If I have 20x 5 BTC inputs in my hardware wallet and I spend 5 BTC like in your example... how are the rest of my 19 inputs being reshuffled?
A fraction of the 5 btc not fully spent will be sent to some of the 19 addresses, in which I will know they are associated with you. Shouldn't this be obvious? Shouldn't you know this already?You have read BIP32 and BIP44 and understand about "external" (aka receive) and "internal" (aka change) addresses right? Pretty much all the hardware wallets that I'm aware of implement BIP44... and keep receive and change addresses separated as per the specification, that is to say using Derivation Paths of m/44'/0'/0'/0 and m/44'/0'/0'/1 respectively.
Most of them are also smart enough to prevent address re-use so while you could follow a chain of transactions that start with one 5 btc input... it'll never touch any of the other inputs (or their chain of transactions) until such time as you don't have enough coins in a single input to be able to send the amount you want to send and it needs to use 2 or more inputs.
All of which is relatively moot for "cold storage" anyway... and works pretty much the same way as your "paper" wallet system.
Like I've been saying all along... your system is pretty much the same as using a hardware wallet, without the convenience of being able to spend easily if required... or sign messages... or use on an online machine while maintaining security... or use easily with a mobile phone wallet... or use as a FIDO U2F secure key...
But hey, you're happy with it... and you saved yourself $100.
