Will the BBs add another layer of paper derivatives or will we see physical demand take over the price setting?

We are living interesting days, because not only are the BBs being harassed (investigation in the gold spot market in the US, GB and Germany), we also see GLD inventories drop in line with the acceleration of gold imports in China.

The site below gives some good insight into what is happening in China. There are 9 commercial banks in China which have a licence to import and export gold and as far I can see, the really big banks are involved (ABoC is huge). At these prices the Chinese import numbers can and will only grow.

http://www.ingoldwetrust.ch/shanghai-gold-exchange-physical-delivery-equals-chinese-demand-part2