As with the other options listed above, this is something that you need to watch out for and something that could cost you a lot of money. It is something that may seem harmless on the surface, something that may even seem similar to the work that they do at GoldBroker, but that is far from the truth.
When you purchase bullion from a bank, to be stored in that bank, that bullion is classed as “unallocated”. This is similar to if you stored money in the bank, which means that if anything happens to that bank, then your investment is at their mercy.
A decade ago, investors might have shrugged their shoulders, assumed everything would be okay and then carried on regardless. After all, this is not the Wild West and a bank is one of the safest institutions in the world, right? Well, not really, and the last few years have taught us just that. With what happened to Lehman Brothers in the US, Northern Rock in the UK, and most banks in countries like Greece and Cyprus, investors now know that their money is never safe in the hands of the bank.