The mechanism
"Allocated" has a precise meaning in wholesale bullion. The London Bullion Market Association explains that an allocated account is backed by specific bars, listed by unique number, weight, and assay, and cannot, by definition, be overdrawn. A credit on a screen, or a receipt without that bar list, is not allocated metal.
Fraud uses the word anyway. The U.S. Commodity Futures Trading Commission has warned that some operations claim to store metal, charge storage fees, and never place metal with an independent custodian. Receipts and allocation lists can also be reused, so the same parcel appears sold or pledged more than once. The buyer or lender is then paying for metal that is not exclusively theirs, or is not there.
Who benefits, and who is targeted
The operator collecting purchase funds, storage fees, or loan proceeds against the same unusable claim benefits. The targets are buyers of discount gold and counterparties who accept a receipt instead of a vault confirmation.
The independent check
Get the bar list. Then get the vault or custodian, on a contact you found yourself, to confirm those bars under an authority they will accept. Ask about any restriction or encumbrance. Bar numbers alone will not rule out a double pledge. If the location is unnamed, or the custodian will not confirm, you do not have proof. Walk away until that confirmation arrives. Watch account diversion as well. See the cluster overview.
