Most Gold Holders Actually Do Not Own Bars: How Storage Costs and Small Safes Trigger Liquidity Crises

There is massive buying euphoria in the global gold market. Over the past 12 months, the price of this precious metal has surged more than 80%, reaching an all-time high above $5,200 per ounce. Investors are flocking into this asset, hoping for genuine financial protection. However, there is a rarely discussed secret: the majority of them have actually never touched physical gold at all. In various interviews, Björn Schmidtke, CEO of Aurelion (a company managing gold treasury), warns that 98% of the total gold exposure in the market is essentially debt (IOU)—not real assets.

Why is this important? Because when talking about ownership, storage methods and the small safe costs to secure assets are critical considerations often overlooked in market analysis.

Paper Gold System: Trust Built on the Surface

The easiest way for investors to gain gold exposure is by buying what Schmidtke calls “paper gold”—shares of gold exchange-traded funds (ETFs). When purchasing these shares, investors imagine they have secured physical gold bars in a safe. The reality is far different.

“You buy a piece of paper that basically says, ‘We owe you gold.’ And people collectively agree that this paper is worth something,” he explains in an interview. The problem isn’t with the concept itself—this system has been running for decades because most investors rarely request physical delivery. But that’s precisely where the vulnerability lies.

Investors never know which gold bars they technically own. No ownership deed, no specific allocation. When buying a gold ETF, you receive a digital promise, not clear proof of ownership. This is a far cry from owning a private safe filled with gold bars with complete documentation.

Liquidity Crisis: When Everyone Wants Their Gold at Once

The scenario is as follows: a “catastrophic event” occurs. Fiat currencies experience a drastic devaluation. Investors panic and simultaneously demand physical gold delivery from ETF fund managers.

This is where the system collapses.

“You can’t just move physical gold worth several billion dollars in a single day,” Schmidtke says. Without clear allocation—without knowing which safe holds their gold—logistics of delivery become chaos. No specific proof of ownership exists. There’s no way to quickly verify who is entitled to how much gold.

In such conditions, a price divergence occurs in favor of physical gold. The price of physical gold that can be directly taken from storage vaults will skyrocket, while ETF “paper gold” prices lag far behind. ETF holders are trapped in instruments that are liquid in value but cannot be exchanged for physical gold as claimed. We have seen this happen in the silver market years ago, and Schmidtke believes the same pattern will repeat in gold.

Verified Ownership: Blockchain Solution

Imagine a property ownership scenario. A developer offers investors an easy way to buy units: buy 10 shares, and we promise to send 10 units. No need for signatures on ownership deeds, no formal documentation. When all investors want to claim their units, the developer will try to send them randomly. The result? Horrendous administrative bottlenecks, with units scattered without clarity on who is entitled to what.

This is the problem with paper gold.

The solution is verified ownership through blockchain. Aurelion has adopted XAUT (Tether Gold), a token backed by physical gold stored in Swiss vaults. The crucial difference: each XAUT token is not just a promise but a digital representation of a specific allocated and curated gold bar.

“How you own gold is just as important as whether you own gold,” Schmidtke says.

With XAUT, token holders have a digital “title deed” that can be transferred globally within seconds on the blockchain. Each token is linked to a physical bar that can be tracked in the vault. While physical gold delivery from the vault still takes time, investors have undeniable proof of ownership. They know exactly what they own, who stores it, and where the asset is located.

This eliminates logistical hurdles that have previously troubled the silver market and could pose a major threat in the gold market if panic ensues.

Long-term Strategy Amid Volatility

Currently, Bitcoin is trading at $88.37K, while XAUT is traded at $5.58K. Aurelion views both assets as complementary instruments—both offering long-term value protection outside the traditional financial system.

The company has allocated most of its treasury to XAUT. They currently hold over 30,000 tokens, reflecting a long-term commitment to building equity in verified digital gold. Not a short-term arbitrage strategy—this is about owning assets with solid, indisputable proof of ownership.

This strategy isn’t just about avoiding the complexities of small safes and crippling traditional storage costs. It’s about fundamentally changing how we own and transfer value. With on-chain gold, the indirect costs of ownership ambiguity—potential asset loss during crises—are eliminated.

Aurelion plans to continue expanding its gold reserves in the coming years, setting a new standard for verified and secure asset ownership in the digital age.