UNALLOCATED METAL ACCOUNTS
Most of the world’s gold is held in unallocated accounts provided by financial institutions and large bullion dealers. While those accounts are described as the most convenient, cheapest, and most common ways to gain exposure to bullion, specific bars are not set aside for the client and the account is backed by the credit worthiness of the institution.
“Unallocated” storage means you own part of a pool of gold with no title to any particular bar. Precious metals held in this form do not entitle the holder to specific bars and the holder only ranks as an unsecured creditor of the dealer or bank in the event of an insolvency or bankruptcy. This bullion can be considered part of the general pool of metal held by the dealer or bank, and may be lent out or sold without the owner’s knowledge or consent. As a result, storage fees are much lower than for full custodial storage and are not paid until the account is closed or the bullion delivered.
The London Bullion Market Association clearly mentions that with such account, “The client is an unsecured creditor.”