as the comex price of gold falls, the (real) price of gold coins continues to rise, with physcial gold coins commanding a 25% premium on ebay.

The gold price - or spot price of gold - is determined by the sale price of so called future contracts at the Commodity Exchange (COMEX) division of the New York Mercantile Exchange (NYMEX) the world’s largest physical commodity futures exchange, located in New York City. Future contracts are a promise to deliver gold at a certain date in the future. And this is were it starts to get interesting: because most investors are content with owning the future contract - so called ‘paper gold’. The reason is convenience: instead of going through the hassle of taking delivery of physical bullion, having to worry about how to safely store the metal, and finally doing the whole process backwards again when wanting to sell, they own the contract. For this reason, the vast majority of these contracts are being perpetually rolled over into the next moth without ever being executed and the COMEX gets away with holding a mere fraction of actual bullion to settle the few contracts that are not being rolled over.

Now that the spot price is significantly below the price of actual bullion, a bunch of investors are bound to demand delivery and pocket the 25% difference minus a (relatively) small production cost of turning the 100 oz COMEX bars into 1 oz coins and this is precisely what is happening right now. No problem, right? All that will happen is that the COMEX will open its vaults and let the market balance this temporary imbalance and all is fine again. Well - not quite. Apparently the huge interest of central banks to make their currencies seem more valuable than they actually are, has led them to manipulating the price of gold downward and there is a growing concern that a lot of the promised paper gold is not backed up by physical bullion. Ouch!

http://blog.cyrrion.com/?p=4