Summary
SPDR Gold Trust (GLD) reported its first quarterly results for the period ending March 31, 2006. The Trust, established in November 2004, aims to mirror the performance of gold bullion prices, less expenses. As of March 31, 2006, the Trust held approximately 11.2 million ounces of gold with a market value of over $6.5 billion, representing a significant increase from September 30, 2005, where it held approximately 6.7 million ounces valued at $3.16 billion. This growth is primarily driven by substantial share creations, indicating strong investor demand for gold exposure. The Trust generated a net gain of $3.15 million for the three months ending March 31, 2006, a significant turnaround from a net loss of $32.77 million in the same period last year. This improvement is largely due to gains on gold distributed for share redemptions and a substantial increase in the market value of its gold holdings. The Trust's operational expenses are primarily covered by the sale of small amounts of gold, resulting in no cash flow from operations and a consistent zero cash balance. Investors should note that the Trust's share value is directly tied to the price of gold, which is subject to various market and economic factors, and that the amount of gold represented by each share gradually declines over time due to ongoing expense accruals.
Key Highlights
- 1The Trust's holdings of gold significantly increased to approximately 11.2 million ounces with a market value of $6.5 billion as of March 31, 2006, up from 6.7 million ounces valued at $3.16 billion as of September 30, 2005.
- 2For the three months ending March 31, 2006, the Trust reported a net gain of $3.15 million, a substantial improvement from a net loss of $32.77 million in the prior year's comparable period.
- 3Investor demand, evidenced by share creations, more than doubled from the prior fiscal year, with 46.5 million shares created in the first half of fiscal year 2006 compared to 74.7 million in the full prior fiscal year.
- 4The Trust maintained a zero cash balance, as operational expenses are primarily settled through the sale of gold, minimizing non-gold assets.
- 5The Net Asset Value (NAV) per share increased significantly from $47.16 at the end of the prior fiscal year to $57.89 as of March 31, 2006, reflecting the rise in gold prices.
- 6A lawsuit filed in 2003 against the Sponsor and others is ongoing, with the Sponsor expressing confidence that it will not materially adversely affect the Trust.
- 7The Trust charges annual fees: Sponsor (0.15%), Trustee (0.02%), Custodian (0.10%), and Marketing Agent (0.15%), with some provisions for expense ratio caps and fee reductions.