Gold bullion banks offer two types of gold accounts - allocated and unallocated:

Allocated account

Similar to keeping gold in a safety deposit box, this is the most secure form of investment in physical gold. The gold is stored in a vault owned and managed by a recognised bullion dealer or depository.

Specific bars or coins are numbered and identified by hallmark, weight and fineness. These are then allocated to each particular investor, who, in addition to the price of the gold, also pays the custodian for storage and insurance. The holder of gold in an allocated account has full ownership of that gold.

The bullion dealer or depository that owns the vault where the gold is stored may not trade, lease or lend the bars - except on the specific instructions of the account holder.

Unallocated account

Unallocated account investors do not have specific bars allotted to them (unless they take delivery of their gold, which they can usually do within two working days). Traditionally, one advantage of unallocated accounts has been the lack of any storage and insurance charges, because the bank reserves the right to lease the gold out.

Now that the gold lease rate is negative in real terms, some banks have begun to introduce charges even on unallocated accounts.
Of course investors are exposed to the creditworthiness of the bank or dealer providing the service in the same way as they would be with any other kind of account.

As a general rule, bullion banks do not deal in quantities less than 1000 ounces. Their customers are institutional investors, private banks acting on behalf of their clients, central banks and gold market participants wishing to buy or borrow large quantities of gold.

Other opportunities for smaller investors include:

Gold pool accounts

There are alternative options for investors wishing to open gold accounts of less than 1000 ounces. For instance, Gold Pool Accounts offer a defined, unsegmented interest in a Gold accounts pool of gold. You can invest in one of these accounts with as little as one ounce.

Electronic currencies

There are also various electronic 'currencies' available - linked to gold bullion in allocated storage. These offer a simple and cost-effective way of buying and selling gold, and using it as money. Any amount of gold can be purchased, and these currencies allow gold to be used to send online payments worldwide.