I am just thinking loudly, but if this Chinese interbank market sets its price just above the COMEX price, wouldn't that allow this market to gradually buy up all physical gold from the COMEX and LMBA? I have no doubt the demand for physical gold is there and the price of the COMEX is far too low to prohibit a continuous transfer of physical gold towards China. Unless the Chnise set up their own gold derivatives PONZI scheme. That may dampen demand for the physical.

http://business.financialpost.com/2012/11/12/shanghai-plans-etfs-as-china-seeks-to-open-gold-market-further/?__lsa=261d-8de4EX