When a custodian holds your metal, the type of storage decides what you actually own. Here is the difference, the cost trade-off and the questions to ask.
Short answer: with allocated storage, specific bars are set aside in your name and you own those exact pieces. With unallocated storage you hold a claim on a pool of metal, which is cheaper but depends on the custodian. For metal you cannot afford to risk, allocated storage is the safer choice.
Your bars are identified, usually by serial number, and held separately from the custodian's own assets. You can ask for a list of exactly what is stored for you. It usually costs more, because the custodian handles and insures individual bars. See allocated storage.
You are owed a quantity of metal, but no particular bar is yours. If the custodian fails, you may rank as a creditor rather than an owner. It is cheaper and convenient for trading, but it carries counterparty risk. See unallocated storage.
Home storage avoids fees but puts security and insurance on you. Vault storage moves them to a professional, at a cost. Many people split their metal between the two.
Keep your own record of what is stored, with serial numbers and the custodian's statements. Your records are what let you prove ownership, whichever route you choose.
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