The sell off in precious metals over the past several weeks, combined with the recent hacking of an AP reporters twitter account, should lead some to question the concept of true liquidity. There is much made about the need for instant liquidity in capital markets, mostly because investors need the warm fuzzy feeling that goes along with the knowledge that one can liquidate one’s position instantaneously. However, the speed of execution, along with the structure of physically based ETF’s provide a level of instability not inherent in the actual physical markets. This is evidenced by the recent wave of ETF based selling in precious metals, which in turn caused forced selling in the physical markets as ETF managers were forced to sell their captive holdings. What has been interesting about the recent price action, is that this paper driven selling was met with a substantial amount of physical buying, both from the commercial user community as well as those interested in building or adding to their metals position. For example, this buying has pushed physical gold premiums to multi-year highs. What this price action clearly tells us, is that the knee jerk reaction of most commodity markets to what really was no new information unveils the danger in reading too much into these types of moves. Conversely, the willingness on the part of longer term players (commercial users and others) to step up in the face of such moves gives us a sense that the shift towards “stuff” continues.