01—Abstract
Summary
Summary of the 10-K filed November 24, 2021. Cited figures are marked; the original filing is the authoritative source.
SPDR Gold Trust (GLD) reported its 10-K for the fiscal year ended September 30, 2021, filed November 24, 2021.
The Trust holds only allocated gold bullion (no derivatives, no debt, no operating cash flow) with the custodian HSBC in London. At fiscal year-end, it held 31,830,401 ounces valued at $55.47 billiona on the LBMA Gold Price PM of $1,742.80/oz, against net assets of $55.46 billion and 340.3 million shares outstanding (NAV of $162.96 per share). The Trust is a passive vehicle: gold is sold only to pay expenses, which are covered by a 0.40% annual Sponsor fee, and no gold is actively traded or hedged.
Financially, the year was negative. The Trust recorded a net loss of $5.75 billionb, or $(15.25) per share, driven by a $9.99 billion change in unrealized depreciation on gold, partly offset by $4.46 billion of realized gains on gold distributed for share redemptions. Total return was (8.01%) at NAV and (7.28%) at market value, versus gains of roughly 26-28% in fiscal 2020.
Share count fell sharply, from 434.4 million to 340.3 million, as 161.6 million shares were redeemed against 67.5 million created, reflecting investor outflows as gold prices eased from their 2020 peak. For investors, the filing shows that GLD's value tracks gold closely, with the main risks being gold price volatility, custody arrangements (including unallocated balances and subcustodian reliance under English law), and the Trust's inability to hedge. Operating controls were assessed as effective by management and KPMG, which issued an unqualified opinion and identified the existence of gold holdings as its critical audit matter.
02—Key points
Key Highlights
- Net loss of $5.75 billion ($15.25 per share) for FY2021, versus net income of $13.08 billion in FY2020, driven by a $9.99 billion unrealized depreciation on gold.
- Gold holdings of 31.83 million ounces valued at $55.47 billion at September 30, 2021, 100% allocated London Good Delivery bars held by HSBC.
- NAV per share fell to $162.96 from $177.15, a total return at NAV of (8.01%) for the year.
- Shares outstanding declined 22% to 340.3 million as 161.6 million shares were redeemed and 67.5 million were created.
- Sponsor fee of 0.40% of NAV totaled $257.6 million for the year, the Trust's only recurring expense, and is the sole source of gold sales used to pay costs.
- The Trust uses no derivatives, debt, or hedging and generates no operating cash flow; it is a passive vehicle with a zero cash balance at year-end.
- Management and KPMG both concluded that internal control over financial reporting was effective as of September 30, 2021.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2021filed November 24, 2021Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Operating Expenses | $257.60M$225.63M | +14.2% |
| Net Income | -$5.75B$13.08B | −143.9% |
| EPS (Basic) | $-15.25$36.89 | −141.3% |
| Shares Outstanding (Basic) | 376.93M354.70M | +6.3% |
05—Questions
Frequently Asked Questions
Why did GLD report a large loss in fiscal 2021 when it holds only gold?
The Trust carries its gold at fair value using the LBMA Gold Price PM. Gold's price at fiscal year-end ($1,742.80/oz) was below its 2020 year-end level ($1,886.90/oz), so unrealized depreciation of about $10.0 billion was recorded. Partly offsetting this were $4.5 billion of realized gains on gold delivered for redemptions. The Trust earns no income, so the loss mirrors the gold price move minus expenses.
How does the Trust pay its expenses, and what does it cost investors?
The Sponsor receives a fee of 0.40% of daily NAV, which covers custody, trustee, marketing, audit, and listing costs. The Trust pays expenses by selling small amounts of gold, which gradually reduces the gold backing each share. In fiscal 2021, the Sponsor fee totaled $257.6 million.
What drove the drop in outstanding shares during the year?
Net redemptions were 94.1 million shares, with 161.6 million shares redeemed against 67.5 million created. Redemptions were concentrated in the third quarter, and the filing shows redemptions of 25.5 million shares in the last three months alone. This reflects investor outflows from gold as prices weakened from the 2020 peak.
What are the main custody risks for investors?
Gold is held at HSBC's London vaults, and while the Trust's allocated gold is owned by the Trust, the filing notes that unallocated balances (in transit for creations and redemptions) are unsecured claims against the custodian. Subcustodian recourse is limited under English law, the Trust does not insure its gold, and the custodian's liability is capped. The filing reports that no gold was held by a subcustodian during fiscal 2021.
Are investors protected like shareholders of a registered investment company?
No. The Trust is not registered under the Investment Company Act of 1940 and is not a commodity pool under the Commodity Exchange Act. Shareholders have limited voting rights, no right to distributions except in specific circumstances, and no statutory rights such as derivative actions. Shares are a passive claim on gold, not an operating company.
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