We compare product formats & features
How do Fractional Bars compare against trading of physical bullion bars and coins or alternative products such as ETC/ETFs or Tokens? We compare all the options below
Main Comparison Points
| FRACTIONAL | COINS | BARS | ETC / ETF (ACTIVE) |
ETC / ETF (PASSIVE) | TOKENS | |
|---|---|---|---|---|---|---|
| Instrument | Bullion bars (fractional ownership) | Bullion coins | Bullion bars | IOU / security | IOU / security | IOU / token |
| Ownership Type | Direct allocated ownership of bar fractions | Direct ownership of a physical coin | Direct ownership of a physical bar | Indirect exposure via a security | Indirect exposure via a security | Indirect exposure via a token / smart contract |
| Asset Backing | 100% physical bullion | 100% physical bullion | 100% physical bullion | <100% (derivatives permitted) | <100% (derivatives permitted) | <100% (varies by structure) |
| Buy-Side Pricing | Very low — near spot | High premiums (≈5–12%+) | Lower on large bars; high on small bars | Very low (≈0–1%) | Very low (≈0–1%) | Varies by platform |
| Sell-Side Pricing | Tight spreads | Dealer discounts (≈3–8%) | Dealer discounts (≈2–6%) | Tight market spreads | Tight market spreads | Platform & liquidity dependent |
| Minimum Investment | Very low (e.g. £5 / 0.001oz) | Full coin price | High (hundreds to thousands) | One share | One share | Fraction of a token |
| Liquidity & Speed | Instant, 24/7 | Slow — physical resale | Slow — physical resale | High — market hours | High — market hours | High — often 24/7 |
| VAT (UK – Silver / PGMs) | No VAT when vaulted | 20% VAT on delivery | 20% VAT on delivery | No VAT | No VAT | Varies by structure |
Note, the contents of the table are based on a range of sources and providers, details may vary and are for illustrative purposes only
Detailed Comparison Points
| FRACTIONAL | COINS | BARS | ETC / ETF (ACTIVE) |
ETC / ETF (PASSIVE) | TOKENS | |
|---|---|---|---|---|---|---|
| Instrument The product and description | Bullion bars Investment grade (fractional ownership) |
Bullion coins Investment grade |
Bullion bars Investment grade |
IOU / security “Asset backed” |
IOU / security “Asset backed” |
IOU / token “Asset backed” |
| Asset Backing What % of the product is backed by physical bullion | 100% – fully backed by physical bullion | 100% – fully backed by physical bullion | 100% – fully backed by physical bullion | <100% – derivatives can be up to ~75% | <100% – derivatives can be up to ~25% | <100% – varies; derivatives may be used |
| Regulatory Category (UK) | Physical goods (non-regulated investment) | Physical goods (non-regulated investment) | Physical goods (non-regulated investment) | Regulated investment product | Regulated investment product | Varies — may be unregulated or within specific regimes |
| Ownership Type Legal title / direct vs indirect exposure | Direct allocated ownership of fractions of specific bars | Direct ownership of a whole physical coin | Direct ownership of a whole physical bar | Indirect exposure via a financial security | Indirect exposure via a financial security | Indirect exposure via a token / smart contract |
| Physical Possession | No — vaulted | Yes — you can hold the coin | Yes — you can hold the bar | No — you hold units/shares only | No — you hold units/shares only | No — you hold tokens only |
| Delivery Option Whether the product can be delivered or converted and delivered | Yes | Yes | Yes | No | No | No |
| Bar / Serial Number Transparency | High — linked to specific allocated bar lists | N/A — coins typically do not use serial numbers | High — each bar has a serial number | Indirect — via custodian allocation reports | Indirect — via custodian allocation reports | Indirect — depends on issuer transparency |
| Buy-Side Pricing What you typically pay above spot on the way in | Very low — near-spot institutional pricing | High — strong premiums (around 5–12%+) | Lower on large bars; high on small bars | Very low (around 0–1%) | Very low (around 0–1%) | Varies — depends on token / platform |
| Sell-Side Pricing What you typically receive versus spot on the way out | Very tight spreads | Dealers typically discount 3–8% | Dealers typically discount 2–6% | Tight market bid/ask spreads | Tight market bid/ask spreads | Variable — platform spreads and liquidity dependent |
| Transaction Fees Typical buy/sell fees added to spot | 0.50% | 5% – 15% | 3% – 10% | 0% – 0.75% | £5.99 – 0.75% | 1.5% – 2.5% |
| On-going Charges Typical annual storage or management fees | 0.15% | 0.65% – 2% | 0.65% – 2% | 0.65% – 1.25% | 0.12% – 0.95% | 0.95% – 2% |
| Minimum Investment Size | Very small (e.g. £5 / 0.001oz) | Moderate to high (price of a full coin) | High (hundreds to thousands of £) | Very small (one share) | Very small (one share) | Very small (fractions of a token) |
| Sell Any Amount | Yes — any fraction | No — whole coin only | No — whole bar only | Yes — any number of shares | Yes — any number of shares | Yes — typically fractional (subject to platform limits) |
| Liquidity & Speed | High — instant on-platform execution | Low — must arrange shipment or in-person sale | Low — must arrange shipment or in-person sale | High — traded on markets throughout the day | High — traded on markets throughout the day | High — depends on exchange / on-chain liquidity |
| Diversification Ease | Very high — easy to spread across metals and time | Low — larger ticket sizes | Low — larger ticket sizes | Very high — small, frequent trades possible | Very high — small, frequent trades possible | Very high — fractional, frequent trades possible |
| Storage Arrangement | Central vaulting included | Home or paid vault storage | Home or paid vault storage | None | None | None (digital custody only) |
| Insurance Treatment | Included within vaulting fees | Often additional and separate | Often additional and separate | None | None | None (no physical asset to insure) |
| Counterfeit Risk | None at customer level (institutionally vaulted bars) | Low–moderate counterfeit risk | Moderate–high counterfeit risk | None (it is a financial instrument) | None (it is a financial instrument) | None in physical sense; smart-contract / issuer risk instead |
| VAT on Silver / Platinum / Palladium (UK) | No VAT when kept vaulted (no delivery) | 20% VAT on products bought for delivery | 20% VAT on products bought for delivery | No VAT (financial product) | No VAT (financial product) | Varies — depends on token structure and tax rules |
| CGT Treatment (UK) | CGT may apply (unless specific exemptions) | UK legal-tender coins (e.g. Britannias, Sovereigns) are CGT-free | Bars: CGT applies on gains | CGT applies on gains | CGT applies on gains | CGT treatment depends on token structure; gains often taxable |
| Counterparty Exposure Key third-party exposures |
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| Risk of Provider Default | Very low — metal is allocated and owned by customers | None once in your direct possession | None once in your direct possession | Exists — issuer, custodian, AP, MM and structure risk | Exists — issuer, custodian, AP, MM and structure risk | Exists — issuer, platform and smart-contract risk |
Note, the contents of the table are based on a range of sources and providers, details may vary and are for illustrative purposes only
Acronyms & Definitions
ETF — Exchange-Traded Fund
A regulated investment fund that trades on an exchange and gives investors exposure to an underlying asset (e.g., gold), but does not provide direct ownership of the metal. You own fund units, not bullion.
ETC — Exchange-Traded Commodity
A type of exchange-traded security that tracks a commodity (e.g., gold, silver). Can be physically backed or synthetic. Still not direct physical ownership — you own a security.
AP — Authorised Participant
A specialist institution that creates and redeems ETF/ETC units. They arbitrage price gaps and keep the product aligned with the underlying asset. They sit inside the counterparty chain.
TER — Total Expense Ratio
The annual percentage fee charged by a fund (ETF/ETC) covering management, custody, operations, etc.
DTC — Depository Trust Company
A major US clearing and settlement system. Used by many ETFs/ETCs for settlement and custody flows.
CREST
The UK’s securities settlement and clearing system (operated by Euroclear UK & International). Used for settling UK-traded securities including some ETCs.
Clearstream
A major European clearing and settlement system, part of Deutsche Börse, used for custody and settlement of international securities.
CGT — Capital Gains Tax
A UK tax on profit when an asset appreciates in value. Applies to bars, fractional metal and ETCs, but not to UK legal-tender bullion coins (e.g., Britannias, Sovereigns).
VAT — Value Added Tax
A consumption tax applied in the UK on many goods, including silver, platinum and palladium when delivered. Not applied when metals stay in a vault (e.g., fractional metal).