This concept of notional gold that can be redeemed for physical bullion has existed for a while (see: Xetra-Gold). Adding a blockchain for tracking redemptions doesn't fundamentally change the service.

And just like companies like Xetra-Gold, it doesn't address the chiefmost concern: You have no assurance that your fund actually has the gold they claim they do. They might be "renting" the physical bullion out and running a fractional reserve system, in essence a giant Ponzi scheme.