However, when some of these clients did actually attempt to take possession of their "gold" they discovered the cupboards were bare. Morgan Stanley was fined heavily for the deception. Then we have the world of "bullion ETFs," undisputed kings of the paper-gold industry. Here there is no better place to start than with the first and largest of these funds the SPDR Gold Trust ( GLD). If one wants to understand how bankers can sell paper gold while not actually selling gold, they only need to read the GLD prospectus. This was previously dissected in The Seven Sins of GLD, and a particularly significant technicality was noted. In the event of "willful default" by the custodian of GLD bullion -- primarily HSBC ( HBC) -- the custodian has no obligation to deliver gold to unit holders even if unit holders demand delivery of what they undoubtedly believe is their gold. What is a willful default? It's where the custodian actually possesses abundant gold to satisfy legal claims against that gold, but simply chooses not to deliver that gold. Who "owns" GLD gold? HSBC is in possession of the gold. HSBC has ultimate legal/proprietary authority over every ounce of that gold in its possession. When the same entity has both actual possession and ultimate legal/proprietary authority over that bullion, then that is the only entity that can rationally claim to "own" this bullion. Obviously it is not necessarily true that a gold fund would not/does not convey actual ownership rights to holders in that specific fund (or account or trust). This is one of the reasons why all purchasers in any "financial product" need to scrupulously sift through the proverbial fine print -- and make sure they understand it. This brings us back to India's gold deficit, and the Western proposal to "solve" this deficit problem through selling Indians lots of imported paper gold. Obviously this paper gold must be imported. If a gold deficit (i.e. shortage) exists inside India, this can't be remedied by selling (domestic) paper gold. That is simply open fraud. Thus selling imported paper gold into India to "solve" a gold-deficit problem that apparently cannot be rectified through the sale of real, physical bullion implies one and only one reality. What would actually be imported into India to solve the gold deficit would be paper, not gold. This means any Indian gold consumer pondering the purchase of paper gold from the Indian Chump Fund (or whatever Western bankers choose to call it) would ultimately only have one question to ponder: Would the paper they were buying be like the paper purchased by GLD unit holders or are these bankers about to attempt to pull off another "Morgan Stanley?" Follow @bullionbulls This article was written by an independent contributor, separate from TheStreet's regular news coverage.