Here is an experiment you can run this week. Take any two people who each "own a million dollars of gold" and ask to see the paperwork. There is a fair chance you will find two completely different assets wearing the same statement. One person owns bars. The other owns a promise. Both were told they bought gold, both watch the same price, and only one of them would collect their metal intact if the company between them and the vault stopped answering the phone.If you have spent years in digital assets, this situation should feel familiar rather than shocking. You have watched balances on failed exchanges turn into claim forms in bankruptcy proceedings. You know the difference between holding your keys and holding a login. The metals market has run the same experiment for far longer, and it has evolved five distinct forms of ownership, each with its own place in the queue when things go wrong. This article defines all five, ranks them, and shows you how to find out, in writing, which one you actually hold.The vocabulary differs from crypto but the logic will not. By the end, you should be able to read a custody agreement the way you read a wallet: checking who controls the asset, not who displays the balance.
The five forms, from property to promise
Allocated. Specific bars or coins are identified as yours: serial number, refiner, weight, fineness, all recorded against your name on a bar list. The metal is your property. It does not appear on the provider's balance sheet, because it does not belong to the provider. If the provider fails, your bars are not part of its estate; an administrator's job is to return your property, not to distribute it among creditors. Allocated is the self-custody of the metals world, with one improvement: a professional vault, insurance and an audit trail come attached.
Segregated. A subset of allocated, and the strictest form. Your bars are not only identified as yours but physically kept apart, in your own compartment or container, rather than shelved together with other clients' allocated metal. Segregation adds cost and removes ambiguity. When you visit, and with the right provider you can, the vault officer opens a container that holds your metal and nobody else's.
Unallocated. You own no specific bars. You hold an entitlement to a quantity of metal, say 100 ounces, owed to you by the provider. That entitlement is a liability on the provider's balance sheet, and you are an unsecured creditor. The London bullion market largely runs on unallocated accounts because they are cheap and operationally convenient for trading, and the LBMA's own market documentation is candid about the structure: unallocated holders rely on the general stock and solvency of the institution. Unallocated is the exchange balance of the metals world. Nothing is wrong with it, so long as you understand that convenience is being paid for with credit risk.
Pooled. A retail cousin of unallocated. Many small holders share an interest in a common pile of metal, with the provider keeping the ledger. Costs are low, minimums are low, and your position is a fractional claim rather than identifiable property. Some pooled programmes are backed bar for bar and audited; others reserve the right to hold partial cover. The category is only as good as its documentation, which is precisely the problem: most buyers never read it.
Tokenised. A digital claim on gold held by an issuer, tradable on-chain. Tokens settle like the assets you already hold and track the price well. In ownership terms, most holders sit at the end of a chain that includes the issuer, the vault operator, the blockchain and any exchange in between, and physical redemption carries thresholds and terms; the largest products set minimums around a full 400-ounce bar. We covered the outline in our portfolio framework. For today's ranking, one sentence suffices: a token is unallocated-style exposure with additional counterparties and better settlement, and holding one is a trade-off you should make knowingly.
The ranking that only matters on the worst day
In normal markets, all five forms track the same price, and the cheaper claims genuinely are cheaper. The ranking below is about the abnormal day: a provider insolvency, a frozen platform, a disputed estate.
At the top sit segregated and allocated metal. You are an owner. The legal principle at work is old and simple: what is your property never becomes part of a failed provider's estate, whatever else is happening on that provider's balance sheet. Recovering property through an administration can still take time, and paperwork quality decides how much. It is a delay, not a haircut.
Below the line sit unallocated, pooled and tokenised holdings. You are a creditor, queueing with the others. Recovery depends on what is left in the estate, and history's bullion-market failures have taught the lesson repeatedly. Crypto holders do not need the history lesson; you have watched modern versions of it in real time, where platform customers discovered that their balances were unsecured claims and settled for cents on the dollar years later.
One more clause deserves your attention, and your background gives you a head start on it: rehypothecation, the provider's right to lend, pledge or otherwise use metal held for clients. Digital asset holders learned this word when yield platforms failed and it emerged that deposited coins had been re-lent. The metals version exists too, and it hides in custody agreements as a quiet permission. Allocated, segregated metal held under a proper agreement cannot be rehypothecated, because it is not the provider's to use. If your agreement grants that right, you do not hold the asset you think you hold, whatever the marketing page says. Our companion piece on allocated and unallocated ownership covers the legal mechanics in more depth.
What a serial number actually proves
Crypto gave you the block explorer: an independent way to verify that an asset exists and where it sits, without trusting anyone's statement. Physical gold's equivalent is humbler but older, and it works.
Every bar from an accredited refiner carries a unique identity: serial number, refiner's mark, year, weight and fineness. The LBMA's Good Delivery system tracks bars through an accredited chain of refiners, vaults and transporters, which is why a bar with an unbroken custody record trades at full value while a bar without one needs re-assaying. When your metal is allocated, that identity appears on your bar list, and the bar itself, the vault's records and your own documentation all point at the same physical objects.
That triple match is what a serial number proves: not that gold exists somewhere, but that specific gold is yours. It supports three things no pooled claim can offer. You can audit, by having the bar list reconciled against the vault's inventory, or by standing in the vault yourself. You can take delivery of those exact bars. And you can sell without re-verification, because the chain of custody travels with the bar. The distinction between holding metal and holding paper that references metal is one we have written about before in Physical Gold vs Paper Gold; serial-numbered allocation is the point where the two stop being confusable.
A note on the word "audit," because the metals and token markets both abuse it. An attestation is a snapshot: a firm confirms that at a moment in time, holdings matched claims. An audit reconciles the whole system, and a bar list you can check against a vault inventory beats both, because it does not expire the day after it is issued. When a provider says audited, ask which of the three they mean. You have asked exchanges the same question about proof of reserves. Same instinct, older asset.
Reading your own agreement: a seven-clause check
The five-minute test from our portfolio framework, serial numbers, balance sheet, delivery, gets you the headline answer. If you already hold metal somewhere, or are comparing providers, these seven clauses in the custody agreement give you the full picture. This is the metals equivalent of reading a smart contract before you sign it, except the language is English and the reading takes fifteen minutes.
First, the title clause: does the agreement say the metal is your property, or that the provider owes you metal? The words "debt," "entitlement" or "account balance" point one way; "bailment," "your property" and "bar list" point the other. Second, the balance-sheet treatment, stated plainly or absent. Third, segregation: identified bars, or a share of a pool? Fourth, rehypothecation and lien rights: any permission for the provider to use, lend or encumber your metal. Fifth, verification rights: bar list on demand, reconciliation, vault access. Sixth, delivery terms: can you withdraw your exact bars, at what notice and cost? Seventh, insurance: who insures the metal, for how much, and does the policy cover metal in transit as well as at rest?
A provider structured around client ownership answers all seven quickly, because the answers are the product. On our own precious metals desk, every holding is allocated and fully segregated, serial numbers are reported to the client, the metal never touches our balance sheet, and storage runs through independent vaults in free-trade zones across Singapore, Hong Kong, Zurich and other established hubs, insured and deliverable. We publish that structure because clients who check custody terms carefully are exactly the clients we want; verification should be a feature you use, and it costs nothing to ask.
Choosing deliberately
None of this says the cheaper forms are never useful. Traders hold unallocated balances for the same reason they hold exchange balances: friction matters when you transact often. The failure is not holding a claim; the failure is holding a claim while believing you hold property, and discovering the difference at the worst possible moment. Five forms, one question: on the day it matters, are you an owner or are you in the queue?
If you are unsure which side of that line your current holdings sit on, send us the agreement. The Value Experts at J. Rotbart & Co. review custody terms for clients regularly, and will walk through yours clause by clause, whether or not the metal is held with us. Contact the team for a conversation with no obligation attached.
ABOUT THE AUTHORS
By the J. Rotbart & Co. Editorial Desk, reviewed by the firm's senior partners.
J. Rotbart & Co. is a precious metals consultancy founded in 2016, with offices in Hong Kong, Singapore, the Philippines and Tel Aviv. The firm advises high-net-worth individuals, family offices and institutions on buying, selling, storing, financing and transporting physical precious metals, including direct conversions between digital assets and allocated bullion, and holds a Hong Kong Type A dealer registration under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615). The partners have more than two decades of combined experience in bullion markets and wealth structuring.
Editorial review date: August 2026. Market figures re-verified at publication; any live figures are date-stamped in the text and refreshed on the article's quarterly review cycle.
Cited sources:
1. LBMA, London bullion market and allocated/unallocated accounts overview (Tier 1): https://www.lbma.org.uk/wholesale-markets/london-bullion-market-overview
2. LBMA, Good Delivery Rules (Tier 1): https://www.lbma.org.uk/good-delivery
3. World Gold Council, gold market structure research (Tier 1): https://www.gold.org/goldhub
4. Hong Kong Monetary Authority, regulatory guides (Tier 1): https://www.hkma.gov.hk/eng/
5. Monetary Authority of Singapore, dealer guidance (Tier 1): https://www.mas.gov.sg/
6. Singapore Bullion Market Association, industry guidance: https://www.sbma.org.sg/
7. Financial Times, custody reporting: https://www.ft.com/
Estimate disclosures within the article: the tokenised gold redemption threshold ("around a full 400-ounce bar") summarises issuer documentation for the largest products; characterisations of the London market's unallocated structure follow LBMA market documentation; descriptions of insolvency outcomes are general statements of custody principles, not legal advice on any jurisdiction or case. Nothing in this article is investment, legal or tax advice.