Allocated Gold
Also: Allocated bullion, Segregated gold storage
Allocated gold refers to physical gold that is individually assigned to an owner, stored separately and does not appear on the custodian's balance sheet.
Allocated gold is the safest way to hold physical gold through a custodian. Each bar or coin is assigned by name to its respective owner, complete with serial number, weight and fineness - the custodian has no right of disposal over it whatsoever. You can use the current gold price at any time as a basis for valuation.
Allocated vs. unallocated - the crucial difference
The opposite term is unallocated gold: here the buyer holds merely a claim against the bank or dealer, without specific bars being reserved for them. The unallocated account appears on the bank's balance sheet as a liability - in the event of insolvency the investor ranks among the general creditors.
| Feature | Allocated | Unallocated |
|---|---|---|
| Ownership right | Direct title to the metal | Contractual claim |
| Insolvency protection | Yes - property remains the owner's | No - ranks as a creditor |
| Storage fees | Yes (typically 0.1-0.5 % p.a.) | Often none (bank bears the cost) |
| Liquidity | Slightly lower | Very high |
| Typical providers | Central banks, major banks, bonded warehouses | Commercial banks, gold savings accounts |
Legal and regulatory basis
With allocated gold, the investor acquires co-ownership or sole ownership of individual gold holdings. In the United Kingdom this is governed by the general law of property and by custody agreements; where gold is genuinely allocated and segregated, it remains the client's property and, in the event of the custodian's insolvency, is not part of the insolvent estate.
Central banks - including the Bank of England, one of the world's largest gold custodians - store their gold reserves exclusively on an allocated basis. The Bank of England's vaults in London hold gold for the UK government as well as for many other central banks and market participants.
Typical forms of custody
- Vault at a precious-metal dealer or a refinery - often with a certificate per bar.
- Bank deposit (allocated metal account) - rarer than the unallocated variant, usually from larger amounts upwards.
- Bonded warehouse - advantageous for international storage (e.g. Switzerland, Singapore); VAT only becomes due on import.
- Home safe / home storage - no counterparty risk, but insurance and theft risk.
Costs and valuation
The annual storage fee, depending on provider and volume, lies between 0.1 % and 0.5 % of the gold value. An insurance premium is frequently added. To value your holdings on an ongoing basis, use the Gold Calculator, which combines weight and the current spot price.
Holding value = fine weight (oz) × current gold price (GBP/oz)
Note: Tax aspects - such as any Capital Gains Tax on gains from a sale - vary from case to case. In the UK, gold bars and non-legal-tender coins are generally subject to CGT above the annual exempt amount, while UK legal-tender coins from The Royal Mint are CGT-exempt. This is not tax or investment advice.
Allocated gold in the portfolio context
As a safe-haven asset, allocated gold offers maximum protection against counterparty risk. It is particularly suited to long-term wealth preservation and inflation hedging. Those wishing to buy regularly can use the Savings Plan Calculator to simulate the pound-cost-averaging effect.
In brief
Allocated gold stands for complete, insolvency-protected title to physically present holdings - it is the counterpart to paper gold and unallocated positions and is regarded as the safest form of professionally custodied gold ownership outside one's own four walls.