Shocking Truth: 98% of Gold Investors Are Just Playing with Paper! Here’s Why That’s a Disaster

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Markets

What to know:

  • Björn Schmidtke, the CEO of Aurelion (sounds fancy, right?), warns us that “paper gold” is basically just a glorified IOU. Yes, 98% of gold exposure is just promises on pieces of paper!
  • In a bold move, Aurelion decided to hop on the blockchain bandwagon with Tether Gold (XAUT), promising real gold to back their tokens. Because who wouldn’t want their gold securely vaulted in Switzerland?
  • The company thinks gold and bitcoin make a cute couple-like peanut butter and jelly, but for investors-focusing on the long-term value of those shiny digital gold tokens.

So, there’s a total buying frenzy in the gold market, sending prices soaring by over 80% in just a year. Who knew shiny rocks could be so popular?

But alas, while everyone is busy buying their “gold,” there’s a hidden threat lurking like a bad haircut. According to our friend Björn from Aurelion, many investors are blissfully unaware of the risks involved.

Buying gold is as easy as pie-or at least it seems to be. Investors think they’ve bagged a glorious gold bar when they actually just own “paper gold.” It’s like saying you own a castle because you have a toy version of it. “Congratulations, you own a piece of paper that says, ‘I owe you gold,’” Björn quips, as if handing out participation trophies.

Now, while this whole “paper gold” thing sounds like the lazy way to dodge the hassle of lugging a gold brick around, here’s where the plot thickens. If a catastrophic event were to occur-like finding out your favorite restaurant has closed down-everyone would suddenly want their actual gold. Surprise!

‘Seismic event’

Imagine this: an investor buys “paper gold,” all smug, thinking they have a real gold bar tucked away somewhere. But when the chips are down and they want their golden prize, they realize they have no clue which bar belongs to them. It’s like winning the lottery and finding out you lost the ticket!

Björn estimates that a whopping 98% of gold exposure is just unallocated IOUs. So, what do people do with these? They hold onto billions of dollars’ worth of little slips of paper as if they were golden tickets. But when the panic hits and everyone rushes for their gold, who knows how that will end?

“You can’t just shuffle around billions of dollars’ worth of gold in a single day,” he cautions, like a wise old sage telling us not to run with scissors. And without proof of ownership, it turns into a logistical nightmare, potentially leading to market chaos. Yikes!

This is where onchain gold struts in wearing a cape, ready to save the day!

Proof of ownership

Let’s take a moment to picture this: a real estate developer offers a super unique way to buy housing units. You buy shares and get an IOU promising delivery. Sounds like a dream, right? But guess what? When it’s time to collect, there’s no proof of which unit belongs to whom. It’s like playing musical chairs, but with houses!

Björn says that onchain gold ownership is the knight in shining armor here. By linking gold ownership to the blockchain, it clears up the delivery mess. Instead of wrestling with physical gold, tokenized gold like XAUT lets you transfer ownership faster than you can say “gold rush.”

Each XAUT token is tied to a specific gold bar in a Swiss vault, so the “title deed” can zoom across the globe in seconds. Imagine if home buyers signed their title deeds first-sorting through who gets what would be a breeze!

With onchain gold tokens, allocations will be as clear as your favorite romcom plot twist. Sure, physical delivery might still take a bit, but at least investors can rest assured knowing their gold is safe and sound, unlike that rogue avocado in your fridge.

A ‘durable’ ownership

Björn’s vision is shaping Aurelion’s strategy. They’ve revamped their treasury to hold XAUT, which is backed by actual physical gold. It’s like going from eating instant ramen to gourmet meals!

Schmidtke insists that XAUT combines the speed of digital with the comfort of physical gold. Unlike paper gold, these tokens represent allocated bars and are fully redeemable. “How you own gold matters as much as whether you own gold,” he muses, probably while sipping a fancy coffee.

He sees XAUT as just getting started, like the first act of a great movie. When asked about selling their gold, he mentioned only doing so if the market conditions create a “significant and sustained discount.” For now, they’re focused on building something durable.

“This isn’t a short-term game. We’re here for the long haul,” he states, sounding very much like a philosopher pondering life’s great mysteries. Aurelion plans to raise more capital to expand its gold treasury further.

As of now, according to CoinGecko data, they hold 33,318 XAUT tokens worth around $153 million. Not too shabby, eh?

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2026-01-25 20:43