Generally speaking, when a client buys unallocated bullion:
- The client only has a beneficial interest or general entitlement to un-segregated metal. The selling institution (e.g. bank) retains legal title to the bullion.
- The metal is not segregated and the selling institution (e.g. bank) can use the bullion for its own trading or refinery purpose.
- The client is an unsecured creditor to the seller (e.g. bank); the bullion is encumbered.
Generally speaking, when a client buys allocated (also known as "vaulted") bullion:
- The client's legal title to the bullion is unencumbered and secure.
- The metal is fully segregated and the bullion dealer or depository may not trade, lease or lend the bars.
- The client is not an unsecured creditor.
Generally speaking, encumbered means that an asset or piece of property is subject to competing creditor claims or liens.
Generally speaking, unencumbered means that an asset or piece of property is free from competing creditor claims or liens.
BMO’s Canadian Vault-Based Bullion Programs
- BMO's Canadian vault-based bullion Programs allow you to purchase small, medium, or large amounts of allocated, segregated, & unencumbered bullion that is physically stored in Canada.
- Our programs will not use or hold unallocated bullion, bullion certificates, exchange traded products, financial instruments, or any product that represents encumbered bullion.
- Under our programs, "allocated" means that the bullion is separated and identifiable from other metal held at the storage facility and segregated from BMO’s other assets. Title to the bullion is unencumbered and secure in BMO Nesbitt Burns' custody account but will not be specifically assigned to any particular purchaser. Bullion is held together with the holdings of all other purchasers under the program.
World Gold Council