Gold is tearing higher — up more than 80% over the past year and one of the top-performing assets — but most investors aren’t actually holding metal in their hands. That gap between perception and reality is, according to Björn Schmidtke, CEO of Tether-backed gold treasurer Aurelion (AURE), a growing systemic risk. Paper gold vs. physical bars The simplest way for most people to gain exposure to gold is through “paper gold”: ETF shares or other products that promise exposure to bullion. But those instruments are, in effect, IOUs. “When you buy such stocks, what investors think is that they have bought the physical gold bar,” Schmidtke told CoinDesk. “The reality is they have bought a small piece of paper that says, ‘I owe you gold.’” Schmidtke estimates roughly 98% of gold exposure today is unallocated — meaning investors hold shares that are supposed to be backed by gold, but they have no claim to a specific, identifiable bar. That arrangement has functioned for decades because few investors ever demand physical delivery. But it creates a fragile mismatch between paper claims and physical inventory. What happens when everyone wants metal? Schmidtke warned of a “seismic event” scenario: if fiat were suddenly devalued or panic hit markets, a mass rush for redemption could expose the system’s limits. Physical gold is heavy, difficult to move in bulk, and many allocated bars lack traceable title deeds tied to specific owners. “You simply cannot move a few billion dollars’ worth of physical gold in a single day,” he said. The result could be severe logistical bottlenecks, soaring premiums for deliverable bullion, and a divergence between paper gold prices and the price of actual metal — a split already glimpsed in the silver squeeze episodes where physical premiums jumped while spot remained flat. Onchain gold as a solution Aurelion’s answer: tokenized, onchain gold. Schmidtke argues that tokens like XAUT — each of which is linked to a specific allocated bar stored in Swiss vaults — can act as digital title deeds. Transferring the token transfers ownership instantly on the blockchain while physical movement is only required for actual redemption. That decouples settlement speed from the physical logistics of moving metal and gives investors searchable proof of which bar they own. Schmidtke illustrated the problem with a real-estate analogy: buying shares in a development without deeded titles creates chaos when people finally claim their units. If, instead, buyers hold title deeds from the start, ownership is transparent and transfers are straightforward. Onchain tokens aim to provide that same clarity for bullion. Aurelion’s strategy and holdings That philosophy is guiding Aurelion’s treasury decisions. The firm has overhauled its treasury to hold XAUT — the blockchain-based token backed by physical gold in Swiss vaults — arguing tokens provide the speed of digital transactions without sacrificing the right to physical settlement. “How you own gold matters as much as whether you own gold,” Schmidtke said. Aurelion currently holds 33,318 XAUT tokens — roughly $153 million in value, per CoinGecko — and Schmidtke says the company will sell only if it sees a “significant and sustained discount” to its underlying holdings. The focus is long-term compounding, not short-term arbitrage: “This is not a short-term arbitrage strategy. It’s about building a durable Tether Gold equity that investors can participate in over time.” Aurelion also plans to raise more capital over the next year to expand its gold treasury. Bottom line The gold rally has drawn money into the market, but ownership structure matters. Unallocated paper claims dominate exposure today, and in a crisis that could create a painful disconnect between paper prices and deliverable metal. Tokenized, onchain ownership — when properly backed by allocated bars — promises faster, auditable transfers and clearer ownership records that could blunt that risk. Whether tokenized gold can scale and win broader trust will be a central question as both demand for gold and interest in tokenized assets rise. Read more AI-generated news on: undefined/news

#ETF