Allocated vs Unallocated
Definition
Allocated metal is specific, identifiable bars or coins held in your name, while unallocated metal is a paper claim against a provider’s general pool. With allocated holdings you own the metal itself; with unallocated holdings you are an unsecured creditor of the institution.
The distinction comes down to whether you own a defined piece of metal or a promise to deliver it.
Why it matters
With allocated storage, the bars are segregated and recorded by serial number, so they are not part of the provider’s balance sheet if it fails. Unallocated metal usually costs less to hold but carries counterparty exposure: if the provider becomes insolvent, you may stand in line with other creditors rather than simply collecting your bars.
In practice
Allocated accounts typically charge storage and audit fees because real metal is set aside and insured. Unallocated accounts often skip those fees and may pay or charge a small spread, which is why they appeal to traders who want exposure rather than physical possession.
Common confusion
Unallocated is not the same as fraud; it is a legitimate, lower-cost structure. The key point is that it is a claim, not segregated property, so the trade-off is cost versus counterparty risk.