Where is your gold? The silent crisis of paper gold bars and how XAUT solves it

The price of gold has experienced an unprecedented surge in the last 12 months, increasing by more than 80% and positioning itself as one of the best-performing assets in the market. Most investors celebrate this growth without noticing a danger lurking beneath the surface: most do not actually own what they think they own.

According to Björn Schmidtke, CEO of Aurelion (Tether’s gold treasury firm), there is a silent threat that could trigger a crisis when you least expect it. And it all begins with a simple piece of paper.

The Invisible Problem: 98% of Investors Do Not Actually Own Gold Bars

When someone decides to invest in gold, they usually take the easiest route: buying shares of a gold exchange-traded fund (ETF). It’s convenient, quick, and avoids the headaches of storing and safeguarding physical metal. But here’s the trap: you are not buying real gold bars.

What you are actually acquiring is “a small piece of paper that says: ‘I owe you gold,’” explains Schmidtke. It’s a promise, a debt, not a tangible asset. And although this “paper gold” is technically redeemable, there is a fundamental problem: investors do not know exactly which gold bars they own. There is no clear proof of ownership over the specific physical gold.

Schmidtke estimates that approximately 98% of all gold exposure in the market is in this situation: billions of dollars invested in IOUs (debt acknowledgments), where investors trust that the precious metal exists and backs them, but without real guarantee of which gold is theirs.

The system has worked for decades because few investors demand physical delivery. But what happens when things change?

When the System Collapses: The Hidden Risk of Unallocated Gold

Imagine a scenario where confidence in fiat currency collapses. Suddenly, millions of investors want to receive their physical gold bars. This is what Schmidtke calls a “seismic event,” and when it happens, the uncomfortable question will be: where is the proof that those gold bars are yours? How are they delivered without clear ownership information?

“Simply put, a few billion dollars’ worth of physical gold cannot be moved in a single day,” says Schmidtke. The result would be a massive logistical collapse. Investors with allocated gold bars would have access; others would face endless queues, indefinite delays, and possibly nothing.

This has already happened in other markets. During silver supply crises, physical metal prices skyrocketed while derivative prices stagnated. Investors holding paper silver were trapped, unable to liquidate their positions. The same scenario could repeat with gold if an equivalent shock occurs.

The bottleneck is not just logistical. It’s a property verification problem. Without clear documentation and specific allocation of gold bars, chaos is inevitable.

Blockchain Solution: Why XAUT Changes the Game of Digital Gold

The question Schmidtke posed was simple but revolutionary: what if each gold bar had a digital “title of ownership” that could be transferred instantly?

This is how the tokenized gold proposal was born. Unlike paper gold, each XAUT token represents a specific, identifiable, and allocated gold bar stored in certified Swiss vaults. When you buy XAUT, you are not acquiring a vague promise: you gain verifiable rights over a concrete physical gold.

The mechanism works elegantly. If someone wants to sell their XAUT, the transfer of ownership occurs on the blockchain within seconds. The ownership title travels around the world at internet speed, while the physical gold remains secure in the vault. When physical delivery is required, the allocation is clear, traceable, and unambiguous. There are no misunderstandings about which gold bar belongs to whom.

“The way you own gold matters as much as owning gold,” asserts Schmidtke. With XAUT, the answer to “Where is my gold?” is definitive: it’s in the vault, directly linked to your blockchain address, without questionable intermediaries.

This approach solves the core problem faced by the traditional market: it decouples ownership from physical movement. You don’t need to transport gold bars to transfer rights over them. And when chaos arrives — because it will — every investor will be able to prove exactly what belongs to them.

Aurelion Bets on the Future of Tokenized Gold

Aurelion has internalized this lesson and completely restructured its treasury around XAUT. Currently, the company holds 33,318 XAUT tokens, valued at approximately $153 million. Each token is backed by verifiable physical gold, offering both the speed of digital transactions and the security of tangible assets.

Schmidtke considers that XAUT is in an early adoption phase. There is significant room for scaling, especially when institutional investors recognize the inherent risks of paper gold and seek safer alternatives.

Aurelion’s strategy is not speculative or short-term. The company would only consider selling XAUT if the market presented a “significant and sustained” discount relative to its underlying value. For now, the focus is on long-term appreciation. “It’s about building a lasting Tether Gold asset that investors can participate in over time,” explains Schmidtke.

Additionally, Aurelion plans to raise more capital over the next year to expand its treasury of tokenized gold bars. The company aims to become a paradigm example of how blockchain technology redefines ownership of physical assets.

The Future of Gold: Physical + Digital

The convergence of physical gold and blockchain is not a passing trend. It’s a necessary response to a real problem that the current system cannot solve. While 98% of gold investors still trust paper without ownership guarantees, a new generation of decentralized assets like XAUT is redefining what it truly means to own gold bars.

Next time you consider investing in gold, ask yourself: do I want a paper or do I want to know exactly where my gold is?