Allocated vs Unallocated Gold: Who Owns It

Allocated gold means specific, identified bars belong to you. Unallocated gold means the provider owes you gold. If the provider fails, the first is your property and the second puts you in line with other unsecured creditors. Everything else about the two — cost, convenience, minimum size — follows from that one legal difference.

The terms turn up on vaulting services, bank accounts, digital gold apps and bullion dealer storage offers. They are frequently not explained, and occasionally blurred on purpose.

This explains a structural distinction in how gold is held. It is not legal or investment advice, and the exact protections vary by provider and jurisdiction — read the custody terms of any specific product before relying on them.

Allocated gold, precisely

Your holding is specific physical bars or coins, identified individually, stored on your behalf, and recorded as your property rather than as an asset of the provider.

In a properly run allocated arrangement you can normally obtain:

• A bar list — serial numbers, refiner, gross weight, assay or fineness, for the exact bars held against your account.
• Confirmation that the metal is off the provider's balance sheet, held in custody rather than owned by them.
• An independent audit of vault holdings, typically annual, sometimes with a second unannounced count.
• A delivery right — the ability, subject to notice and fees, to take the metal.

You pay storage and insurance for this, quoted as an annual percentage of value or a flat fee per bar. That charge is the visible cost of having a claim on identified metal instead of a claim on a company.

Unallocated gold, precisely

Your holding is a balance denominated in gold. The provider owes you that quantity. No specific bar is yours, and the metal backing the pool sits on the provider's balance sheet.

This is the default form for most wholesale bullion trading in London, and it is not inherently disreputable — the interbank market runs on it, between counterparties who assess each other's credit. It becomes a problem when a retail product is sold as though it were the same thing as owning gold.

The practical consequences:

• No storage fee, usually. The provider can use the pooled metal, and that benefit substitutes for charging you.
• No bar list, because there are no bars assigned to you.
• You rank as an unsecured creditor in an insolvency. Your gold balance is a debt owed to you, not property held for you.
• The backing ratio may be less than one. Some unallocated arrangements are fully backed. Others are not required to be.

Why unallocated is cheaper

Because you are lending, not storing. The absence of a fee is not a discount — it is payment for the credit you are extending to the provider, whether or not the arrangement is described that way.

Seen in that light, the comparison is straightforward. Allocated: pay roughly 0.1% to 0.5% a year, own identified metal. Unallocated: pay nothing, own a claim on a company. Neither is wrong, but they are not the same product and should not be priced against each other as if they were.

What happens when a provider fails

The distinction stops being theoretical at exactly the moment it matters.

With allocated metal, properly segregated and documented, the bars are not the failed company's assets. Administrators should identify them from the bar records and return them to their owners. Delays and legal costs are normal; total loss is not the expected outcome.

With unallocated metal, your gold balance is converted into a monetary claim and joins the unsecured creditor pool. You recover whatever percentage the estate pays out, and you recover it in cash rather than metal — which means you also lose the gold exposure at precisely the point you might most want it.

This is the same counterparty question that separates the wrappers in gold ETFs vs physical gold vs gold bonds, applied one level deeper.

How to check which one you hold

Do not rely on the marketing page. Four questions settle it, and a provider who cannot answer them plainly has answered them.

1. Can you send me the bar list for my holding? Allocated providers produce serial numbers. Unallocated ones explain why they cannot.
2. Is the metal on your balance sheet? Allocated metal is held in custody and should be off it.
3. Who audits the vault, and how often? Look for a named independent auditor, not a self-certification.
4. What is my legal status if you enter insolvency — owner or creditor? This is the question, and it should be answered in the custody terms rather than by support staff.

For context on the wholesale market these arrangements sit inside, the LBMA's OTC guide documents how allocated and unallocated accounts function in London, and the World Gold Council publishes the underlying demand and holdings data.

When unallocated is perfectly sensible

Allocated is not automatically correct, and paying for it reflexively is its own mistake.

• You are trading, not holding. For a position measured in days, storage fees on allocated metal are pure drag and the credit exposure is brief.
• Your holding is small. Many allocated services have minimums around a kilogram. Below that, allocated storage may not be offered at a sensible price.
• The counterparty is strong and the sum is modest. Unsecured exposure to a large, regulated institution for a small balance is a normal risk to take knowingly.

The failure mode is not choosing unallocated. It is choosing it without knowing you did.

Whatever the custody arrangement, the value of the holding tracks the same spot price. Our gold unit converter prices any weight and purity against a timestamped snapshot.