"At any rate bear in mind this is a greatly simplified view however the fact remains the underlying problem with Gold markets is that they mimic the fractional reserve based Banking system where a small amount of cash on deposit is used as a reserve to create vast amounts of loans."

I think you are still formulating it very mildly, probably too mild.

When you say "they mimic the fractional reserve based Banking system" it sounds as if it is an error in their business approach. But it is no error or mistake we are talking about, we are here talking about intended fraud towards clients who are either mislead or much worse, being robbed from their legitimate holdings. Once you start misleading or lying to your clients, you will never survive, not when you are a business and certainly not when you are a bank.

I am convinced that in 5-10 years time only those banks, which have maintained the discipline to go by the rules of prudency and transparency, without changing these rules in the process, will survive. A few extremely conservative, boring, small Swiss banks and a number of very democratic cooperative banks are likely to pass this test. Most other banks will fail the test or simply will be unable to counter the general distrust of the public vis-a-vis banks in general.

Trust has to be built, but once it is breached, it will take double the time and effort to rebuild.