The Vet

The Disconnect Between Supply and Demand in Gold and Silver Markets, Part II

The major risk to the metal ETFs like GLD and SLV is not their structure or management but the fact that as stocks they can be sold short.
Naked short selling is the worse, but even "legal" short selling where stock is borrowed and then sold creates more long holders of stock than there is metal in the vault to cover that stock.

Ultimately in the worse case 100% of the metal could be redeemed leaving zero "real" shares but the same number of borrowed shares would remain in long shareholders accounts backed by nothing except the creditworthyness of the short sellers.

Of course once the backing of gold dropped, few new buyers are likely to step up and the price would fall leaving the shorts sellers of the stocks with a tidy profit and the long shareholders with nothing. Current SEC rules can't even force the shorts to cover or deliver stocks they have sold, so don't expect any protection from the regulators.