[cf141q5325]

Another poster (tim333) made a great summary of the concept behind GLD (your first link) a few posts up. Those backed assets are otherwise owned and loaned against. IShares is the other one with a similar concept. You can read up on this in the context of Basel 3's net stable funding ratio and the exemption LBMA (the biggest backer of COMEX) achieved.

https://www.gold.org/goldhub/gold-focus/2021/06/basel-iii-an...

Or directly from the LBMA:

https://cdn.lbma.org.uk/downloads/Pages/NSFR-PRA-Letter-fina... https://www.lbma.org.uk/articles/pra-clearing-banks-may-now-...

This is not to say that all ETFs work this way. I believe Xetra is one example of being fully physically backed. But this naturally increases running cost due to storage. Last i checked i believe you pay in the rough region of 0.1% a year in storage cost at the reputable physical gold bullion storage sites as a large customers (tons / room). That sums up. This also explains why physical copper is not something you can easily invest in.

But again, this kind of misses the point, i would really appreciate a definition of paper differing from backed by derivatives. I think you might be onto something here, i ran into this argument a few times now so i believe i might be missing something.

I would also like to reiterate that i do not share the conclusion the initial post made about run away gold prices. I elaborated on that in the other posts.

Sorry for the late edits, had to double check the numbers.

[kortilla]

“Paper gold” is meant to refer to a claim on real gold. I.e. if the ETF share exists, there is a small piece of gold backing that and only that share.

A /GC futures contract—-even with physical settlement—- is not paper gold because two parties can create the contract without any actual gold existing anywhere.