Allocated vs Unallocated Metal
When precious metal is held for you, how is that holding recorded? Allocated and unallocated describe different arrangements. Understanding the difference helps you ask what you own, who holds it and how you could receive it.
What does allocated mean?
In a conventional allocated account, particular physical bars are identified as belonging to the account holder. A record may list details such as bar numbers, weights and fineness. The custodian holds those identified bars under the terms of the arrangement.
The important point is identification: the account is connected to specific physical metal, rather than only to an amount measured in ounces or grams. How that ownership is documented and protected still depends on the provider's contract.
What does unallocated mean?
In a conventional unallocated account, your balance records an entitlement to a stated quantity of metal, but particular bars are not identified as yours. For example, the account may show an amount of gold without giving you a list of specific gold bars.
That distinction affects your relationship with the provider. You need to check the agreement to understand its obligations to you, how metal is backed, what happens if the provider cannot meet those obligations and how a request for physical metal would work.
Allocated
Specific physical metal is identified for the account holder under the applicable custody arrangement.
Unallocated
The account records a quantity of metal without identifying particular bars for that account holder.
Provider terms
The agreement determines the exact rights, backing, charges and process for selling or requesting delivery.
Does unallocated mean there is no physical metal?
Not necessarily. An unallocated arrangement does not identify particular bars as yours, but a provider may still hold physical metal against its obligations. Backing policies vary. The Perth Mint, for example, describes its own unallocated holdings as backed by metal in its inventories. That description applies to its product and should not be assumed for every provider.
Remember: "Unallocated" tells you that specific bars have not been assigned to your account. It does not, by itself, tell you everything about backing, legal rights or risk. Read the product's own terms.
What if I want a physical bar or coin?
Ask how delivery or collection works before you buy. An allocated holding may involve the identified product or bars, subject to the provider's rules. An unallocated balance may first need to be converted into an available physical product. That conversion can involve minimum quantities, fabrication charges, handling or delivery costs.
Also check whether the product you could receive matches the unit shown in your account. A balance measured in grams does not automatically mean a bar of that exact size is ready for collection.
What should you ask a provider?
Ask whether specific bars are identified for your holding and what records you will receive. Check who legally owns the metal, where it is stored, whether it is insured and what the provider promises if something goes wrong. Then confirm the costs and time involved in selling, converting or taking delivery.
Some providers also offer other categories, such as pooled allocated arrangements. Their labels and terms can differ, so use the written agreement to understand the actual product.
The key idea: Allocated usually points to identified physical metal. Unallocated usually points to a quantity owed under an account arrangement. The contract tells you what either label means for a particular provider.