01—Abstract
Summary
Summary of the 10-K filed November 24, 2020. Cited figures are marked; the original filing is the authoritative source.
SPDR Gold Trust (GLD) reported its fiscal year ended September 30, 2020 with net income of $13.08 billiona, or $36.89 per share, driven almost entirely by gold price appreciation rather than operating activity.
Net realized and unrealized gains on the gold holdings totaled $13.31 billionb, while the only expense, the Sponsor's fee at 0.40% of daily NAV, came to $225.6 million. The Trust is passive: it holds no derivatives, earns no income, and sells gold only to pay expenses, so its net asset value tracks the LBMA Gold Price PM less accrued costs. The Trust's scale grew sharply during the year.
Gold holdings rose to 40.8 million ounces, valued at $76.98 billionc at September 30, 2020, up from $44.17 billion a year earlier. Shares outstanding increased from 314.0 million to 434.4 million, reflecting net creations of 120.4 million shares, and NAV per share rose 26.5% to $177.15. Net assets closed at $76.95 billion.
The Trust's gold is 100%d allocated London Good Delivery bars held by HSBC in London, and KPMG issued an unqualified audit opinion and an effective internal control opinion. For investors, the key points are that returns are tied to gold prices, the share count is shrinking in gold terms by roughly 0.4% per year through expense-driven sales, and the Trust carries concentration and custody-related risks, including limited recourse against the custodian and subcustodians and the absence of insurance on the Trust's gold. Shareholders have limited rights and no voting power over management decisions beyond narrow matters.
02—Key points
Key Highlights
- Net income of $13.08 billion ($36.89 per share) for FY2020, versus $7.25 billion ($27.00 per share) in FY2019, almost entirely from unrealized and realized gains on gold.
- Gold holdings reached 40.8 million ounces with a fair value of $76.98 billion at September 30, 2020, up 74% from $44.17 billion a year earlier.
- Net asset value per share rose 26.5% to $177.15 from $140.00, while shares outstanding grew to 434.4 million from 314.0 million.
- Sponsor fee of 0.40% of NAV totaled $225.6 million for the year, the Trust's only recurring expense; the Sponsor pays all ordinary operating costs in exchange.
- Net creations of 120.4 million shares (201.8 million created, 81.4 million redeemed) reflect strong investor demand during 2020.
- The Trust does not use derivatives, leverage, or active management, and gold is sold only to cover expenses, so the gold per share declines gradually over time.
- KPMG issued unqualified opinions on the financial statements and on internal control; the Trust's gold is held by HSBC in London and was physically counted by Inspectorate International.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2020filed November 24, 2020Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Operating Expenses | $225.63M$135.18M | +66.9% |
| Net Income | $13.08B$7.25B | +80.5% |
| EPS (Basic) | $36.89$27.00 | +36.6% |
| Shares Outstanding (Basic) | 354.70M268.48M | +32.1% |
05—Questions
Frequently Asked Questions
What drove the Trust's strong performance in fiscal 2020?
Gold prices rose sharply, with the LBMA Gold Price PM ending the year at $1,886.90 per ounce, up from $1,485.30. The Trust recorded a $11.13 billion change in unrealized appreciation and $2.14 billion in realized gains on gold distributed for redemptions, producing net income of $13.08 billion.
How does the Trust make money, and what does it cost investors?
The Trust earns no income because it holds only gold and cash, which earns no interest. Returns come solely from gold price changes. The main cost is the Sponsor's fee of 0.40% annually on NAV, which accrues daily and reduces the amount of gold represented by each share over time.
What are the main risks highlighted in the filing?
Key risks include gold price volatility, the possibility of large-scale distress sales by central banks or other holders, and custody risk. The Trust does not insure its gold, and recourse against the custodian HSBC and any subcustodians is limited under English law and the custody agreements. Shares may also trade at a premium or discount to NAV, especially outside COMEX trading hours.
Are shareholders able to vote or influence management?
Shareholders have very limited rights. They have no voting power on most matters, cannot elect directors, and receive no dividends. They may vote only to remove the Trustee (66 2/3% threshold), to terminate the Trust, or on certain amendments to the Trust Indenture (51% or unanimous consent).
How are the Trust's gold holdings verified and audited?
Inspectorate International conducted a complete physical bar count as of the fiscal year-end on June 5, 2020, and a random sample count on February 24, 2020. KPMG audited the financial statements and internal controls, and its critical audit matter concerned the existence of the gold, which it confirmed through physical count observation and reconciliation to custodian records.
06—Continue