I've been thinking a lot about this apparent disconnect between the physical price of gold, as suggested by the surge in demand and shortages of gold for purchase as coins, bars, etc., and the "paper" price, i.e. futures and spot markets. Sprott also mentions it in his newsletter.

Do the gold ETFs actually hold bullion in vaults, or just futures contracts representing investors' gold claims? When they buy or sell so many "tons of gold," is it actual physical bullion changing hands, or just paper contracts? The reason I ask is that these ETFs are supposedly a popular vehicle for hedge funds, so if a fund like Ospraie got in trouble and had to sell large, it might explain the disconnect if the selling was in paper contracts, not physical bullion landing on the market.

BB