Allocated Gold

Allocated gold is a type of gold ownership in which the investor has physical possession of a specific quantity of gold stored in a secure vault on their behalf.


Allocated gold refers to a form of gold ownership where the investor physically owns a specific amount of gold stored in a secure vault on their behalf.

What Is Allocated Gold?

Allocated gold refers to a form of gold ownership where the investor physically owns a specific amount of gold stored in a secure vault on their behalf. In this type of ownership, the gold is specifically allocated to the investor and is distinguishable from other gold stored in the same vault. The investor has a direct claim to a specific quantity of gold and can take physical possession of it if they wish.

One of the main advantages of allocated gold is that it provides a greater degree of security and control over the investor’s gold holdings. Because the gold is physically allocated to the investor and stored in a secure vault, it is less vulnerable to theft or other forms of loss. Additionally, allocated gold is often insured, providing an extra layer of protection for the investor.

Another advantage of allocated gold is that it is a tangible asset not subject to the same market volatility and economic uncertainties as financial assets like stocks or bonds. This makes it an attractive option for investors who are seeking to diversify their portfolios and protect themselves against economic instability.

What Is unallocated gold?

Unallocated gold is a form of gold ownership in which the buyer does not own specific, physically allocated bars of gold but rather holds a claim on a certain amount of gold held in a bullion dealer’s inventory. With unallocated gold, the bullion dealer does not set aside specific bars of gold for the buyer but rather holds the gold in a pool of assets that can be sold to other customers or used to cover its own obligations.

The advantage of unallocated gold is that it is typically easier and less expensive to buy and sell than allocated gold. Since the buyer does not own specific bars, the bullion dealer can physically transfer the gold to the buyer, and the buyer can arrange for the safe storage of the gold.

Additionally, since the gold is held in a pool, the buyer may be able to purchase a smaller quantity of gold than would be possible with allocated gold.

However, the disadvantage of unallocated gold is that the buyer has a different security level than allocated gold. If the bullion dealer goes out of business or experiences financial difficulties, the buyer’s claim on the gold may not be honored, and the buyer may not receive any compensation. 

Additionally, since the gold is held in a pool, the buyer may be unable to take physical possession of it if they want to.

Allocated Gold vs Unallocated Gold

Allocated gold and unallocated gold are two different forms of gold ownership.

Allocated gold refers to physical gold specifically set aside and assigned to an individual or entity. The owner has a specific, identifiable bar of gold that is stored in a secure location, such as a bullion vault. Unallocated gold, on the other hand, is a more abstract form of gold ownership. The gold is held as part of a pool of assets owned by the financial institution. The owner of unallocated gold has a right to a certain amount of gold but does not have the ability to take physical possession of it.

In summary, the main difference between allocated and unallocated gold is that allocated gold is physical gold that is specifically assigned to an individual, while unallocated gold is a more abstract form of ownership. The difference can be broadly compared to custodial and non-custodial ownership of cryptocurrencies. Allocated gold is non-custodial, while non-allocated gold is custodial. 

Is Allocated Gold Better Than Unallocated Gold?

The choice between allocated and unallocated gold depends on the individual’s preferences and investment goals.

Allocated gold can be seen as a more secure form of gold ownership, as the owner has a specific, identifiable bar of gold set aside for them. This means that the owner has complete control over their investment and has the ability to take physical possession of it if they so choose. This can appeal to individuals looking for a tangible asset that they can hold on to for the long term.

Unallocated gold is a more flexible and convenient form of gold ownership. Because the gold is held as part of a pool of assets owned by the financial institution, the owner does not have to worry about storing the physical gold themselves. This can be especially appealing to individuals who live in areas with limited storage options or who do not want to worry about the logistics of storing physical gold.