The alarm here doesn't seem to make much sense. The physical gold was there - only its ownership was in dispute.
There's no question that GLD is actually backed by physical gold - the only real concern would be whether the shares of the ETF are being diddled with by a account manager. It seems to me that if you have a legitimate retail brokerage firm (such as Schwab, TD Ameritrade, etc.) with the firm's integrity and SIPC, your risk of loss of the shares due to a corrupt dealings of an individual broker is virtually zero.
The guy's point about GLD as a convenient trading vehicle is obvious - but look at how many major institutions use GLD gold as a long term holding. Unless they are ALL stupid, isn't this an imprimatur of legitimacy?
IMHO, this seems to be a Man Bites Dog story, without any dog.