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Should I Choose Segregated, Allocated, or Pooled Storage?


What are the differences between these three storage options, and why do they matter?

For the decided majority of investors, allocated storage, which means that you will receive the exact same type of bullion you put into storage (e.g. If you put 10 1 oz. Gold Eagles into storage, you’ll get 10 1 oz. Gold Eagles when you decide to take physical receipt, but they will not necessarily be the exact same individual coins you originally purchased) offers the best combination of security and value.

Pooled/unallocated storage comes with unnecessary and avoidable risks. It should be avoided

Segregated storage means that you will receive the exact same bullion you put into storage (literally, the exact same bars, coins, or rounds) when you decide to take physical receipt of them, but it costs significantly more than allocated storage. 

Here is each storage program explained in more depth...


But average investors don’t need this kind of attention. The fact is, you can achieve nearly the same level of security with true allocated storage as founder Mike Maloney explains, you get it for considerably less money:

Choosing the right custodian is critical.

What you should look for is a vault that is run by a well-known, highly-respected company with a lengthy historical record of stability. Its business should solely be the provision of security services. It should be a disinterested third party: i.e., otherwise unconnected to any of the dealers with whom it does business. And its depositories should be independently audited.

Ask most people to name a company like that, and they’ll likely say “Brinks.” Founded in 1859, Brinks has become globally synonymous with asset protection. In its own words, it has provided “150+ years of safety, security and peace of mind.” It’s simply the best at what it does.

This is why, when GoldSilver created its segregated and allocated storage programs, we selected only the best, most trusted professionals to be our custodians.

Brinks and IDS are the perfect third-party contractors. They are private companies unbeholden to any dealers, the banking system, the government or the Federal Reserve. Their facilities are guarded by armed agents and monitored 24/7 by highly-vetted personnel. Their vaults feature state-of-the-art security systems, including video surveillance, laser barriers and motion sensors. They offer Class 3 vaults (the highest rating in the industry).

And speaking of the banking system...

Should you use one of the big banks to store your gold?

Probably not. Why? Because these large institutions do a lot of lending out. You can never be sure that your “allocated” metal is actually allocated. In 2007, Morgan Stanley paid out $4.4 million to settle a class-action lawsuit by its clients after Morgan Stanley charged them to buy and “store” precious metals for them, but neither bought nor stored the metals. UBS has been accused of the same thing. And the 2011 collapse of MF Global revealed that they had also been playing fast and loose with customers’ gold holdings.

In 2012, Matterhorn Asset Management’s Egon von Greyerz alleged that Swiss banks were trading gold that was supposedly held in special “allocated” accounts for its customers.

Von Greyerz wrote:

“We (just) had an example of a client moving a substantial amount (of gold) from a Swiss bank to our vaults, and we found out the bank didn’t have the gold. This was supposed to be allocated gold, but the bank didn’t have it. We didn’t understand why there was a delay (in our vaults receiving the gold), but eventually we found out why there was a delay (the bank didn’t have the gold). It’s absolutely amazing, but not surprising.

This confirms what I’ve always thought. Not only should you not have gold in banks [especially] unallocated gold, but even allocated gold. It seems that some banks don’t even possess that. So the risk of having gold in the banking system is major.”

These instances are from the past. Whether this sort of thing continues today, and to what extent, is anybody’s guess. But we do know that investment banks, even as trustees, are permitted to engage in “hypothecation” of their assets, which means lending them out to cover their or someone else’s debts. Beyond that, global precious metals trading is notorious for its lack of transparency.

So we don’t know exactly what they do with their gold stockpiles. But why would you want to expose yourself to the risk?

If you buy gold from GoldSilver and choose allocated storage, then your assets are shipped from us directly to Brinks, preserving the chain of custody. Once received, they are logged in and held in what is legally called bailment, which means that you receive warehouse receipts certifying that the assets in question belong to you, not the storage facility.

(GoldSilver does not believe in offering unallocated storage. Our warehouse receipts are 100% backed by the metal in the vault: there are no fractional holdings or reserves, and no lending out of assets. We’re also more strict in our use of the word allocated. Some other dealers may claim you own allocated gold when you only own, say, a fractionally-allocated portion of a gold bar. Caveat emptor. With us, you either own the whole bar or you don’t.)

It is the same level of security as with our segregated storage, but at a significant cost savings. The only real differences are: 1) what you deposit is not sealed and confined to its own area with your unique tag and 2) you’re only guaranteed to be able to withdraw a near-identical form of gold. That is, if you store 10 Gold Eagles, you will get 10 Eagles back, but they may not be the exact ones you originally delivered. Same with bars. You’ll receive the proper weight and quality, but perhaps a different fabricator.

Our allocated storage is:

  • easy to arrange and cost-effective at just 0.06% of asset volume per month
  • stress free
  • flexible
  • fully insured (each account, up to $50 million)
  • independently audited
  • outside the banking system

Moreover, you can add to your holdings with an online purchase, or sell back to us, at any time; you never have to handle the physical gold yourself. Or if you do want it, you can have the metal withdrawn and shipped to you at your convenience. And you can diversify internationally, choosing to store your gold not only in the U.S., but also in Canada, Hong Kong and/or Singapore.


At the other end of the spectrum is fully segregated storage.

This is, so to speak, the gold standard. It means that whatever you put into storage is what you get out. That is, if you contract to store 10 Eagles, a chain of custody is initiated. Your coins are logged in and, typically, are resealed inside a security wrap, with tamper-proof tape and a unique security tag.  Then the package is placed in an area with your tag on it, and you get paperwork attesting to your ownership of these specific coins and only these specific coins. The seal and security tag ensure that, when you withdraw them, you get the exact same coins delivered back to you. You’re a true owner, not a creditor. For legal purposes, your assets are distinct from everyone else’s.

This kind of custodial arrangement is costly. Deposits need special handling from the start, and special vault space must be set aside to keep these assets segregated from all others. There will likely be depository minimums.

Yes, it’s good to have such a level of security available—in some cases. For instance, if you have numismatic coins of great individual value, you obviously don’t want to risk them being replaced by some inferior version. You want to own that particular coin. It may also be suitable for those with large holdings, corporate security or escrow requirements. And GoldSilver provides segregated services for those clients who really need it.


First, unallocated (also called pool gold or fractional gold storage). The vault owner certifies that you own a certain amount of gold, say 10 ounces. Those ounces are part of a pool of indeterminate size. When you want to claim your metal, the custodian pulls out 10 ounces in some form and delivers them to you. You can’t specify a particular fabricator or country of origin, for either a coin or a bar. You get what they decide to send you. All it has to do is add up to the requisite amount.

For example, if you want to claim 10 ounces, the custodian may not have them on hand, as such. So, as with mint certificates, you will be charged a fabrication fee. Which means that he goes out to market and buys your coins with your own money, or pays a refiner to make a small bar out of the scrap they keep on hand (since they cannot, ipso facto, cut it off of a larger bar that you and other investors own fractions of). This is pricey and could be subject to delays or even unavailability in a supply crunch.

But that’s not the worst of it. The bigger hitch here is that you don’t actually own 10 ounces of gold. You’re a creditor, i.e. you have a claim on 10 non-specific ounces, and yours is mixed up with all the other claims on that amorphous pile of metal in the vault. The pile as a whole? It is an asset of the holding company, not the depositors.

Being merely a creditor means that you accept certain downsides.

Most importantly, if the vault administrator goes belly up, you will have difficulties in establishing your ownership rights. It may involve legal action and will take a lot of time or money, or both.

And what if worse comes to worst? What if your custodian has been playing fast and loose with all that gold in his private vault? What if, at the time he crashes, it turns out that he hasn’t maintained a physical inventory sufficient to satisfy all creditors? Well, you could find yourself horribly out of luck, forced to accept a partial disbursement.

That’s in essence what happened in 2008, when Lehman Brothers went under. Lehman clients who believed they owned specific shares of a company’s stock, registered in their name, found out to their shock that they only had claims against a large pool of that company’s shares, held in common. Lehman was constantly lending out clients’ shares, or using them for collateral in mega-deals with other banks. In the end, it took forever to untangle that mess. And something similar could easily happen with a bankrupt gold depository.

Participating in unallocated gold ownership programs will save you some money on the per-ounce price. And that’s it. Against this you have to weigh the many drawbacks enumerated above.

There is the added risk you assume if the dealer you bought from is also custodian of the vault where your gold is stored. What assurance do you have that your irreplaceable assets are being properly handled? Dealers move bulk gold in and out of their vaults all the time. That this represents a potential conflict of interest should be evident.

Bottom line: For us, it’s a no-brainer. We cannot in good conscience recommend consigning your precious metals holdings to an unallocated pool.

Other Storage Options

Now that you know about the types of private, remote storage options you have to choose from, let’s take some time to discuss why we advise against other methods of precious metals storage.

Home Storage

First, let’s address why we advise against storage precious metals at home.

Your financial privacy is important to you. If you store your gold at home, you’d best not tell anyone else about it — including children, friends and neighbors (and maybe even spouses). Are you prepared to do this?  The more people who know what you’re doing, the more likely word is to leak out. And then the more likely you are to become the target of a burglary or, worse, a home invasion.

Maybe you think a modern safe, cemented into your wall or floor, and perhaps known only to you and your spouse, will be sufficient protection. It may not be. Sophisticated safecrackers can open just about anything. And if you’re at home when they break in, that’s worse. They won’t have to crack it. All they’ll have to do is threaten you and/or your spouse with bodily harm and you’ll open it for them. Won’t you?

In addition, homes are subject to physical and natural disasters, such as fire, flood, hurricanes, tornadoes, and the like.

Some people have been known to advocate packing gold inside PVC pipe and burying it in the backyard. Good idea? Again, probably not. If you’re the only one who knows about it, and you die unexpectedly, your family won’t know where to look.

The bottom line about keeping precious metals at home is that even under the best of circumstances, you’re in possession of high-value items very attractive to thieves. And unless you literally have not told a single person you have it, you can never be certain word won’t get out.

Ok, but aren’t the contents of your home insured? When it comes to gold, probably not. Check your policy and you’ll almost certainly find a rider that exempts precious metals from coverage, or there may be a very low cap. You can of course add insurance protection for your holdings. But that will mean providing the insurance company with a full inventory of what you have, exposing that information to electronic theft or unauthorized sale to a third party. Plus, it’ll cost a lot of money in premiums.

Bank Storage

A safe deposit box, then?

This is the option many people select. It’s better than risking the dangers of home storage. And, especially for those with relatively small holdings, it’s not a bad choice. You can sleep more easily and your gold will be close at hand if you need it in a hurry.  But there are some drawbacks.

First, limited space. As you build your holdings, you may find yourself needing two or more boxes. This is not only unwieldy, it’s also becomes increasingly costly.

Additionally, no one but you knows what’s in there. If there is a natural disaster or a major robbery, and your metal goes missing, good luck persuading the bank that you need to be reimbursed for 200 American Eagles.

The fact of the matter is that safe deposit boxes are not insured by either the bank or the FDIC. No one is liable for losses under any circumstances. As with a home safe, you can seek outside insurance. But you will be required to file a detailed inventory and provide some documentation, such as photos or video, that shows you have what you say you do. These will be open to inspection by persons you don’t know and will be stored electronically with all of the attendant risks.

Other  problems include the lack of access to your gold except during banking hours, or during a “bank holiday” declared during a major crisis (such as the one that was declared after 9/11), exactly when you might need access to your metals the most. 

Furthermore, and this is major: the bank can foreclose on you, open your box and sell off your assets if you fall behind in your payments. Or, sometimes, they might do the same if there is an internal screwup in their record-keeping. This has happened. If it’s the bank’s fault, you’ll be reimbursed, but only with the amount of money they got for the sale of your gold, not its actual value. And there’s nothing you can do about it.

 Finally, suppose the branch that houses your safe deposit box is suddenly closed. You’ll find where they sent your box, eventually. But it can be a real hassle tracking it down.

CAUTION: If you intend to place some or all of your gold holdings in an IRA, then strict regulations apply as to where you can keep it. Home storage and safe deposit boxes are generally not acceptable, even though some unscrupulous companies are promoting the idea that you can “easily” create an LLC to buy gold for an IRA and store it at home or in a safe deposit box (and they’ll help you do it, for a price).

For the record, the IRS states on its website: “Gold and other bullion are ‘collectibles’ under the IRA statutes, and the law discourages the holding of collectibles in IRAs. There is an exception for certain highly refined bullion provided it is in the physical possession of a bank or an IRS-approved nonbank trustee. This rule also applies to an indirect acquisition, such as having an IRA-owned Limited Liability Company (LLC) buy the bullion.”

It’s not completely illegal to do this, but to make it legal you would have to jump through some very tight hoops. You must file a complete written application with the IRS demonstrating that you satisfy a long list of requirements specified in the relevant regulations, including those relating to your: fiduciary ability, fiduciary experience, capacity to account, fitness to handle retirement assets, bonding, audits and net worth.

If you are not meticulous in following the regs precisely, then there are bad consequences. The purchase is treated as a taxable distribution from your retirement account. Your IRA assets will lose their tax-deferred status and be subject to immediate taxation and, if you are under age 59 1/2, you face a 10% penalty for early withdrawal in addition to taxes owed.

 In short, we probably don’t have to add our recommendation: do not try this.


The matter of gold storage is a complex subject. It can be difficult to fully grasp all the little details. But we hope that we have helped explain the ins and outs of it all, in an understandable way — and that you now appreciate why our fully allocated vaulting program is the best way to store and protect your precious metals investments.

We’re here to provide prompt responses to any further questions you may have.