Digix is incorporated in Singapore and goes through the same audits as any other gold storage facility, has their gold insured, etc. If you own paper gold that is backed by gold in a similar facility, then this is no different. If you own gold futures then it is ultimately backed by physical gold in facilities (although perhaps warped through various contracts and leveraged 5x).

It just happens that Digix gold is issued as an ERC20 token rather than registered with a physical gold exchange.