If the Banque de France holds physical in New York and sells it to JPMorgan (nothing moves) and then in Paris buys contract for physical from UBS, there will probably need to be physical gold that moves.

In all likelihood, Swiss gold held by e.g. a Gulf customer might be sold to Paris (nothing moves) and JPMorgan may entice Venezuela to take those contracts on its balance sheet (nothing moves). But if it’s a big trade, the price of delivering physical in Paris (or Genève) will go above spot in New York at which point it’s profitable for JPMorgan to take delivery, load up planes and physically ship gold.

[1] https://en.wikipedia.org/wiki/Rai_stones