Shorting will cost them physical at the margin. I believe that they are now paying off contracts with more physical than they have in the past. More people and institutions now want physical and it is getting harder to come by. The European CBs have drastically cut back their gold sales and the cost of operating mines is going up. Drilling costs and lack of ready cash for exploration is making new discoveries more and more rare.

Until the paper hangers can pay off their crimex shorts in some form of paper, they will have to pick their battles.