This article (pointed to me via zerohedge) describes the current bitcoin market exactly.
A Game of Sentimenthttp://www.salientpartners.com/epsilontheory/post/2013/11/03/A-Game-of-Sentiment"who will get the most votes when all the voters are basing their votes on who they think will get the most votes? This is the Sentiment game!"
and
"We have reached the third degree where we devote our intelligences to anticipating what average opinion expects the average opinion to be. And there are some, I believe, who practice the fourth, fifth and higher degrees." (originally Keynes).
That's every market, all the time.
I would guess markets on goods with less exchange value and more direct use value, where storage and transaction costs relative to goods value is higher, with a high degree of production and consumption compared to storage, are different.
That was a great read. The USD, which is probably the biggest traded and used "item" worldwide, is manipulated as hell and anything that is traded in USD - which is just about everything - has no real chance of price discovery. I have seen 10+ valid explanations for the drop in the price of oil, but because the world of finance is so fucked up, not a single economist/analyst has suggested it may be simply supply and demand, which could also be a valid reason. I wonder if bitcoins became as ubiquitous as the USD whether things would change.
The article reminded of a something a lecturer said from when I was learning Pascal, many eons ago: "In order to fully understand recursion, first you must fully understand recursion."
The sentiment game is played within usd markets but there is no real alternative to where sound money should be placed based on real demand metrics. That is, the next alternative is just as bad as the "everyones" favourite. Bitcoin is simply clawing its way into the sentiment battle by being an alternative to usd and the rigged game by the phonies on wallstreet. As more and more people realize its strengths and Id argue smart money already knows about usd weaknesses then it slowly shifts trend over to bitcoin and the likes.. its all about governments giving green light for bitcoin to do business in their jurisdiction. Once that is in place watch out.. but by then someone with alot of money will be already well positioned and prices will reflect that news already.
That is also the time that bitcoin becomes the obvious chioce as the "everyone knows" and wins the sentiment game.
Gold is manilulated because of phony supply and no trail or visibility of who owns what.