Price attracts most of the attention in financial markets, but physical precious metals introduce another question that is just as important:
What actually happens after the trade?
Settlement is the process through which an agreed transaction becomes completed obligations — money on one side and physical metal on the other.
Without settlement, a quoted price remains only part of the story.
Price agreement creates obligations
When a buyer accepts a firm quote, both sides have agreed to specific commercial terms.
The buyer is expected to provide the required funds according to the settlement instructions.
The physical desk is expected to satisfy the other side of the transaction by allocating the agreed metal and following the selected storage or delivery instructions.
Settlement is the process that connects those obligations.
Why physical settlement is different
A purely cash-settled financial position can end with monetary gains or losses being recorded.
A physical bullion transaction requires an actual asset.
That asset has characteristics:
● metal type;
● weight;
● fineness;
● form;
● identification where applicable.
The settlement process must therefore move beyond a monetary calculation and reach physical inventory.
Documentation links the stages
A well-structured transaction creates records along the way.
The written confirmation records the agreed commercial terms.
The trade reference identifies the transaction.
Funds confirmation verifies payment.
Allocation records connect the transaction with physical metal.
Custody or delivery records then show what happened to that metal after allocation.
Together, these documents create a traceable settlement chain.
T+0 and T+1 to T+3
The Alloy Capital Commodities sequence distinguishes between allocation and final delivery.
Metal is allocated on T+0 under the described settlement process.
Where physical delivery is selected, the delivery stage may occur from T+1 to T+3, depending on the applicable arrangements.
This distinction makes sense operationally.
Ownership records can be established before a secure transport process is completed.
Physical movement requires additional logistics that allocation itself does not.
Settlement risk is operational
Physical transactions can involve several operational dependencies.
Funds have to arrive correctly.
Inventory has to match the confirmed transaction.
Records must be accurate.
Metal must be allocated according to the applicable custody structure. If delivery is requested, the shipment has to be arranged securely.
Each stage must connect to the previous one.
This is why physical settlement matters even when the market price itself is no longer changing for that confirmed trade.
Settlement creates the bridge to ownership
A price gives the economic terms.
Settlement creates the operational result.
Once funds are confirmed and physical metal has been allocated, the transaction has progressed from a market agreement toward a documented physical holding.
If the client chooses storage, the metal remains within the custody structure.
If the client chooses delivery, settlement continues into logistics until the physical asset is transferred according to the agreed procedure.
The key distinction
A useful way to think about physical precious metals is:
Price answers “How much?”
Settlement answers “What happened to the money and the metal?”
For a physical owner, both questions matter.
A low spread or attractive quote has limited meaning if the transaction cannot be reliably documented and settled into actual metal.
That is why Alloy Academy treats settlement as one of the core foundations of physical ownership rather than as a back-office detail.
