Allocated vs Unallocated Gold Storage: What Investors Need to Know
WHAT IT MEANS
Allocated storage means specific bars or coins are assigned to you by serial number or lot, stored in a segregated section of a vault, and legally yours. If the storage provider goes bankrupt, your metal is not part of their estate — it is your property, returned to you.
Unallocated storage means the vault holds a pool of metal and owes you a quantity. No specific bars are assigned to your name. You are a creditor, not an owner. If the provider becomes insolvent, you stand in line with other creditors and may receive pennies on the dollar.
This is not a technicality. It is the difference between owning gold and owning a promise.
WHY IT MATTERS FOR INVESTORS
The vast majority of "gold accounts" at major banks and some digital platforms use unallocated storage. The bank takes your money, credits your account with a gold balance, and commingles your metal (or more often, does not hold physical metal at all — they use derivatives or fractional reserves to back the position).
This works fine in normal times. But the entire reason people buy gold is for times that are not normal. During a banking crisis, an unallocated gold account behaves exactly like a bank deposit — it is a claim against the institution, subject to the institution's solvency. MF Global's 2011 bankruptcy demonstrated this: customers who believed they owned physical gold and silver through the brokerage discovered they were unsecured creditors.
Allocated storage eliminates this risk entirely. Your metal has your name on it. It sits in a designated location within the vault. It is inventoried, insured, and auditable. The storage provider is a custodian, not a counterparty. Their financial health has no bearing on your ownership.
The cost difference is real but modest. Unallocated storage is typically free (because the provider can lend or leverage your metal). Allocated storage costs a storage fee — typically $100 to $1,800 per year depending on the value stored. That fee buys you legal ownership, insurance, and the peace of mind that comes with knowing your metal will be there regardless of what happens to the custodian.
HOW IT CONNECTS TO PRECIOUS METALS
For serious precious metals investors — particularly those using vault storage as a wealth preservation strategy — allocated storage is the only option that delivers what gold is supposed to provide: an asset outside the financial system with no counterparty risk.
Within allocated storage, there is a further distinction between segregated and commingled. Segregated storage means your metal is physically separated from other clients' metal — stored in its own bag, bin, or section. Commingled allocated means your metal is allocated to you by weight and purity but stored alongside other clients' allocated metal in the same area.
Segregated storage provides the highest level of ownership certainty. You can inspect your specific items if desired. Your vault statement reflects the exact coins or bars in your possession. There is no question about what is yours.
For investors holding significant value in vault storage — or those using metals as an estate planning tool — segregated allocated storage is the standard. It provides clean audit trails for insurance claims, estate settlement, and tax reporting. It is the level of custody that family offices, high-net-worth individuals, and institutional investors require.
THE BOTTOM LINE
If you are storing precious metals in a vault, the single most important question to ask is: "Is my storage allocated or unallocated?" If the answer is unallocated, you do not own gold — you own a promise backed by someone else's balance sheet. That defeats the entire purpose of holding physical metal.
Alex Lexington provides exclusively segregated allocated vault storage. Every client's metal is stored in their own designated bin, fully insured, and held in their name. We do not offer commingled or unallocated storage because we believe it contradicts the fundamental reason our clients hold physical precious metals.
RELATED TERMS
Segregated Storage | Custodial Storage | Safe Haven Asset | Vault Storage | Counterparty Risk
DISCLOSURE
Alex Lexington provides this content for educational purposes only. This is not investment advice. Precious metals prices fluctuate and past performance does not guarantee future results. Consult a qualified financial advisor before making investment decisions. Alex Lexington is a licensed precious metals dealer, not a registered investment advisor.