The London-based Al-Shark al-Awsat reports Israel does know the location where Gilad Shalit is being held, quoting a senior official in Yerushalayim.
The report continues to explain that while the location is known, and is monitored constantly by Israel, with Hamas awareness, a rescue mission would be too risky since the soldiers location is surrounded by large quantities of explosives placed in a radius of about 400-500 meters in all directions.
(Yechiel Spira YWN Israel)