What is Allocated Gold

Learn about allocated gold, its meaning, benefits, and storage options. Understand why it's a secure investment choice and how it differs from unallocated gold.
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Gold Loan
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2 mins
10 December 2024
Allocated gold refers to gold held on behalf of an investor in a specific account, distinctly identified and physically stored. It represents direct ownership of gold, ensuring that the allocated gold cannot be used or borrowed by third parties. Understanding allocated gold, its characteristics, and its differences from unallocated gold is essential for investors seeking security and control over their gold holdings. Its impact on financial products like gold loans also highlights its relevance in the market.

Definition of allocated gold

Allocated gold is physical gold stored in a specific account under an investor’s name. Each piece of gold is distinctly identified, typically with serial numbers, ensuring that the investor has direct ownership of specific gold bars or coins. These assets are securely stored in a vault by a custodian and cannot be loaned, borrowed, or used by others. Allocated gold provides the highest level of security and transparency for gold investments, making it ideal for individuals seeking full control over their holdings. This type of investment is commonly used by those looking for long-term security or diversification in physical assets.

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Characteristic of allocated gold

Allocated gold has distinct characteristics that set it apart from other forms of gold investments. It represents direct ownership of physical gold, identified by serial numbers, weight, and purity. Stored securely in a vault under the investor’s name, it cannot be used by third parties, offering unparalleled protection. Custodians charge storage and insurance fees to maintain the security of the gold. Investors receive detailed documentation confirming their ownership, ensuring transparency. Unlike unallocated gold, allocated gold is not pooled with other investors’ holdings, providing exclusive rights to the physical asset. These characteristics make it a highly secure and transparent investment.

Benefits of owning allocated gold

Owning allocated gold offers several advantages for investors. It ensures direct ownership of physical gold, providing security against counterparty risks. With dedicated storage and insurance, the gold remains safe and traceable, offering peace of mind. Allocated gold acts as a hedge against economic uncertainty and inflation, preserving wealth over time. It provides liquidity, as it can be easily sold or used as collateral for financial products like gold loans. The transparency of ownership, supported by detailed documentation, ensures that investors have full control over their assets. Allocated gold is ideal for long-term investors prioritising security and stability.

Allocated gold vs. Unallocated gold: Key differences

Allocated gold and unallocated gold differ significantly in ownership and usage. Allocated gold represents direct ownership of physical gold stored securely under the investor’s name. It is not pooled or used by third parties, offering maximum security. Unallocated gold, on the other hand, represents a claim on the bank’s or custodian’s gold holdings, rather than specific gold bars. It is cheaper to hold as it does not incur storage fees but carries counterparty risks. Unallocated gold can be used by the custodian for lending or trading, while allocated gold ensures complete control and ownership of the physical asset.

Impact of allocated gold on gold loan

AspectImpact of allocated gold on gold loan
Valuation AccuracyAllocated gold’s defined purity and weight ensure accurate valuation for gold loans.
Collateral SecurityDirect ownership of allocated gold makes it a secure and credible collateral option.
TransparencyDetailed documentation supports transparency, simplifying the loan approval process.
LiquidityAllocated gold can be easily pledged for gold loans without ownership disputes.
Loan AmountThe high valuation of allocated gold allows borrowers to access higher loan amounts.


Allocated gold’s transparency and secure ownership enhance its value as collateral, making it a preferred choice for gold loans.

Frequently asked questions

What is allocated gold?
Allocated gold refers to physical gold owned by an investor and stored securely in a vault under their name. Each piece is distinctly identified, often with serial numbers, and remains separate from other holdings. This ensures the investor has direct ownership and full control over specific gold bars or coins. Allocated gold cannot be lent or used by third parties, offering a high level of security and transparency.

How is allocated gold different from unallocated gold?
Allocated gold represents direct ownership of specific gold bars or coins, stored securely under the investor’s name. Unallocated gold, on the other hand, offers a claim on the custodian’s pooled gold holdings rather than individual pieces. Allocated gold incurs storage fees but eliminates counterparty risks, while unallocated gold is cost-effective but carries risks as it can be used for lending or trading by the custodian.

Can anyone sell allocated gold easily?
Yes, allocated gold can be sold easily, as it represents direct ownership of physical gold. With proper documentation, including serial numbers and certificates of ownership, the gold can be liquidated through trusted dealers or institutions. Its clearly defined purity and weight simplify valuation and resale. However, storage arrangements may need to be terminated before sale, ensuring the transfer of ownership is seamless and transparent.

How is allocated gold stored?
Allocated gold is stored securely in a dedicated vault under the investor’s name, ensuring exclusive ownership. It is individually identified with details such as serial numbers, weight, and purity. Reputable custodians, such as banks or specialised facilities, manage the storage, often providing insurance and periodic audits. This ensures the gold remains safe, untampered, and readily accessible, with storage fees covering maintenance and security services.

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