
By Tim Schmidt - UPDATED: February 8, 2025
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If you are reading this article, the chances are that you have heard the terms "allocated" and "unallocated" gold. Choosing between the two is an important decision, one that will likely have a significant impact on your investment.
In this article, we'll walk you through the differences between them to help you decide whether to go for allocated or unallocated gold bullion.
Understanding Allocated Gold

When you purchase allocated gold, you're taking ownership of the actual physical precious metals. This type of gold is available in the form of gold bars, rounds, and coins, each with its own weight, serial number, and fineness.
These details are recorded and allocated to the investor. They are also listed in a document and offered as proof of ownership.
- Bars. Gold bars are available in a wide range of sizes, ranging from 1-ounce to 400-ounce bars. Smaller bars are generally preferred because they can be transported easily and provide more liquidity. They also require less storage space.
- Coins. Physical gold coins are also popular among investors. There are many different types of coins available, such as the South African Krugerrand and the American Gold Eagle. They are appealing because they are smaller in weight and often have aesthetic and cultural value, making them great collector's items.
- Rounds. Although they lack legal tender status, rounds are also appreciated for their beauty and lower premiums.
Another important thing to remember about physical gold ownership is that the assets are often stored in secure vaults. Because each item is allocated to certain investors and belongs to them, they are stored separately.
Unallocated Gold
When you choose unallocated gold, you're not purchasing physical gold bullion. Instead, you're investing in a portion of gold held by a financial institution. The gold is typically part of a larger pool of bullion.
Unlike with an allocated gold investment, you will not have ownership of the underlying gold bars, coins, or rounds. The bullion remains the property of the bank, and you become their creditor.
One of the main benefits of choosing this type of investment is the high liquidity. The bullion is generally easier to buy, sell, and trade because you do not have to physically move bars or coins. However, the reality is that unallocated gold exposes investors to high levels of risk.
Those who invest in gold and silver this way will generally have to track price movements to determine the best time to buy or sell their holdings. Here are two types of unallocated gold bullion investments:
- Gold ETFs. Exchange-traded funds, or ETFs, are a common type of unallocated gold investment. Investors hold a portion of a pool of precious metals and trade their holdings on stock exchanges as they would individual stocks.
- Gold accounts. Many financial institutions offer investors the opportunity to set up gold accounts without owning physical gold. With this type of investment, a certain amount of gold, generally measured by weight, is reserved for you.
Allocated vs. Unallocated Gold Bullion: What Are the Differences?
To help you choose between unallocated and allocated gold, we'll take a closer look at the differences between them.
Risk
The truth is that no investment is without risk. However, understanding the odds is important when determining the suitability of a particular investment.
Gold buyers who take physical ownership of their precious metals are typically subject to fewer risks than those who invest in unallocated gold bullion. That's because their holdings will not be subject to the ebb and flow of market changes but stored away safely in a vault until they decide to sell.
Unallocated gold, however, isn't as low-risk. Because the bank still owns the assets, you could end up losing your holdings if it faces financial issues or files for bankruptcy.
Storage
Gold investors must think carefully about storage when deciding between allocated and unallocated gold. Here's what you can expect in terms of storage with both types of investment structures:
Allocated Gold
When you take ownership of physical gold bullion, you'll need to invest in professional bullion vault storage to protect your investment. Allocated gold storage is not free and will involve ongoing storage costs.
Unallocated Gold
Storage is much simpler with this type of investment. Instead of having to worry about the cost of security, insurance, and more, the financial institution handles this for you. These institutions often have highly secure vaults that are used for this kind of storage.
Liquidity
Allocated gold is typically less liquid than unallocated bullion. That's because you have to handle specific gold bars or coins yourself. Selling gold isn't as easy as one might think, and it's often a time-consuming process involving transportation and handling. Nevertheless, allocated gold is still a fairly liquid asset, outperforming other types, such as real estate.
Unallocated gold, on the other hand, is highly liquid because gold investors don't have to worry about the logistics. They can buy, sell, and trade with ease as they do not have to deal with physical gold bars, rounds, or coins.
Audits or Inspections
It's also crucial to understand how the gold bullion held in each type of investment is managed or audited.
Allocated Gold
When you have ownership of your gold bullion, you can rest assured that audits will be conducted to ensure that the precious metals you have are physically present. Audits also verify the quantity and quality of the items in storage. Some facilities allow gold investors to inspect and audit their holdings themselves.
Unallocated Gold
Because the precious metals held in unallocated gold investments are stored in a bank's gold reserves, you will not be able to gain access to it to conduct your own audit or inspection. The financial institution will be responsible for ensuring the presence and security of your holdings.
Audits conducted by the bank aim to ensure the quantity and quality of the entire pool of bullion rather than just the assets that you have invested in.
However, audit reports are generally made available to investors, either through private communication or documents that can be accessed by the public.
It's essential that you familiarize yourself with regulatory obligations surrounding unallocated gold, as financial institutions will be subject to these rules and laws.
Which Investment Should You Choose?
It's important to remember that investments are personal decisions that are made based on your affordability, risk tolerance, and investment goals.
Suppose you prefer a low-risk way to diversify your portfolio with precious metals. Then, allocated gold is probably your best bet. However, if you're willing to take a risk, unallocated gold bullion can offer great returns.
Moreover, it's essential to decide whether you want the flexibility that unallocated gold provides or the stability of outright ownership.
Consider your financial position, too. If ongoing storage fees are not something that's feasible for you right now, unallocated gold investments may be the way to go.
It's also a good idea to consult a financial advisor who can offer case-specific recommendations to help you determine which investment product would best meet your needs.
Final Thoughts
Understanding the difference between allocated and unallocated gold is crucial for those hoping to add precious metals to their portfolios. Both have their pros and cons, so it's important to familiarize yourself with them and think about your own needs and goals.
And, if you're looking for more investment advice, please browse our website for more detailed content on gold investments!
Frequently Asked Questions
1. How much of my portfolio should be dedicated to gold and other precious metals?
This will usually depend on your personal needs and preferences, but most experts recommend allocating roughly 5 to 10% of your portfolio to gold.
2. Why should I invest in gold bullion?
Gold has been a sought-after asset for centuries. It has held its value historically and offers investors the benefit of tax savings. Moreover, it holds its value during inflationary hikes and is commonly referred to as a safe haven asset because of its ability to retain its value in extreme conditions. Ultimately, this asset can help you diversify your portfolio and protect against the risk of loss.
3. Can I store my gold bars and coins at home?
If you have purchased allocated gold and have taken legal ownership of it, you can store it at home. However, it's important to remember that when you choose to do so, you run the risk of theft and damage. To avoid this, it's often best to go with a professional storage facility.
4. Can I invest in gold without owning it?
Absolutely. Unallocated gold investments, such as gold ETFs, allow you to do this.