Allocated vs Unallocated Gold accounts define how investors legally hold and safeguard their bullion. In an allocated structure, the investor owns specific gold bars, recorded by serial number and listed in custody reports. In an unallocated structure, the investor holds a general claim against the provider rather than direct ownership of bars, which changes the profile of counterparty risk, fee models, liquidity, and audit reporting. Grasping these distinctions is essential for institutions, family offices, and private investors, since the account type directly shapes asset security, governance standards, and long-term wealth preservation.
1. Why account type matters for gold investors
The structure of a gold account determines the level of security, ownership, and governance applied to the asset. When investors allocate capital into bullion, the question is not only how much gold they own but also how that gold is recorded, protected, and recognized in custody reports. The distinction between allocated and unallocated accounts defines whether the investor holds direct title to specific bars or a broader claim on a provider’s pool of assets.
For institutional portfolios, this difference shapes compliance and audit readiness. Allocated accounts provide barlists with serial numbers, weights, and fineness, which can be matched directly to financial statements. Unallocated accounts provide exposure to gold but without direct bar ownership, creating reliance on the provider’s balance sheet and liquidity. Family offices and private investors face similar choices: either prioritize transparency and governance, or seek lower costs and higher liquidity with more counterparty risk.
Understanding why this decision matters is fundamental for long-term wealth protection. The type of account chosen affects reporting standards, insurance structures, and even tax treatment in some jurisdictions. Investors who align account type with strategy—whether it is capital preservation, trading, or diversification—gain clarity, reduce risks, and ensure that gold functions as a stable pillar in their portfolio.
2. Allocated gold accounts explained
Allocated accounts represent the highest level of ownership in gold custody. In this structure, specific gold bars are set aside in the name of the investor, segregated from the assets of the provider, and documented with unique serial numbers. The investor has direct legal title to these bars, which means they cannot appear on the provider’s balance sheet or be used for lending or trading activities.
This model provides full transparency. Each bar is recorded in a custody report, often referred to as a barlist, that includes weight, fineness, and refiner information. These details allow investors and auditors to verify the exact bullion held at any given time. Allocated accounts are therefore particularly valuable for institutions and family offices that require proof of ownership for governance, regulatory, or reporting purposes.
While allocated accounts typically involve higher custody fees—covering secure storage, insurance, and regular audits—they offer clarity that cannot be matched by pooled or unallocated structures. Investors know exactly what they own and where it is stored, which strengthens confidence in long-term wealth preservation.
For professional investors, allocated custody is not only about security but also about governance. It transforms gold from a passive store of value into an asset class that can be integrated seamlessly into audited financial statements and institutional compliance frameworks.
2.1 Definition and legal ownership
An allocated gold account is a custody structure where specific bars are legally owned by the investor and held in their name. Each bar is physically segregated from the provider’s general holdings and assigned through unique identifiers such as serial number, refiner stamp, weight, and fineness. These identifiers appear on official barlists, which serve as proof of ownership and can be reconciled during audits.
The legal distinction is clear: bullion in an allocated account does not belong to the provider. It is not part of the provider’s balance sheet and cannot be used as collateral or lent into the market. If the custodian were to face financial difficulties, the investor’s gold remains protected as their direct property.
This structure creates certainty for investors. Legal title ensures that gold is treated as a personal or institutional asset, not as a liability of the custodian. For regulators, auditors, and insurers, this separation is what gives allocated accounts their strength: they represent a direct, unambiguous claim on physical gold, safeguarded under custody agreements.
2.2 How custody and barlists work
Custody in an allocated account operates through a transparent chain of documentation and verification. Once gold is deposited, the custodian issues a barlist — a detailed register that specifies each bar’s serial number, refiner, weight, and fineness. This document links the investor directly to the physical bullion, creating a verifiable record of ownership.
Barlists are updated whenever bullion is added, withdrawn, or transferred between vaults. Each change is logged to maintain an audit-ready history. Independent auditors and insurers use these lists to confirm that the gold reported in custody statements matches the gold physically present in the vault.
Storage takes place in high-security vaults, often within recognized trading hubs such as London, Zurich, Dubai, or Hong Kong. The custodian provides ongoing oversight, ensuring that the bars remain untouched unless the investor authorizes movement or sale. Insurance policies cover the gold as it sits in custody, and policies are typically tied directly to the barlist to avoid ambiguity in coverage.
For investors, barlists are more than operational paperwork — they are governance tools. They provide the ability to reconcile gold holdings against financial statements, satisfy audit requirements, and demonstrate clear ownership in compliance and reporting frameworks.
2.3 Fees, storage costs, and transparency
Allocated gold accounts carry a fee structure that reflects the high level of security, segregation, and documentation involved. Unlike unallocated accounts, where the provider holds pooled reserves and charges lower or indirect fees, allocated custody is explicit: the investor pays directly for storage, insurance, and audits of specific bars.
Storage fees are typically charged as a percentage of the gold’s market value, often ranging between 0.3% and 0.8% per year, depending on jurisdiction, vault provider, and total volume stored. For large institutional allocations, negotiated rates may reduce costs, while smaller private accounts may fall at the higher end of the range. The fee covers physical security, vault infrastructure, and operational costs tied to managing segregated bars.
Insurance premiums are included in most custody arrangements. Coverage is usually “all-risk,” protecting against theft, damage, or loss within the vault. Because the bars are individually listed on barlists, insurance can be structured with precision — each bar is covered explicitly rather than as part of a general pool. This clarity reduces disputes in the event of claims and strengthens investor confidence.
Audit and reporting costs can either be bundled into storage fees or charged separately. Allocated accounts require periodic independent audits, during which barlists are reconciled against the gold physically stored. Institutions may commission additional audits to satisfy governance requirements, and while this adds cost, it also enhances transparency.
The value of transparency outweighs the higher fees for many investors. With allocated custody, investors know exactly what they are paying for — secure storage of specific bars that legally belong to them. There are no hidden risks of rehypothecation, lending, or balance sheet exposure. The clarity of costs is part of the reason why allocated accounts are preferred by family offices, pension funds, and institutional investors who prioritize governance over marginal savings.
For long-term capital protection, this transparency creates stability. Allocated custody transforms gold from a passive commodity holding into a fully accountable asset, integrated into financial statements and protected by legal and insurance frameworks.
2.4 Benefits for investors
Legal title, zero ambiguity
Allocated custody grants direct ownership of identified bars. Title is recorded via serial numbers and reconciled to custody statements. This removes ambiguity in ownership, simplifies legal review, and supports clean opinions from auditors and counsel.
Counterparty risk contained
Segregated bars sit off the provider’s balance sheet. Exposure shifts from “creditor of the provider” to “owner of specified bullion under custody.” Вankruptcy-remote positioning preserves the asset through corporate stress at the operator level.
Audit-grade transparency
Barlists (serial, refiner, weight, fineness) tie one-to-one with vault holdings. Periodic third-party verification turns physical gold into an asset class that withstands institutional audit cycles without manual reconciliation marathons.
Insurance aligned to the metal you actually own
“All-risk” coverage references listed bars rather than a pooled claim. Policy wording maps to barlists, reducing disputes and speeding claims handling. Premiums reflect real exposure, not averages across a pool.
Governance and reporting clarity
Allocated custody integrates cleanly with board policies, risk limits, and regulator expectations. Statements, barlists, and insurance certificates slot into financial reporting without bespoke workarounds.
Portability across hubs
Identified bars can be transferred between approved vaults (London, Zurich, Dubai, Hong Kong) with the chain of custody intact. This enables re-balancing by jurisdiction, settlement needs, or changes in risk appetite—without resetting documentation.
Withdrawal and delivery rights
Contractual rights to take delivery are clear because the bars are already earmarked. Investors can plan repatriation, collateral substitution, or physical audits with reliable timelines.
Financing optionality
Banks and specialty lenders frequently accept allocated bullion as collateral via tri-party or pledge structures. Identified bars, clean title, and custody confirmations reduce haircuts and legal friction compared with pooled claims.
Cost transparency
Fees are explicit (storage, insurance, audits). There are fewer hidden economics from netting or internalization common to pools. Budgeting becomes predictable at scale.
Operational resilience
In market stress, segregated title plus audit trails preserve confidence with risk committees, trustees, and beneficiaries. The asset is easier to defend, document, and—if required—move.
Practical playbooks
Institutions (asset managers, pension funds, insurers)
- Policy fit: Write mandate language that specifies allocated custody, named vaults, and audit cadence.
- Controls: Require barlists with unique IDs at each month-end; tie them to portfolio records.
- Liquidity planning: Maintain standing instructions for inter-vault transfers between two hubs (e.g., London ↔ Zurich) to avoid ad-hoc approvals.
- Financing line: Pre-negotiate a tri-party collateral agreement referencing allocated bars to unlock repo/credit without asset migration.
- Assurance: Schedule independent inspections annually; keep insurer endorsements aligned to current barlists.
Family offices / private wealth
- Simplicity first: Use one primary vault and one contingency vault; standardize reporting formats across providers.
- Confidential audits: Opt for inspector attestations that confirm serial numbers and weights without disclosing beneficiary identity beyond NDA scope.
- Event readiness: Keep delivery instructions, KYC, and customs paperwork templated for quick repatriation or jurisdiction switches.
- Cost control: Negotiate tiered storage as AUM grows; ask for bundled audit fees once barlists stabilize.
Example scenarios
- Board-level comfort: An endowment upgrades from unallocated exposure to allocated custody. Audit variance drops to zero because barlists reconcile line-by-line with statements; the investment committee gains approval to increase the gold allocation.
- Collateral efficiency: A multi-strategy fund pledges allocated bars under a tri-party agreement. Haircut improves versus a pooled claim because title and bar identification lower legal risk for the lender.
- Jurisdictional switch: A family office moves part of its position from Dubai to Zurich within the same provider network. The chain of custody remains continuous; insurance and documentation update automatically, avoiding a tax trigger.
Quick checklist — when allocated custody fits
- Need verifiable ownership for audits, trustees, or regulators.
- Desire to use bullion as collateral with minimal legal friction.
- Preference for jurisdictional flexibility and clean portability.
- Priority on governance, insurance precision, and resilience in stress.
- Willingness to pay explicit storage/insurance for transparency and control.
3. Unallocated gold accounts explained
Unallocated accounts are the dominant model in the global bullion market, especially within banks and large trading institutions. In this structure, investors do not own specific bars. Instead, they hold a general claim against the custodian or provider, who pools all customer holdings together. The provider maintains the obligation to deliver gold on demand, but no unique serial numbers or barlists are assigned to the investor.
This arrangement makes unallocated accounts efficient and liquid. Providers can move gold within their balance sheets, use it for settlement, or lend it into the market, while still recording the client’s entitlement. For investors, this often means lower custody fees—or in some cases, no explicit storage charges at all—since the provider generates revenue from redeploying pooled gold.
The trade-off is in ownership rights. Because no specific bars are assigned, investors are exposed to the provider’s creditworthiness. If the provider were to face distress, holders of unallocated accounts would be treated as unsecured creditors, rather than owners of physical bullion.
Despite this structural risk, unallocated accounts remain attractive for certain strategies. They allow investors to gain exposure to gold quickly, to trade in and out of positions without delays, and to operate within the infrastructure of large financial institutions. For short-term allocations or liquidity-driven strategies, the convenience of unallocated custody can outweigh the limitations.
For family offices and institutions, the decision is strategic: unallocated accounts may serve as a tactical tool for liquidity, but they do not provide the long-term security of fully segregated, allocated holdings.
3.1 Definition and provider liability
An unallocated gold account is a custody arrangement where investors hold a claim on gold, but not on specific bars. The custodian records the balance in ounces or grams, without assigning unique serial numbers or refiner stamps. This balance represents a liability on the provider’s books rather than a segregated asset belonging solely to the investor.
In practice, this means that the provider owes the investor the equivalent quantity of gold, but the actual metal is part of a larger pool that may be used for lending, hedging, or settlement with other counterparties. The investor has contractual rights, but those rights are tied to the financial stability of the provider.
The legal status is critical: in insolvency or restructuring, unallocated account holders are treated as unsecured creditors. They do not have direct ownership of bars in custody. Instead, they must rely on recovery through bankruptcy proceedings or balance sheet restructuring, where claims compete with those of other creditors.
This distinction creates both opportunity and risk. On the one hand, it gives providers flexibility to manage liquidity and reduce costs, which often translates into lower or zero storage fees for the investor. On the other hand, it shifts counterparty risk squarely onto the investor, who must trust the solvency and operational discipline of the custodian.
For professional investors, understanding provider liability is the foundation of working with unallocated accounts. It defines whether the account is suitable for tactical allocations, trading exposure, or hedging strategies, and clarifies why these accounts are rarely used as the sole vehicle for long-term wealth preservation.
3.2 How claims and pooled accounts function
Unallocated accounts operate on the principle of pooled custody. Instead of earmarking bars for each client, the provider maintains a collective pool of gold. Every investor’s balance is recorded as a unit of entitlement—measured in ounces or grams—rather than as identified bars. The investor’s rights are therefore contractual rather than proprietary: the provider promises to deliver gold when requested but retains the freedom to manage the underlying metal for its own operations.
Recording balances
Client positions are tracked on the provider’s internal ledger. These entries are backed by the provider’s pool of bullion, but the specific bars supporting those balances are not disclosed. This system resembles a bank deposit: the client sees an account balance, while the bank uses the underlying capital for lending or liquidity management.
Operational use of pooled gold
Providers often deploy the gold in unallocated accounts for multiple purposes:
- Settlement between institutions, where claims are netted daily.
- Lending into the bullion market, generating interest income.
- Liquidity management, allowing providers to match short-term inflows and outflows.
- Hedging activities, where gold is temporarily mobilized against derivative exposures.
Implications for investors
From the client perspective, the pool provides convenience and efficiency. Transfers between accounts can be instantaneous, settlement with other counterparties is simplified, and providers can offer trading access without delay. Investors benefit from the liquidity of being part of a larger system that moves vast volumes of gold daily.
But the same mechanism limits transparency. Because bars are not assigned, investors cannot request a barlist, nor can they confirm which specific bullion backs their claim. Insurance is structured at the provider level, not at the level of individual investors. This creates dependence on the provider’s solvency and operational discipline.
Governance view
For institutions, pooled accounts can be practical for tactical exposure, but they raise governance questions. Boards and auditors often note that balances in unallocated accounts are only as secure as the provider’s ability to honor redemption. While this may suffice for short-term trading desks, it complicates long-term portfolio allocations or strategies requiring physical delivery.
In practice, pooled accounts are efficient tools in global gold markets, but they require clear understanding: investors hold a claim on a system, not direct ownership of gold bars.
3.3 Fee models and liquidity advantages
Unallocated accounts are attractive to many investors because they minimize explicit storage costs and maximize trading flexibility. Unlike allocated accounts, where investors pay for secure vaulting and insurance of identified bars, unallocated structures spread costs across the provider’s operations. This creates a model where fees are lower—or sometimes invisible—while liquidity is significantly higher.
Fee structure
In most unallocated accounts, investors do not pay a direct custody fee. Instead, providers generate revenue in two ways:
- Trading spreads and commissions – Investors may face slightly wider buy–sell spreads when entering or exiting positions.
- Revenue from lending and liquidity management – The provider earns income by redeploying pooled gold into the interbank or bullion lending markets.
This indirect structure makes unallocated accounts appealing to investors focused on minimizing visible costs. For smaller allocations or tactical positions, the savings on storage and insurance fees can be substantial compared with allocated custody.
Liquidity benefits
Unallocated accounts excel in speed and accessibility.
- Instant transfers – Balances can be moved between counterparties without the logistics of transporting physical bars.
- High-volume settlement – Banks and trading desks use unallocated accounts to settle large transactions quickly, netting obligations across multiple parties.
- Integration with derivatives – Futures, forwards, and swaps often reference unallocated gold balances, allowing investors to manage exposure seamlessly.
- Flexibility for trading desks – Providers can support 24/7 execution, with near-instant adjustments to balances.
Trade-offs behind efficiency
While the absence of direct custody fees and the high liquidity are clear advantages, the efficiency comes from the provider’s ability to mobilize the pooled gold. For investors, this means their entitlement is only as strong as the provider’s balance sheet and risk controls. In normal market conditions, this works smoothly; in stress events, it exposes investors to counterparty risk that does not exist in allocated structures.
Investor perspective
For family offices and institutions, unallocated accounts can function as transactional tools:
- To build or reduce exposure rapidly.
- To manage collateral in derivative strategies.
- To benefit from market liquidity without bearing high custody fees.
However, for long-term wealth preservation, most governance frameworks advise limiting unallocated exposure or pairing it with allocated holdings. This balances liquidity needs with the security of direct ownership.
3.4 Risks and limitations for investors
Unallocated gold accounts look attractive because they are liquid and cheap to maintain, but their design carries risks that investors often underestimate. The core issue is ownership: the gold belongs to the provider, not to the account holder. The investor holds only a claim on the balance sheet, and this claim is unsecured. If the provider defaults, the bullion in the vault stays with creditors, while the investor joins the queue of claimants.
Counterparty exposure
Because pooled gold can be lent, pledged, or used for settlement, the investor’s security depends entirely on the provider’s financial health. In a stable market this may not be a concern, but in stress conditions balances can be frozen or converted into cash settlement at unfavorable terms. For investors who see gold as a safe-haven asset, this undermines the very purpose of holding it.
Insurance and audit limits
Insurance in unallocated systems is written at the pool level. Policies cover the custodian’s stock, not individual claims. This makes payout less predictable in case of loss. Audit processes face the same problem: with no barlists or serial numbers, auditors cannot verify the gold as a tangible asset. Institutions may be forced to classify such positions as financial claims, reducing their value in governance and compliance frameworks.
Liquidity that can vanish
The biggest selling point—instant settlement—can turn into a weakness. If multiple clients demand delivery at once, there may not be enough metal in the pool. Settlement can be delayed, or investors may be offered cash instead of bullion. This is the opposite of what many expect when they allocate capital into gold.
Investor profiles most at risk
- Long-term allocators such as pensions or family offices, which need proof of title.
- Regulated institutions that must show physical backing for assets.
- Private investors who assume they “own gold” when in fact they only own a promise.
Illustrative scenario
A pension fund places part of its reserves in an unallocated account to reduce custody fees. At year-end, auditors request barlists and receive only balance statements. Without proof of ownership, the position is treated as a counterparty claim, forcing the fund to hold extra capital against the risk. What looked like a saving in fees turns into a governance cost.
4. Key differences between allocated and unallocated gold
The contrast between allocated and unallocated accounts comes down to one question: do you own bars, or do you hold a promise? Everything else — costs, liquidity, reporting — flows from that.
| Aspect | Allocated Accounts | Unallocated Accounts |
|---|---|---|
| Ownership | Direct title to specific bars, identified by serial number and refiner stamp. | General claim on provider’s pool, no individual bars assigned. |
| Custody Records | Barlists with serial numbers, weights, refiners. Auditable at any time. | Internal ledger balance only. No barlists, no physical reconciliation. |
| Risk Profile | Protected from provider insolvency; bars remain client property. | Investor is an unsecured creditor if provider defaults. |
| Insurance | Policy tied to specific bars under custody. | Coverage written at pool level, payout shared among claimants. |
| Liquidity | Delivery requires arranging movement of specific bars. Slower but certain. | High liquidity through instant transfers and netting. |
| Costs | Custody and insurance fees apply, often higher. | Often lower or zero direct fees; provider earns from lending and spreads. |
| Audit & Compliance | Recognized as physical bullion, fits governance mandates. | Classified as a financial claim in many frameworks. |
What this means in practice
- For institutions: Allocated accounts meet the requirements of trustees, regulators, and auditors. They provide certainty, but at a higher operational cost. Unallocated accounts integrate smoothly with trading systems and derivatives, making them useful for treasury desks but unsuitable for long-term reserves.
- For family offices: Allocated custody aligns with long-horizon wealth strategies, offering proof of ownership and clarity for succession planning. Unallocated accounts can serve as a tactical tool when quick access to liquidity is more important than direct ownership.
- For private investors: Allocated accounts remove ambiguity — the investor owns gold bars, full stop. Unallocated accounts may appear cheaper, but without full understanding they can introduce risks that defeat the purpose of holding gold.
4.1 Ownership and custody records
The most fundamental difference lies in the legal nature of ownership.
Allocated accounts
- Investors hold direct title to specific bars.
- Each bar is uniquely identified by serial number, refiner, weight, and fineness.
- Custodians issue barlists, which can be reconciled against physical bullion in the vault.
- These records allow independent auditors and insurers to verify holdings.
Unallocated accounts
- Investors have only a contractual claim against the provider.
- No barlists are issued; balances are tracked internally as ledger entries.
- Investors cannot verify which bars—if any—are backing their position.
Why it matters
- For institutions, clear title is critical for governance and regulatory compliance. Trustees and auditors typically require barlists to confirm ownership of physical bullion.
- For family offices, barlists provide intergenerational clarity: heirs inherit specific assets, not just a financial claim.
- For private investors, ownership records eliminate ambiguity and protect against misrepresentation.
Illustrative case
A fund manager with an allocated account in Zurich receives an updated barlist each quarter. The list allows auditors to confirm the exact bars held, satisfying both internal governance and external regulators. By contrast, a peer fund in an unallocated account receives only a statement showing ounces held. The difference is not cosmetic—it defines whether the gold is an owned asset or a provider liability.
4.2 Risk and insolvency protection
Risk exposure is where the gap between allocated and unallocated accounts becomes most visible.
Allocated accounts
- Bars remain the property of the investor at all times.
- If the custodian or storage provider becomes insolvent, the bullion is legally separated from their balance sheet.
- Creditors of the custodian cannot claim the gold because it is not part of the custodian’s assets.
- In practice, this gives investors a strong layer of insolvency protection—the metal can be reclaimed regardless of the custodian’s financial status.
Unallocated accounts
- Balances are treated as liabilities of the provider.
- Investors are considered unsecured creditors in insolvency proceedings.
- If the provider defaults, the gold pool is used to satisfy all creditor claims, not only those of account holders.
- Recovery may involve lengthy legal processes and partial repayment, often in cash rather than bullion.
Why it matters
- Institutions: Governance rules often require that reserve assets remain bankruptcy-remote. Unallocated accounts violate this principle, exposing institutions to systemic counterparty risk.
- Family offices: For multi-generational wealth, insolvency protection is essential. A claim on a balance sheet does not provide the continuity needed for legacy planning.
- Private investors: Many assume that “holding gold at a bank” means full protection. In unallocated models, the reality is different: the security depends entirely on the solvency of the provider.
Scenario
During a liquidity crisis, a provider suspends redemptions from unallocated accounts. Investors are told their claims will be settled as part of a restructuring plan. Those with allocated accounts in the same vault are unaffected—their bars are released directly. The same vault, two different account types, radically different outcomes.
4.3 Costs, fees, and insurance
The economics of custody differ sharply depending on whether accounts are allocated or unallocated.
Allocated accounts
- Custody fees: Investors pay for secure vaulting, bar handling, and administration of barlists. Fees are typically charged as a percentage of the gold’s value or a flat rate per ounce per year.
- Insurance: Coverage is written against the exact bars listed in custody. Policies specify serial numbers, refiners, and weights, which makes claims straightforward in case of theft, loss, or damage.
- Transparency: Costs are explicit and tied directly to the service of safeguarding physical property.
Unallocated accounts
- Custody fees: Often zero or minimal. The provider earns revenue by deploying pooled gold into lending markets, settlement flows, or internal liquidity operations.
- Insurance: Written at the provider or pool level, not linked to individual investors. In case of dispute, payouts are allocated across claimants, creating uncertainty for recovery.
- Transparency: Investors see low direct costs but rarely understand the embedded risks or the provider’s revenue model.
Why it matters
- Institutions: Higher fees in allocated accounts are justified because they align with compliance requirements. Insurers and auditors recognize the link between policies and specific assets.
- Family offices: Explicit costs are easier to plan for than hidden risks. Paying custody fees can be a strategic decision to avoid governance or insurance disputes in future.
- Private investors: Low costs in unallocated accounts look attractive, but if gold is meant to serve as a safe-haven asset, insurance gaps and indirect risks may outweigh the savings.
Scenario
A family office compares two custody proposals:
- Allocated custody in Dubai with 0.40% annual storage fee, insurance tied to serial-numbered bars.
- Unallocated custody in London with zero direct fees, but insurance written against the custodian’s general stock.
4.1 Ownership and custody records
The foundation of any gold custody structure is the legal proof of ownership.
Allocated accounts
- Investors hold direct title to specific bars.
- Each bar is documented by serial number, refiner, weight, and fineness.
- Custodians issue barlists, which can be checked by auditors and reconciled with vault holdings.
Unallocated accounts
- Investors hold only a claim against the provider.
- No barlists are available, balances exist only as internal ledger entries.
- There is no way to verify which bars support the account, if any at all.
Why it matters
- Institutions: Governance rules and regulators demand proof of ownership. Barlists provide that proof.
- Family offices: For wealth planning, clarity of ownership avoids disputes in succession or estate transfers.
- Private investors: Clear records ensure the asset is physical gold, not just a balance on someone else’s books.
Practical insight
In Zurich, a custodian issues quarterly barlists for allocated accounts, allowing investors to match their holdings line by line. In London, a client in an unallocated structure receives only an account balance. Both claim to “hold gold,” but the governance and audit outcome is radically different.
4.2 Risk and insolvency protection
The real stress test for any custody model comes when a provider faces financial distress.
Allocated accounts
- Bars remain legally separate from the custodian’s assets.
- Even in insolvency, the investor’s bullion is ring-fenced and released to its owner.
- Creditors of the custodian have no legal claim on the client’s bars.
Unallocated accounts
- Balances appear on the provider’s balance sheet as liabilities.
- In insolvency, investors become unsecured creditors competing with others for recovery.
- Compensation is uncertain and may arrive as partial cash repayment, not bullion.
Why it matters
- Institutions: Governance frameworks typically prohibit unsecured exposure for reserve assets. An unallocated balance undermines the very purpose of holding gold as a safeguard.
- Family offices: Multi-generational portfolios need continuity; relying on a provider’s solvency weakens that continuity.
- Private investors: Many assume their gold is “safe in the bank,” but in this structure the safety depends entirely on the bank’s survival.
Case insight
During the 2008 financial crisis, several banks restricted access to unallocated gold balances when liquidity tightened. Allocated holders in the same vaults withdrew their bars without interruption. The difference came not from the vault, but from the account type.
4.3 Costs, fees, and insurance
Allocated accounts — explicit economics
- Storage fees: usually charged as an annual percentage of the gold’s value or a per-ounce rate. Levels depend on jurisdiction (London, Zurich, Dubai, Hong Kong), portfolio size, and access frequency.
- Handling charges: applied for deposits, withdrawals, and inter-vault transfers.
- Insurance: policies are written against specific bars, referencing serial numbers and refiners listed on the barlist. This makes claims assessment straightforward.
- Audits and attestations: third-party checks are often included but may also be itemized.
- Negotiation levers: long-term commitments, consolidated family holdings, or reduced movement frequency can lower costs.
Unallocated accounts — implicit economics
- Storage fees: often minimal or zero, since providers monetize pooled gold through lending, settlement, or liquidity operations.
- Spreads and execution costs: buy–sell spreads are typically wider, and frequent rebalancing can add up quickly.
- Insurance: written at the pool level, not against individual claims. Recovery is shared among all account holders if a loss occurs.
- Hidden frictions: governance overhead, audit treatment as a financial claim, and potential capital charges for regulated investors.
Total cost of ownership
What appears cheaper at first glance is not always the least expensive over time. Allocated custody makes expenses transparent and predictable, while unallocated accounts embed costs in spreads, liquidity practices, or governance hurdles.
Illustrative example
Consider a $10 million position in gold:
- Allocated custody might charge around 0.40% per year (≈ $40,000) for storage and insurance.
- Unallocated custody may show zero storage fees, but even a modest 5 basis points per trade spread on monthly rebalancing equals ≈ $10,000 per round trip, or $120,000 annually.
This illustrates how trading intensity can make unallocated custody more expensive in practice, while buy-and-hold strategies may justify explicit allocated fees.
Underwriting perspective
- Allocated: insurers link coverage directly to barlists, reducing disputes and accelerating claims.
- Unallocated: coverage applies at pool level, which can delay settlement and dilute recoveries.
Checklist for investors
- Request a sample invoice that itemizes custody, insurance, and handling fees.
- Review insurance policy wording, especially links to barlists or coverage limits.
- Ask for a spread schedule in unallocated models.
- Clarify audit frequency and whether reports are external or internal.
- Map the custody model to reporting classification — physical bullion vs. financial claim.
Figures above are indicative and for illustration only. Actual fees, spreads, and insurance terms vary by provider, jurisdiction, and client profile. Always request full fee schedules and policy documents before making commitments.
4.4 Liquidity, settlement, and compliance
Allocated accounts — secure but slower
- Liquidity: Movements involve specific serialized bars. Delivery or transfer requires arranging logistics, export permits, or inter-vault handling. Execution takes longer and incurs costs.
- Settlement: Transfers rely on barlists and title documentation. This ensures certainty but adds administrative steps.
- Compliance: Regulators and auditors recognize allocated holdings as physical bullion. For institutions, this simplifies reporting of reserves, collateral, or solvency metrics.
Unallocated accounts — fast and flexible
- Liquidity: Balances can be moved instantly within the provider’s system. This supports rapid reallocations and market access.
- Settlement: Providers net flows across participants, allowing large trades to settle without moving physical bars. This efficiency makes unallocated accounts central to bullion trading and derivatives.
- Compliance: In many jurisdictions, unallocated balances are classified as financial claims. Institutions may face stricter reporting standards, while family offices and private investors must account for different tax or audit treatments.
Strategic trade-off
- Institutions: Treasury desks benefit from the speed of unallocated settlement, but boards often mandate allocated reserves to ensure insolvency protection.
- Family offices: Combining both models is common — unallocated for tactical liquidity, allocated for long-term wealth storage.
- Private investors: Fast access in unallocated accounts can be useful for trading, but those seeking a safe-haven asset should prioritize the security of allocated custody.
Case insight
A wealth manager uses unallocated accounts in London to adjust gold exposure within hours of a macro event. At the same time, the family office holds allocated bars in Zurich for annual reporting and inheritance planning. Speed on one side, certainty on the other — both serve distinct roles in the portfolio.
Examples above illustrate common market practice. Actual settlement times, compliance classification, and regulatory recognition vary by jurisdiction, provider, and account structure.
5. Choosing the right account type for your strategy
The choice between allocated and unallocated gold accounts depends less on theory and more on investor objectives. Some prioritize legal certainty and direct ownership, others need speed and liquidity for active strategies. The most effective approach is aligning custody type with portfolio purpose, governance requirements, and time horizon.
5.1 Institutional investors
For institutions, custody decisions are shaped by governance, regulation, and fiduciary duty. Gold is often held as part of reserves, collateral, or long-term strategic allocations, which makes the question of account type more than a technical detail — it directly affects compliance and risk management.
Allocated custody
- Provides bankruptcy-remote protection, as bars remain off the custodian’s balance sheet.
- Delivers audit-ready barlists that satisfy internal governance, external regulators, and trustees.
- Ensures gold is classified as a physical asset in financial reporting, which supports its use for capital adequacy and collateral frameworks.
- Carries higher custody and insurance fees, but those are acceptable trade-offs for compliance certainty.
Unallocated custody
- Useful for trading desks and treasury operations that need liquidity for hedging or settlement.
- Enables fast rebalancing of large positions, integration with futures and swaps, and smoother participation in interbank bullion flows.
- Creates counterparty risk and may require additional capital charges, limiting its role to short-term or tactical strategies.
Strategic mix
Many institutions run a dual structure:
- Allocated accounts for reserves, reported holdings, and long-term insurance against systemic shocks.
- Unallocated accounts for execution efficiency, liquidity management, and tactical overlays.
This combination allows them to satisfy compliance and governance while retaining operational flexibility.
5.2 Family offices
Family offices approach gold differently from institutions: the focus is not quarterly reporting or capital adequacy, but long-term wealth continuity and protection of purchasing power across generations. The custody structure they choose must support stability, inheritance planning, and flexible access to liquidity when required.
Allocated custody
- Ensures heirs inherit tangible assets — bars with serial numbers and barlists, not just contractual claims.
- Provides clarity in succession planning and estate transfers, reducing disputes or ambiguities.
- Insurance policies tied directly to identified bars protect wealth against operational risk.
- Higher explicit costs are often acceptable because they remove uncertainty and simplify legal structuring for future generations.
Unallocated custody
- Offers tactical advantages when families need fast access to liquidity — for example, rebalancing portfolios after market shifts or meeting capital calls.
- Works well for short-term allocations that will later be converted into allocated holdings.
- Exposes the family to provider solvency risk, which can be problematic in legacy planning.
Strategic mix
A common model is to hold the core allocation in allocated custody for security and governance, while maintaining a smaller unallocated position to provide tactical flexibility. This balance allows the family to preserve wealth with legal certainty while still benefiting from market liquidity when opportunities or obligations arise.
5.3 Private investors
Private investors often look at gold as a safeguard against currency risk, inflation, or financial instability. For them, the account structure determines whether that safeguard functions as expected. The distinction between allocated and unallocated custody is critical, especially because many individuals assume they “own gold” when in fact they only hold a provider’s promise.
Allocated custody
- Grants direct ownership of bars, with serial numbers and barlists as proof.
- Fits the purpose of gold as a safe-haven asset, since holdings remain secure even if the custodian faces financial stress.
- Provides transparency for personal record-keeping, estate planning, and tax reporting.
- Involves custody and insurance fees that may appear high, but these are predictable and directly tied to protecting physical wealth.
Unallocated custody
- Attractive for entry-level exposure because fees are low or absent, making it a simple way to gain market access.
- Supports active trading: investors can enter or exit positions quickly without dealing with logistics.
- Creates hidden risks: ownership is only a claim, insurance is indirect, and in provider distress scenarios, investors may end up unsecured.
Practical takeaway
For most private investors who view gold as a long-term safety net, allocated custody aligns best with their objectives. Unallocated accounts can play a role for tactical trading or for those seeking to minimize visible costs, but they should not be mistaken for direct ownership of bullion.
6. Conclusion: Why account type matters for long-term strategy
At first glance, the choice between allocated and unallocated gold accounts can seem like a detail, a technicality hidden in custody contracts. But once you look closer, it becomes clear that this decision shapes how gold works for you — whether it truly protects wealth or simply gives you market exposure.
Allocated custody is slower, more expensive, less flexible — yet it offers something priceless: certainty. Bars with serial numbers and barlists are not just paperwork; they are proof that the wealth exists outside of anyone’s balance sheet, ready to pass on, ready to survive shocks. That certainty is what many institutions, family offices, and long-term investors are really buying.
Unallocated custody feels light, fast, efficient. It moves like cash, trades like a balance, and connects directly to the largest flows in the bullion market. For tactical allocations, for treasury desks and short-term plays, it is hard to beat. But when the system wobbles, unallocated gold is only as strong as the provider behind it.
In practice, most sophisticated investors use both. The core is held in allocated accounts — anchored, insured, documented. Around it sits an unallocated layer that provides liquidity and tactical flexibility. This dual approach reflects the truth about custody: there is no single “best” option, only the structure that matches your goals, risk tolerance, and time horizon.
Gold is simple, but custody is not. Understanding the difference between owning bars and holding a promise is the key to turning gold from an abstract exposure into a reliable tool for wealth preservation.