Gold bar and market price: why traditional ownership is becoming risky

More than 98% of investors who think they own gold actually hold a financial paper rather than a physical bar. This is a troubling paradox of the modern investment market, where the price of the precious metal has soared by 80% over the past twelve months, yet few understand the true risks hidden behind this impressive growth.

Illusion of Ownership: The Myth of Real Gold in the Portfolio

When the average investor decides to buy gold, they often choose the easiest route — purchasing exchange-traded fund (ETF) shares or so-called “paper gold.” On paper, it looks simple: you pay money, receive a certificate, and supposedly own a physical bar. In reality, according to Björn Schmidtke, CEO of Aurelion, which manages Tether’s gold reserves, the investor is not buying gold but a debt obligation — a paper promise that is worth exactly what society agrees to value it.

“When you buy paper gold, you buy a piece of paper with the inscription ‘I owe you gold’,” Schmidtke explained in an interview with CoinDesk. “And people collectively believe that this paper has value.”

This system has worked for decades because it is convenient. It spares investors the worries about storage, insurance, and security of the physical bar. However, it is precisely this convenience that contains the main danger.

When Panic Strikes: The Gap Between Paper Price and Real Gold

Imagine a scenario that seems unlikely but is not impossible at all. A catastrophic event occurs in the market — hyperinflation, currency default, or systemic crisis. Millions of investors simultaneously want to retrieve their physical gold bars, confident that they purchased them. But a logistical nightmare arises: there is no clear proof of which bar belongs to whom, no ownership documents for specific physical assets.

“You simply cannot move several billion dollars worth of physical gold in one day,” emphasized Schmidtke. “And if there is no clear proof of ownership for these gold bars, it creates an even greater logistical challenge.”

What happens then? The price of real physical gold will soar (due to genuine scarcity), while paper gold will lag behind, as everyone realizes it is not backed. Exactly what happened in the silver market in the past occurs: premiums on physical metal skyrocketed, while spot prices remained almost unchanged. Holders of paper obligations are left without a way to settle.

Schmidtke is confident: “We believe this will happen also in the gold market if such an event occurs.”

How Blockchain Gold XAUT Is Redefining Ownership Transparency

The solution that Aurelion envisions lies in the realm of digital assets. The company has completely restructured its investment strategy by moving gold reserves into tokenized gold — Tether Gold (XAUT).

Here’s how it works. Each XAUT token is inseparably linked to a specific, allocated gold bar stored in a Swiss vault with maximum security. With the current price around $5,540 per token and a total market capitalization of $2.88 billion, the system creates a full transparency chain.

Imagine a hypothetical real estate scenario. A developer offers investors a simple scheme: buy project shares, and you will get a right to a residential module. It sounds simple, but when it’s time to receive the actual housing, it turns out you haven’t signed a property deed — you only bought shares. Which module will you get? When? Who will decide? Chaos ensues.

Blockchain tokens solve this problem fundamentally differently. Each investor receives not a vague promise but a clear digital ownership certificate for a specific bar. The “certificate of ownership” for gold is transferred via blockchain in seconds, separating ownership rights from the physical movement of the metal. The investor knows exactly which bar belongs to them and can transfer ownership rights to anyone in the world instantly.

“How you own gold is as important as the fact of ownership,” Schmidtke says. “XAUT provides the speed of digital transactions without compromising physical settlement.”

From Theory to Practice: Aurelion’s Long-Term Strategy

Aurelion demonstrates how the new system should work. The company owns 33,318 XAUT tokens worth approximately $184 million (recalculated at the current price), and this is not a short-term speculation but a strictly long-term accumulation strategy.

“This is not a short-term arbitrage game,” emphasized Schmidtke. “It’s about creating a sustainable Tether Gold asset in which investors can participate over time.”

The company plans to expand its gold treasury by attracting additional capital over the next year. Such an approach reflects a deep conviction that physical gold will remain one of the most reliable means of preserving value, but the way it is stored and owned must evolve.

In the current market environment, where gold prices are constantly rising and traditional financial systems are becoming increasingly unstable, the choice between paper and digital bars can be critical for investors. Those who switch to tokenized gold like XAUT gain not just an asset — they gain transparency, speed, and ownership guarantees amid growing global market uncertainty.