Insurance firms have started covering charter flights to carry gold, helping to ease logjams in the bullion supply chain that caused prices to diverge sharply in different markets, the London Bullion Market Association (LBMA) said on Thursday.

The moral of that story and the lessons that we can learn are simple – don’t believe the pronouncements of the powers that be in the London and US gold markets, especially during a crisis. In March 1968, during the last days of the London Gold Pool, as the central bank cartel ship began to sink, theystodd steadfast in denials that anything was amiss, brazenly saying that “the London Gold Pool reaffirm their determination to support the pool."

This time around, with their hollow claims about “healthy stocks of gold in London and New York”, and that the “LBMA has offered its support to CME Group”, the names may have changed but the denial strategy remains the same. It therefore seems that while history doesn’t repeat itself, it still often rhymes.

First Day deliveries.

The five banks that clear gold trades in the London market are considering expanding their network of storage locations to other countries if it becomes impossible to fly enough gold in and out of London, said two sources involved in the discussions.

The move would be aimed at reducing the risk of disruption if metal cannot reach London, the world’s most important physical gold trading hub, where trades are underpinned by metal held in high-security vaults.

So what is exactly going on here? Who is bailing out who? The same bullion banks operate in both markets. Is the LBMA bailing out some of its bullion bank members that have blown up while at the same time propping up the COMEX edifice? If so, with the LBMA just being a trade association with the bullion banks at the helm, where are the 400 oz gold bars coming from? The HSBC or JP Morgan vaults in London? Or that famous gold lender of last resort, the Bank of England?

Tuesday evening, the futures exchange announced the launch of a new gold futures contract with expanded delivery options that include 100-troy ounce, 400-troy ounce and 1-kilo gold bars.

The London Bullion Market Association (LBMA) and several major banks that trade gold have asked U.S. exchange operator CME Group Inc CME.O to allow gold bars in London to be used to settle its contracts to ease disruption to trading, sources said.

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