Nope. paper gold is legit. If everyone is using physical gold, this would be too much of a hassle to trade at huge volume and I do not think there is so much physical gold to go around.

Plus, paper gold are like virtual items you know? You buy them with real money and you can sell them for real money.

And banks normally won't go down so easily these days. We got SOX laws.

Why so many people keep worry about the gold on paper. Do you want you to keep the physical gold at your house? Then every time go to bank to sell/buy?

Yes, this is legit. Please see previous replies.

This is not a money game as you are dealing with bank, the gold will be on paper, not physical. Why would you want physical gold anyway, where you gonna keep?