Allocated gold/silver is gold/silver owned outright by an investor and is stored, under a safekeeping or custody arrangement, in a professional bullion vault. It is the property of the investor. Whereas the unallocated gold/silver is the property of the bank.
Most of the precious metals trading today are not allocated. Unallocated gold is often used in the case of gold funds, ETFs, or synthetic products composed of financial derivatives. Unallocated gold represents a position with a counterpart where the client is a creditor of the gold but does not own it. By contrast, allocated gold is the direct ownership with no accounting liability. Meaning that the token holders have full control of the assets and no counterpart risk.
