this analysis is by reginald howe. he illustrates that gold derivatives declined sharply, according to the new report from the bank for international settlements. this report is issued only twice a year, and the new report may indicate that the shorts are finally running for cover:

On May 19, 2009, the Bank for International Settlements released its regular semi-annual report on the over-the-counter derivatives of major banks and dealers in the G-10 countries and Switzerland for the six months ending December 31, 2008. See A. Moses, Derivatives Market Declines for First Time on Record (Update1), Bloomberg.com (May 19, 2009). The total notional value of all gold derivatives declined from $649 billion at mid-year to $395 billion at year-end, or almost 40%. Although gold prices fell from $930 to $870 (London PM) during the period, gross market values dropped only marginally from $68 to $65 billion, probably reflecting the impact of increased volatility on valuing options.

As detailed in table 22A, forwards and swaps declined from $222 to $152 billion, and options from $428 to $243 billion. Converted to metric tonnes at period-end gold prices, total gold derivatives dropped by almost 7600 tonnes during the last half of 2008, with forwards and swaps falling nearly 2000 tonnes to somewhat over 5400, and options by over 5600 tonnes to almost 8700.

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