Were the coins:
a. Lost. As in "These coins no longer exist." "The private key is unknown/unknowable."
b. Stolen, and therefore still in circulation.
Another more likely (in my opinion) theory is that a large chunk of coins were simply 'lost' in an effort to enrich an insider. Many people think they know who that is, but it really could be a number of people. One clue, part of the initially 'lost' 200K coins were moving while Gox claimed they were lost. It is VERY unlikely that a server was just doing that on its own. Someone in my opinion was trying to take those coins and were caught by astute blockchain watchers.
If he did - he used Bitcoins valued at $10 and less do to that in 2011/2012.
Coinbase got 25m funding for example. If Mtgox needed 10m for the first two years, then this explains why 650k coins are missing. Even 650k coins are only 6.5m at $10 coins.