China Draining Global Gold InventoryWhere is all the gold flowing into China coming from? Bullion vault market analyst and GATA consultant Koos Jansen tries calculating it, starting with the huge amounts flowing from the United Kingdom and Switzerland. His commentary is headlined “China Continues To Drain Global Gold Inventory” and is posted at the BullionStar website.  The World Gold Council, creator of the gold exchange-traded fund GLD, announced an agreement in principle with the Shanghai Gold Exchange to develop the Shanghai Free-Trade Zone as a global gold market. In a press release, World Gold Council CEO Aram Shishmanian said: “The growth of the Shanghai Gold Exchange into the world’s largest physical gold exchange provides compelling evidence that the future of gold is physical. As the market shifts from West to East, the expansion of strong gold-trading hubs in Asia will improve price discovery, liquidity, transparency, and efficiency, all of which will transform the landscape of the global gold market. As a major market, accounting for 30 percent of global capacity, this will enable China to take its rightful place in the world gold market.”  Gold market rigging by central banks and their investment bank agents is the main topic of the year-end investor letter by John Hathaway, portfolio manager for Tocqueville Asset Management. Hathaway writes: “We believe that a breakdown of trust in financial intermediaries – including bullion banks, ‘synthetic’ gold substitutes such as ETFs, and derivatives, as well as the integrity of central-bank custodial relationships – is behind the growing clamor to repatriate physical gold bars owned by sovereign states. … “Loss of trust is the genesis of bank runs. Bullion banking is a fractional-reserve system in which large amounts of credit are extended based on a relatively small quantity of physical metal. Sovereign gold bars are a major component of the credit base. We believe this is a story to watch very closely in the coming year. More