Perspectives on reserve diversification.

For most corporate treasuries, reserves mean cash, short-term government paper, and maybe a slice of investment-grade credit. That mix is built for liquidity and safety, and for most operating needs, it's exactly right.

What's changed for some treasuries is the currency and inflation exposure sitting underneath that mix. A reserve built entirely in one currency, however safe the instruments, still carries that currency's risk. Central banks have managed a version of this problem for decades by holding a portion of reserves in physical gold — an asset with no counterparty and a very different risk profile from sovereign debt.

Corporate treasuries are starting to ask the same question at a much smaller scale: not whether to replace cash and short-term instruments, but whether a modest, clearly governed allocation to physical metals belongs alongside them.

The honest answer is that it depends on the balance sheet. A treasury with tight working-capital needs and low cash buffers is a poor candidate. A treasury with durable excess reserves, multi-currency exposure, and a board comfortable with a long-duration, low-correlation holding is a much better one.

This is the assessment we run before recommending anything: what the reserve is actually for, how much of it is genuinely excess, and whether a physical metals allocation would reduce risk or just add a new one. Sometimes the answer is no. When it's yes, allocation size and structure follow from that same assessment — not from a fixed percentage borrowed from someone else's balance sheet.

Once a corporate treasury decides to hold physical metal, the next question is usually structural: allocated or unallocated storage?

Unallocated storage means the custodian owes you a quantity of metal, backed by their general holdings — you have a claim on the custodian, not a specific bar or set of bars. It's typically cheaper and more liquid, but it also carries counterparty risk: in a custodian insolvency, unallocated holders are generally unsecured creditors.

Allocated storage means specific, identified bars are held in your name, segregated from the custodian's own inventory and from other clients' holdings. You own the metal outright, not a claim against the custodian. It typically costs more in storage and insurance fees, and it's less liquid for very short-term trading, but it removes the custodian's balance sheet from the risk equation entirely.

For a corporate treasury holding metal as a reserve asset rather than a trading position, allocated and segregated storage is almost always the more defensible structure — it's easier to explain to a board, easier to audit, and consistent with why the allocation exists in the first place: reducing counterparty and currency risk, not adding a new counterparty back in through the storage arrangement.

The tradeoff is cost and, in some cases, custodian selection: not every institution offers true allocated, segregated storage at a scale that makes sense for a corporate holding. Due diligence on the custodian — audit rights, insurance coverage, chain-of-custody documentation — matters as much as the storage structure itself.

A reserve allocation is easy to approve and easy to neglect. Once the initial purchase and custody arrangement are in place, physical metal doesn't generate statements the way a brokerage account does, and it can quietly drift out of view of the people responsible for treasury oversight.

A governance framework exists to prevent that drift. At minimum, it should answer four questions in writing, before the first purchase is made: who is authorized to approve changes to the allocation; how often the holding is independently valued and reported to the board or audit committee; what triggers a rebalancing review — a market move, a change in treasury policy, a fixed calendar; and how custodial arrangements are re-verified over time, not just at onboarding.

None of this needs to be complicated. Most of our clients end up with a two- or three-page policy document: allocation targets and bands, approval authority, reporting cadence, and custodian review schedule. What matters is that it exists, that it's approved at the right level, and that someone other than the treasury team running day-to-day operations reviews compliance with it periodically.

The firms that end up regretting a reserve allocation are rarely the ones where the metal lost value. They're the ones where nobody could clearly explain, three years in, why the position was sized the way it was, who'd approved the custodian, or when it was last reviewed. Governance is what keeps a defensible decision defensible.