A bar. Or a claim. | Canvas of Knowledge

The distinction is in the account

Gold can be bought and sold before the parties decide how the resulting holding will be recorded. Allocated and unallocated describe account arrangements, rather than two different chemical forms of gold. An unallocated balance represents a contractual entitlement to a quantity of metal against the account provider. It does not identify a particular bar as the customer’s property. The holder therefore has credit exposure to that institution, alongside exposure to changes in the gold price. [1]

Identified bars

Allocated holdings are associated with particular bars and a list identifying their characteristics. The Bank of England provides a concrete example: customers using its allocated custody retain title to specified bars, instead of holding a general claim on the Bank for a weight of gold. The distinction separates the role of custodian from that of debtor. It does not mean that every service advertised with the word gold uses the same legal or operational arrangement. [2]

Why accounts matter to settlement

Unallocated accounts help the London market settle trades efficiently. LPMCL’s system uses electronic transfers and netting between participating clearers, reducing the need to move heavy, valuable bars for each transaction. That convenience explains why an account claim can be useful even when identified metal sounds more intuitive. The trade-off is not a change in gold’s physical properties. It is a change in the relationship through which a holder obtains access to the metal. [3]

Look beyond the label

An informative comparison starts with the agreement: are bars identified, who holds legal title, and what claim exists if the provider fails? It also asks how withdrawals work and what storage or conversion charges apply. Ownership of identified metal does not remove gold-price risk or make physical access instantaneous. For readers, the central lesson is to separate the underlying asset from the arrangement used to hold it. A photograph of a vault cannot answer those contractual questions. [1] [2]

FOLLOW THE EVIDENCE

Sources & further reading

Sources checked 14 November 2026. The artwork is illustrative. Reference organisations do not endorse this website. Financial examples are educational, not investment recommendations.