Allocated Storage
asset custody
Allocated Storage refers to a custody method where specific bars or quantities of a precious metal ÔÇö such as gold or silver ÔÇö are individually assigned and held in a secure vault on behalf of the rightful owner. The metal remains the legal property of the owner and is not commingled with other assets or used by custodians for lending or collateral.
Use Case: “By holding KAU or KAG, users benefit from fully allocated storage ÔÇö where every token corresponds to real, legally assigned bullion stored in insured vaults.”
Key Concepts:
- Direct Ownership ÔÇö Each unit of metal is legally assigned to the holder.
- Physical Segregation ÔÇö Assets are not pooled or reused by vaulting providers.
- Redemption-Ready ÔÇö Owners can claim specific bars for delivery at any time.
- Risk Mitigation ÔÇö Eliminates counterparty and lending-based custodial risk.
Summary: Allocated Storage is the most secure form of bullion custody ÔÇö providing transparency, full legal title, and trust. It forms the backbone of tokenized metals like KAU and KAG, ensuring that digital assets are truly backed by tangible wealth.
| Feature | Allocated Storage | Unallocated Storage |
|---|---|---|
| Ownership | Specific bullion legally assigned to owner | General claim on pooled metal reserves |
| Risk Profile | Low ÔÇö Full control and redemption rights | Higher ÔÇö Subject to custodian solvency |
| Vault Use | No rehypothecation or lending | Assets may be loaned or collateralized |
| Auditability | Full ÔÇö Serial numbers and bar lists tracked | Limited ÔÇö No assigned physical inventory |
| Examples | KAU, KAG, vaulted private bullion | ETFs, pooled accounts, paper gold |