How is the purchase of gold protected if you don't take possession of it?

Answer 1

Same as beef on the hoof or any other comodity. It's grazing somewhere with your name on it. Well, maybe the gold isn't grazing, but it's actually real and sitting in a safe place (unless you buy futures that aren't mined yet.)

If you're concerned, you can alway take delivery. (Not recommended for beef on the hoof)

Answer 2

Like a bank, you just gotta trust they kept it safe, ask if they have insurance protection against theft. I personally don't trust anybody to hold my gold, otherwise I might as well trust somebody to hold my paper money.