that the overall shape of the chart would be little different if I used their prices instead. I will continue to monitor this situation and if Mt Gox marketshare shrinks, or the price gap widens, I may look at rebuilding the chart based on a volume weighted average of all the active exchanges. (If I took that approach today, the closing BTC price would be shown as 3.11 g rather than 3.22 g.)