"Where anything is \"backed\" by gold, the investment is abstracted from the metal, which becomes a physical asset underlying a financial instrument. In this case, the investor owns the token, not the gold, and the token gains its value in the same way as unallocated accounts or gold ETPs are backed by gold but don't give you any ownership of physical metal.\n\nImportantly, none of the largest gold-backed stablecoins charge any storage or insurance fees, again matching the position of unallocated gold. In those investment accounts, the buyer is owed gold and does not own any metal. More secure allocated gold must always carry storage and insurance fees, and those fees have in the past been decisive in proving true ownership of physical assets where an investor's title has needed confirming in law."