Bill,
Yesterday the Open Interest in the April COMEX gold contract was 362, it is now 2245 contracts. The addition of 1883 contracts so late in the current contract month can only mean the buyer intends to stand for delivery. There are already 11,208 cumulative delivery notices issued this month but almost no deliveries have been made…I know that from observing that there has been almost no physical metal leaving the COMEX warehouse on the gold side. If these new contracts stand for delivery the total to be delivered will be 1.3 Mozs; the dealer inventory stands at 2.68 Mozs. In other words deliveries could reduce available dealer inventory by 50% in a single month. There is always a possibility that these delivery notices get re-tendered (settled in cash) but so far that hasn’t happened. There is certainly the potential for a short squeeze brewing in gold which coupled with the continuing drawdown in physical silver inventories I have been reporting looks like things will get exciting very soon.

The contango in gold has almost disappeared between the cash market and the AUG contract being only $3 as I write this. Silver is actually trading in backwardation between the cash market out to the SEP contract as I write. These are signs of a growing physical shortage.
Cheers
Adrian