What does unallocated metal mean?
An unallocated account records that the institution owes you a quantity of metal. No specific bars are set aside in your name; you hold an IOU backed by the institution's general metal inventory.
This structure is common in bank metal accounts and some trading platforms because it's cheap to run: the institution can use the pooled metal in its own operations.
Why is unallocated riskier than it sounds?
Because the metal is the institution's asset, not yours. In normal times the distinction is invisible, you can buy, sell, and sometimes convert to physical. In an insolvency, it becomes everything: unallocated holders are unsecured creditors, paid from whatever remains.
That doesn't make unallocated accounts illegitimate, they suit some trading purposes. It makes them a different product than physical ownership, priced differently because they are different.
How does unallocated show up in practice?
If a product's terms never mention specific bars, serial numbers, or segregated storage, and especially if they describe your holding as a 'balance' of metal, you're likely looking at an unallocated claim. For long-term physical ownership, allocated storage is the standard to ask for.