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Precious Metal Terminology
(Note: the terms defined below are among those most often misunderstood and misapplied in the precious metals industry.
Segregated & Commingled: refers to the physical arrangement of how precious metals products are stored in relation to one another while in custody of a depository.
- Segregated - Precious metals assets physically grouped together for a specific reason (i. e., they are held in the same account, grouped as a specific metal type, etc.) and stored separate from all other items in the depository.
- Commingled (also, “Non-Segregated”) - Precious metals assets physically intermingled with one another while in storage without regard to any special distinction, status or difference among them (also referred to as “bulk storage”).
Fungible & Non-fungible: refers to the innate quality of “exchangeability” of individual precious metals products.
- Fungible - Precious metals products manufactured to the exact same specifications (i. e., weight, brand and fineness) and therefore can be readily exchanged with, or substituted for one another, without any resulting difference in quality or market value.
- Non-fungible - Precious metals products that vary in their design (i. e., weight, brand and/or fineness) such that if exchanged with, or substituted for one another, a difference in quality and or market value results.
Allocated & Unallocated: refers to the accounting assignment of precious metal asset balances held in custody to specific accounts.
- Allocated - refers to the specific assignment of defined quantities of specific physical precious metals products to particular accounts maintained by the custodian.
- Unallocated - refers to general assignment of precious metal balances, stated in “ounces” rather than specific product types, to individual accounts maintained by the custodian.
Pool: refers to the amalgamated balance of precious metals assets in all forms maintained in an account (i. e., physical products, accounts receivables, “due ins,” metal balances “on account” at a third party institution, futures and option contracts, etc.). Thus, a “pool balance” in an account typically consists of physical metals and “paper” balances, or any combination thereof.
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