Will having Physical Assets on the Blockchain work long term? e.g. Gold

Gold is now tokenised and on the blockchain.

https://cointelegraph.com/news/paxos-launches-pax-gold-regulated-and-redeemable-for-physical-gold

The identification and traceability of the asset will now be simplified, when things are fine.

What happens to Gold in times of conflict and war? It get confiscated, robbed, hidden.

So how will we manage conflict within the blockchain?