Allocated vs Unallocated Gold
What Is the Difference Between Allocated and Unallocated Gold?
Allocated gold and unallocated gold are not just two ways of holding precious metal, they set out what you actually own behind the scenes. If you choose allocated gold, you own specific bars or coins, set aside with your name attached in the provider’s records. For unallocated gold, you have a claim on a quantity of metal, but not on any single bar; the provider pools all such gold together.
This split decides what happens if your provider fails, and how secure your title really is. You’ll see both types offered by banks and bullion firms. Focus on the legal details in your account paperwork, because these labels describe the arrangement, not what sits in a vault. Both holdings rise and fall in value just like the gold market itself. You’ll find more on how this compares to physical gold and paper claims in our other pages.
How Allocated and Segregated Holdings Work
In an allocated arrangement, every bar you own usually carries a unique serial number, tied to your account in the records. These bars are stored separately, sometimes called segregated storage, so no one else should have a claim to them. Many providers add an assay certificate, showing the bar’s weight and purity next to its serial number.
When gold is allocated, it’s supposed to be ring-fenced from the custodian’s own supply. That lowers your risk in the case of insolvency, though the local legal process could slow access to your bars. Since this kind of tracking and storage often costs more, most providers pass on those extra charges as vault storage fees.
Unallocated Accounts and Counterparty Risk
If your account is unallocated, you’ll see a gold balance in grams or ounces, but your claim is against the provider itself, not specific property. Metal is pooled together, and customers have unsecured claims on the provider to deliver gold or its value.
This means your risk depends on the company’s health and how well its records match its real holdings. Unallocated accounts tend to involve fewer steps and lower fees, but you gain those savings in exchange for a weaker claim should the provider run into trouble.
Two Claims, Same Balance
Say you buy 100 grams of gold in an allocated account, and another 100 grams in an unallocated one. Both show the same figure on your dashboard. Were the provider to go under, the bar tied to your name could be claimed and returned, assuming the legal process allows. The unallocated portion, though, is a debt owed to you by the provider, settled out of what, if anything, remains. The same account balance can have very different outcomes for the person holding it.
Frequently asked questions
Is allocated gold always safer than unallocated gold?
Allocated gold often gives you a stronger claim because the metal is set out as yours by serial number and record. But risks still exist. Vault security, insurance, provider audits and the country’s legal recovery are all factors. Look up the provider’s regulatory status and auditing standards in the national register before you commit substantial funds.
What happens to unallocated gold if the provider fails?
If the provider fails, you are normally considered a creditor, not the owner of individual metal. The recovery process depends on what assets are left and the details of insolvency law in that country. You might get less than your total claim, or have to wait for legal proceedings to play out. Check the terms before funding an unallocated account, and ask clear questions about how your gold is held.