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Updated 17:52 05/12/19

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Allocated vs Unallocated Gold


Many investors in precious metals will find themselves asking the question - what is the difference between allocated and unallocated gold?

Below we have compiled a list of some of the pros and cons of the two popular forms of bullion investment in order to allow you to make the best decision.

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Allocated Gold

Unallocated Gold

An investor in allocated gold is the outright owner of a certain amount of physical bullion.

Unallocated metal remains the property of the bank- the investor is essentially a creditor of the bank.

Buying allocated gold allows you to set your investment aside and forget about it- as long as it is stored safely your investment can’t disappear.

Your money is backed by the bank’s physical gold reserves.

As it is your physical property and not part of a bank or other organisation’s gold reserves, allocated gold will not be seized in the event of a liquidity crisis.

Because unallocated gold remains the property of the bank, the premiums involved are slightly lower.

Allocated gold is the one true way of owning bullion, while unallocated gold is a way of imitating bullion investment.

Unallocated gold is the most common form of gold investment worldwide.

Allocated gold may incur slightly higher costs than unallocated gold such as premiums and storage costs.

The fact that no physical gold is held makes this a much cheaper and more convenient method than allocated gold.

It also needs to be stored, either in a secure vault safely at home. However, as gold is such a compact store of wealth, it is easy to store safely and discretely.

However, while your investment is supported by the bank’s gold reserves, you cannot redeem any amount of gold, as you are not the owner.

Owning allocated gold means the value of your investment is independent of the performance of banks, making it the ultimate safe-haven asset.

The institution may not actually own sufficient gold to back the total value of all unallocated gold investments.

Click here to know more about allocated gold | Click here for more information on unallocated gold

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In our opinion, there is one clear answer as to which is the better way of investing in gold- the purchase and outright ownership of gold bars and coins. Unallocated gold can be attractive due to the lower costs and the fact that storage is taken care of by the bank. However, buying allocated gold offers investors the security and the privilege of being the rightful owner of the specific amount of metal that they bought.

When so many investors are attracted to gold due to its strength as a safe-haven asset, we believe that it makes sense to choose the only method that can truly offer this level of security. Read more about why you should buy gold.