The Post Monitoring reports about what's really happening in the physical gold and silver markets:

(emphasis mine)

What’s really happening in the physical gold and silver markets
November 23, 2008

In recent months it's been widely and repeatedly reported that retail demand for physical gold and silver is insatiable. The price may be falling in the futures markets, but retail dealers in North America, Europe, Asia and Africa have all described the situation as 'unprecedented'.

There's a shortage of coins, few people are prepared to sell the coins they have, and manufacturers of coins and bars do not have the fabrication capacity to meet current orders, causing longer and longer waiting times.

This has led to numerous theories about shortages of metal. I wanted to get the 'view from the street', so I spoke to Tony Baird, founder and boss of Baird and Co., the UK's biggest independent coin and bullion dealer

Demand for coins is enormous

The first thing to note is that retail demand really is unprecedented. Baird founded Baird and co in 1967, and so was dealing bullion and coins as gold fever spread in late 1970s. Yet he describes the last four months as the busiest he's ever known.

"It's been building up over the last two years", he says. "Then it sped up with Northern Rock and Bradford & Bingley. But in the last four months or so since Lehman Brothers, there has been a massive movement of money out of banks and into physical bullion, which people are taking home and putting under the bed. This is the busiest I've ever known."

A quick look at coin dealers' websites in the US, in the UK and in mainland Europe shows that many have run out of coin supply altogether and have had to stop dealing. Baird is among them. "We normally carry millions of pounds' worth of coins," he says. "We're big stockists and our stock has been going one way - and that is out of the door. There is huge physical demand. We're experiencing great difficulty buying coins in any volume anywhere in the world.

"Whether it's America, the UK or Europe, there are no sellers. Our stocks are low and we don't know what replacement premiums to charge. The replacement premium isn't apparent because there are no sellers, so we've stopped taking orders until the market settles down."

I notice even on Ebay that coins are trading hands at huge premiums to the spot price. It is not uncommon for American Eagle 1oz silver coins to sell for more than $20, even in the US where they do not have VAT. That's more than a 100% premium to the spot price of around $9.30! Surely this is unsustainable, in the short term at least?

If things get worse, gold banks will empty

My reaction: Demand in the physical gold market is as high as ever, and the outlook for gold prices is very bullish:

1) Hedge fund deleveraging is more than halfway done, which means the artificial dollar rally is losing its fuel.
2) Government bailouts keep growing larger, with Citigroup and the big three automakers being the latest in line for more funds.
3) Consumer spending and the US economy are spiraling down into the void.
4) Despite plunging tax revenue, tax cuts are being planned for next year to "stimulate" the economy.

For the above reasons, a dollar crash is imminent. I expect the dollar to move sharply lower before the end of November (beginning its collapse).