Art Cashin AP Images No discussion about gold is complete without a good conspiracy theory.

While most theories are easily dismissed, some stay around for a while due to a confluence of circumstantial evidence surrounding them.

Wall Street veteran Art Cashin addresses one such theory in this morning's Cashin's Comments.

He builds off of this weekend's New York Times story about Goldman Sachs' aluminum warehousing operation and Monday's gold spike.

A quick note about jargon: Commodities like gold will have a futures price and a spot price. The futures price is the price you'd see on a contract, which is traded on an exchange like the NYMEX. The spot price is the current price of the commodity. Backwardation occurs when the spot price is above the futures price. Typically, these two prices converge when the futures contract matures.

From Cashin:

All That Glitters Is Not Arbitrage – Monday, spot gold spiked up $45 and the media pundits pointed to things from China to the FOMC. While all the cited may have been factors, veteran traders saw the bulk of the move resting in a conspiracy story.

In my mid-day email to friends I had noted this:

Gold soars as NYT story on metal warehouses fans flames of conspiracy theorists that gold warehouse stores have been "lent" out. That theory also aided by backwardation (spot price far above near future).

If you haven't been following gold closely, let me expand on that a little. For several months "physical gold" (bracelets, coins and small bars) have seen near riotous demand with long lines stretching into the streets. At the same time "paper gold" (ETF's, futures and nominal spot) have seen sharply falling prices. That dichotomy has sparked more than a few conspiracy theories.

The worst (and most strained) claims the world's central banks have put a bear raid on gold. That rumor claims that they are trying to cover the fact that they have sold/lent the gold they were supposedly safeguarding for their citizens. A plunging gold price would reduce the urge to look behind the curtain (or into the vault) and discover this misfeasance. A more pervasive form of the rumor/hypothesis substitutes the global banks for the central banks but with the same, theoretical, abuse of custody.

A key support of these theories is the backwardation in gold – the spot price is higher than the near future contract. That's unusual. It could normally be resolved by selling spot gold and buying the cheaper future one month out. Thus, in a month, you would reap an apparent locked-in, riskless profit. Yet no one seems to be doing it. Is there doubt that there is gold in storage that will be deliverable in a month? So, the theorists assume.

Now add in the front page NYT story, hinting chicanery and manipulation by the big banks of warehoused metals. Was this the smoking gun? Some folks seemed to think so as a short covering stampede exploded the gold price. The next five days will be key.

Arb, or arbitrage, is a fancy word traders use to describe a situation where they can take advantage of market price discrepanicies to book guaranteed profits.

Is there something the traders know that we don't know? Are there other forces preventing the arb opportunity from being arbed away?

Unfortunately, we are not sophisticated enough to answer these questions. But email us at moneygame@businessinsider.com if you can.