OK, so let me make sure I'm understanding this correctly:

- The coin cannot be mined, it can only be purchased on the Ripple network for BTC
- Presumably, the price of 1 GBC will be somewhere around 0.3 BTC, which would be roughly $130, or 1/10 oz gold at current spot price
- For each 1 GBC sold, devs will acquire 1/10 oz of gold and stick it in a vault or something to "back" the value of the coin

Assuming the above does actually happen, GBC will indeed be 100% backed by real, physical gold.

If and when the price of GBC falls below 1/10 oz gold at current spot price:
- "Intervention" will occur and the physical gold reserves will be used to guarantee the price stays above BTC value of 1/10 oz gold

The problem is, to do this, you must use BTC to buy GBC and force the price back up.  But you don't have BTC.  All you have is physical gold, remember?  Every 0.3 BTC you gained from the sale of GBC was used to purchase physical gold, right?