The backing would be done through bullionvault. Or I could use bitcoin as a backing with the wallet being public and viewable.
I have thought about inflation of the price going over the asset value. It would be similar to a stock/share/company bond though with a positive net asset value.
For example:
The Company Bond starts with a value of £100. Market is good and news is positive for the company. The bond now trades for £150 but still only has a value of £100. However can also go in reverse market is in decline and bond now trades for £70 but still has a value of £100 when it matures and is cashed back in with the company.
It's just an idea at the moment and any thoughts are greatly appreciated be they positive or negative.
I know for a fact having dealt with BullionVault many times over the years, that they would have major problem with that idea. Also IMHO backing of an alt coin with physical assets crosses the Rubicon for many regulators. For starters if you where using silver, there would be VAT implications within the UK.
I applaud you for thinking "out the box" but the FCA, SFO and HMRC would be all over it.