The physical gold market is splitting into a Western pool (LBMA London, COMEX) and a Chinese pool (Shanghai Gold Exchange, its Hong Kong and planned offshore vaults — The central-bank gold bid), and sanctions are doing the cutting. KingKong9888’s account (08/2026, unverified here): on 31 July 2026 DHS added 43 Chinese entities to the UFLPA forced-labor entity list, including Shandong Gold Mining and Shandong Gold Smelting; their goods are barred from the US under a rebuttable presumption, and the LBMA suspended Shandong Gold Smelting’s Good Delivery status on 5 August pending review. His inference: even HKEX physical and Hong Kong OTC gold of mainland origin may become off-limits to US buyers.
His conclusion is the interesting one: China “no longer needs to apply a premium over the Western price to pull global prices higher.” Read that as: the Shanghai premium (the Shuibei retail print 5% over futures, see the same note) used to be an arbitrage that Western metal flowed east to close; once mainland-origin bars can’t enter Western Good Delivery, the pools stop equalizing and the two prices can diverge for real. Two prices for one metal is what a fragmented settlement system looks like from the inside — the The stablecoin T-bill bid note’s “two strategies” in physical form. Watch the SGE–LBMA spread as the gauge; a persistent premium is the bifurcation, a closing one means the arbitrage still works.