Allocated storage means a vault holds specific bars or coins for you under a bailment arrangement. Your metal is your legal property, tracked separately from other clients’ holdings. The vault’s job is to safeguard it on your behalf.
Understanding gold storage terms
There are four key terms you might hear with gold and silver storage options. These include allocated, unallocated, segregated, and commingled. Allocated gold and unallocated gold are about legal ownership. Segregated and commingled are about physical storage.
Allocated storage
The storage company holds your gold under a safekeeping or custody arrangement and tracks your gold to your account by serial number, weight, or form.
The gold is not on the storage provider’s balance sheet, so if the company went out of business, your metal would be returned to you because it was never theirs to begin with.
Unallocated (pooled) storage
With unallocated storage, you don’t own specific bars or coins. You own a share of a pool of gold that the provider holds for many clients at once. If the company runs into trouble, you’re treated like any other creditor, with no guarantee you’ll get your metal back.
It’s usually cheaper, sometimes free, because the provider can earn money on the pooled gold. The lower cost comes with more risk for you.
Segmented storage
Your gold sits in its own dedicated space, separate from any other client’s metal. Your specific bars or coins are physically isolated, usually in a labeled compartment or locker tied to your account.
This is the highest level of physical separation you can get. Nobody else’s metal touches yours. If you want to audit your holdings or take physical delivery, the storage provider hands you the exact bars you shipped to them.
Segregated storage costs more because it uses more vault space and more handling. Investors who hold rare coins or want specific bar serial numbers preserved tend to choose it.
Commingled storage
Commingled storage means your gold sits in the same vault as other clients’ gold. The provider tracks what’s yours, but the bars aren’t physically separated. When you withdraw, you get bars of the same weight and purity, not necessarily the exact ones you started with.
Gold storage terms at a glance
Storage terms to be aware of when buying gold:
| Feature | Allocated | Unallocated | Segregated | Commingled |
|---|---|---|---|---|
| Legal ownership | You own specific bars or coins | Claim on a quantity, not a specific metal | You own specific bars or coins | You own specific bars (if allocated) |
| Physical storage | Tracked to you by serial number | Pooled inventory across clients | Dedicated space tied to your account | Stored alongside other clients’ metal |
| If the provider fails | Returned to you | You become an unsecured creditor | Returned to you | Returned to you (if allocated) |
| Cost | Higher than unallocated | Lowest, sometimes free | Highest | Lower than segregated |
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Why legal ownership matters
Precious metals stored as allocated give you a contractual claim on a quantity of metal.
- Debtor-creditor: Unallocated storage creates a debtor-creditor relationship. The institution holds metal as a fungible pool. If it goes bankrupt, that obligation becomes a general unsecured claim. Recovery depends on what’s left after secured creditors get paid.
- Bailment law: With allocated storage, specific bars and coins are titled to you and not on the provider’s balance sheet. If the company fails, your metal isn’t part of the bankruptcy estate. You produce your documentation and reclaim your property.
Where to store allocated gold
Examples of depositories for allocated precious metals storage in the US include:
- Delaware Depository: One of the most widely used in the industry, also COMEX-approved.
- Brink’s Global Services: Secure logistics company with vaulting operations in multiple locations.
- International Depository Services: Facilities in Delaware and Texas, with a Canadian location as well.
- Texas Bullion Depository: State-administered facility in Leander, Texas.
- A-M Global Logistics: Las Vegas-based precious metals storage.
- Loomis International: Secure logistics company with vaulting services in multiple regions.
How to verify your allocated gold is real
Allocated storage is only as good as the provider’s documentation and oversight. Before you commit to any facility, check for:
Serial numbers and bar lists
A unique serial number should identify each bar or coin in your account. Reputable providers publish bar lists so you can confirm your specific holdings are recorded against the vault’s actual inventory. Ask to see this documentation before you sign up.
Independent third-party audits
Your vault’s holdings should be audited annually by an outside firm with no financial relationship to the facility. Ask who conducts the audit and whether you can receive a copy of the most recent report.
Full replacement-value insurance
Your gold should be insured at full replacement value against theft, loss, and damage. Get the specifics in writing, like what the policy covers and the coverage limits.
Allocated storage and a Gold IRA
If you hold gold inside a self-directed IRA, you’re required to store it at an IRS-approved depository. Storing IRA gold at home, in a personal safe, or in a bank safe deposit box isn’t allowed. The IRS treats it as a distribution, which means you’d owe taxes on the full value, plus a 10% early withdrawal penalty if you’re under 59½.
Most Gold IRAs have allocated storage. IRS-approved depositories have high levels of security, include insurance, and meet strict custody standards.
Why do some investors use unallocated gold storage?
There are a few reasons why people decide to use unallocated gold storage:
- Lower cost: There are usually no separate storage or insurance fees, so it’s a lower‑cost way to get gold exposure.
- Flexible: You just buy a set amount of gold without choosing bar sizes or dealing with shipping and vault logistics, which appeals to people who do not care about specific pieces.
- High liquidity: Because there’s no shipping of specific bars, you can sell your holdings immediately.
Pros and cons of allocated storage
Here are the considerations of this type of ownership.
Pros of allocated storage
- Full legal ownership: Your specific bars or coins are documented as your property, not as a pooled claim on a quantity.
- Bankruptcy protection: Your gold isn’t on the storage facility’s balance sheet, so it stays outside any bankruptcy proceeding involving the company.
- Comprehensive insurance: The storage facility insures your holdings at full replacement value against theft, loss, and damage, included in the annual fee.
- Independent verification: You can confirm your holdings with third-party audits and serial-number documentation.
Cons of allocated storage
- Annual fees: Expect to pay 0.5%–1.5% of your holdings’ value each year. If you own $50,000 worth of gold or silver, that’s $250–$750 annually.
- Less liquid than unallocated: When you’re ready to sell, there are more steps and coordination than with an unallocated account.
- Minimum thresholds: Some providers have minimum holding requirements.
At a glance: allocated storage pros and cons
| Pros | Cons |
| Full legal ownership. Specific bars or coins registered in your name, not a pooled claim on a quantity. | Annual fees. About 0.5%–1.5% of holdings per year. |
| Bankruptcy protection. Your gold stays out of the estate if the storage company fails, because it was never theirs. | Less liquid than unallocated. Selling involves more steps than closing an unallocated account. |
| Comprehensive insurance. Full replacement-value coverage from a named insurer is included in the annual fee. | Provider minimums. Some programs require minimum holdings to participate. |
| Independent audit access. Serial numbers and third-party reports let you confirm your gold exists. | Vetting required. The protections are only as strong as the program behind them. |
Final thoughts on precious metals allocation
If you want to avoid counterparty risk with your physical gold, allocated storage is the way to go. You maintain specific bar ownership, backed by documentation and independent oversight.
Storage is just one part of building a gold portfolio. To learn more about how to get started with gold and silver, connect with the Swiss America team today!
Allocated storage: FAQs
What does dynamically allocated storage mean?
It’s a form of allocated storage where the specific bars assigned to you can change over time, even though your total ownership stays the same.
- How it works: You hold legal title to a set quantity of gold at a specific purity. The provider may swap in different bars of equal weight and purity as inventory changes.
- Why providers offer it: It gives them flexibility to handle withdrawals and rebalance the vault without tracking the same bars to each client.
- What it means for you: You keep the bankruptcy protection of allocated storage because the metal is yours, not the company’s. But you won’t have specific serial numbers tied to your account.
What happens to my gold if the vault company goes bankrupt?
Your allocated gold is protected from the company’s creditors because it’s documented as your legal property, not as a company asset.
- Legal separation: The bailment structure that governs allocated storage means the vault holds your property on your behalf. Because it’s not on their balance sheet, creditors of a failed company have no claim to it.
- What you’d need to do: You’d present your ownership documentation, account records, bar lists, and serial numbers to the bankruptcy administrator to claim your specific metal.
- Contrast with unallocated: If you held unallocated gold at the same company, you’d be an unsecured creditor filing a claim alongside everyone else, with no guarantee of full recovery.
How do I verify that my allocated gold is actually there?
The most direct way is through serial number documentation and an independent audit report.
- Serial numbers and bar lists: Your account documentation should list the specific bars or coins held for you by serial number, weight, and fineness.
- Third-party audit reports: Look for annual audits done by an outside firm with no financial relationship to the vault.
- Physical visits: Some vaults allow clients to visit and view their holdings in person.
Can I take physical delivery of my allocated gold?
Yes, though the process involves some lead time, logistics, and fees that vary by provider.
- Withdrawal process: You can request physical delivery of your bars or coins. You’ll typically pay a handling fee, plus shipping and insurance costs.
- Gold IRA restriction: If your gold is inside a Gold IRA, once you reach the age of 59½, you can take an in-kind distribution and receive the physical metal directly.
The information in this post is for informational purposes only and should not be considered tax or legal advice. Please consult with your own tax professionals before making any decisions or taking action based on this information.
