"A dislocation in the gold futures market indicating that demand for physical delivery of the metal is now far outweighing supply has intensified in recent weeks, increasing concern in the market that the change may not be a momentary blip and participants may have become over-leveraged."
GOLD IS IN BACKWARDATION: That's why a fall or rise in gold prices is not so relevant anymore. The monetary 'fire alarm' message, courtesy of the relationship between spot and futures prices, is: run for your gold, there is not enough for all."
"The bullion banks want to get gold back into contango and stop the movement of the remaining inventories by shaking the market lower, using paper leverage to do so," wrote Naylor-Leyland.
"It hasn't worked, indeed more and more investors are now seeking allocation, delivery and physical metal at the expense of synthetic products offered by the banks. The squeeze we have been waiting for is closing in, it is always darkest just before dawn. The inevitable 'run' on the 100:1 leveraged bullion banking system is truly underway."
Separately the FED announced today that it wants commercial banks out of the commodity business, ostensibly because its too risky. I have an alternative explanation - the greedy bankstards screwed the pooch in April; their massive gold short was so transparent it further undermined the credibility of fiat currency and increased investors appetite for physical gold. Get your gold now because I suspect this is a prelude to another FED gold grab. And if you are short and haven't covered, particularly if you are a retail short, you better cover quickly.