SEGREGATED ALLOCATED ACCOUNTS
With such an account the investor owns metal that is identified by bar type, unique serial number, gross weight, the assay or fineness of each bar, and its fine weight. Credits or debits to the holding are linked to the physical movements of bars, to or from the client’s physical holding. The investor outright owns specific bars that have been fabricated and are sitting insured in a vault segregated from holdings of other clients.
There are several types of providers of such accounts:
1 – Bullion banks provide allocated accounts and charge a yearly storage fee ranging between 0.1% and 0.6% of the value of the metal, depending on the size of the investment and the relationship with the client. A feature of the London Bullion Market is that the clearing members act as sub-custodian for each other. This means that in the case of bullion held in an allocated account with a bullion bank, the property will exist but its location will be a bit of a secret. One clearer’s allocated collection (comprising individually identified 400 oz bullion bars) is most likely distributed across multiple vaults.
2 – Most wholesale bullion dealers offer a storage solution since the vast majority of their clients need to store the quantities they purchased. Such dealers work with top tier vaulting companies with whom they get a wholesale deal on the storage due to the volumes they bring. Clients are often better off going through these intermediaries. Moreover, most professional vaulting companies are not too keen in dealing with private clients (and some simply refuse to). Lastly, the bullion dealer acts as a front for its clients to the vaulting company, which adds another layer of confidentiality for the cautious investor.
3 – Most of the bullion companies that offer allocated pooled accounts (explained above) give the option to pay for the fabrication of the bars and have their segregated storage. The bar fabrication fees are usually prohibitive.