10-QPeriod: Q3 FY2008

SPDR GOLD TRUST Quarterly Report for Q3 Ended Jun 30, 2008

Filed August 11, 2008For Securities:GLD

Summary

The SPDR Gold Trust (GLD) 10-Q filing for the period ending June 30, 2008, reflects a significant increase in its investment in gold, driven by both market appreciation and substantial share creations. Total assets grew to $13.78 billion from $10.64 billion in the prior year, primarily due to a rise in the 'Investment in Gold' asset, which appreciated from $10.64 billion to $13.31 billion at cost, and significantly more to $18.79 billion at market value. This surge in gold's value and investor demand is further evidenced by the increase in redeemable shares to $19.26 billion from $13.80 billion. The Trust generated substantial gains during the period. For the nine months ended June 30, 2008, the Net Gain from Operations was $1.31 billion, a significant increase from $309.04 million in the same period of the prior year. This performance is largely attributable to the appreciation of gold held by the Trust. The filing also highlights that the Trust's operations generate no cash flow, as gold is sold to cover expenses, and the amount of gold per share gradually declines over time unless offset by price appreciation. Investors should note that the value of the Shares directly correlates with the price of gold, which has experienced significant volatility.

Financial Highlights

10 data points
Beta

Net Income

$603.50M

EPS (Diluted)

$3.04

Cash & Equivalents

$0.00

Free Cash Flow

$0.00

Financial Statements
Beta
Gross Profit$4.99M
Operating Expenses$17.51M
Net Income$603.50M
EPS (Basic)$3.04
Shares Outstanding (Basic)198.52M

Key Highlights

  • 1Total Assets increased significantly to $13.78 billion as of June 30, 2008, up from $10.64 billion as of September 30, 2007.
  • 2The market value of the Trust's gold holdings saw substantial appreciation, rising to $18.79 billion at June 30, 2008, from $13.81 billion at September 30, 2007.
  • 3Net Gain from Operations for the nine months ended June 30, 2008, was $1.31 billion, a substantial increase compared to $309.04 million for the same period in 2007.
  • 4The Trust experienced significant inflows, with 'Creations' of shares increasing by 72.7 million shares for the nine months ended June 30, 2008, compared to 92.1 million shares in the prior fiscal year's comparable period.
  • 5Redemption Value per Redeemable Share increased from $73.46 at September 30, 2007, to $91.70 at June 30, 2008, reflecting the rising price of gold.
  • 6The Trust's financial statements show no net cash flow from operations, as the Trust utilizes gold sales to cover expenses, leading to a zero cash balance at period end.
  • 7The filing notes a name change to SPDR Gold Trust and a transfer of listing to NYSE Arca, effective in late 2007/early 2008.

Frequently Asked Questions

The Trust's 'Investment in Gold' saw significant appreciation. While the cost basis increased from $10.64 billion to $13.31 billion, the market value surged to $18.79 billion by June 30, 2008, from $13.81 billion a year prior, indicating strong performance driven by rising gold prices.

The Trust generated substantial 'Net Gain from Operations,' with $1.31 billion for the first nine months of fiscal year 2008. However, the Trust has no net cash flow from operations. This is because it uses its gold holdings to pay for expenses, meaning cash receipts from gold sales equal cash paid for expenses, resulting in zero cash balance at period end.

The value of SPDR Gold Trust Shares directly correlates with the price of gold bullion. The filing emphasizes that fluctuations in the price of gold, influenced by global supply and demand, inflation expectations, currency exchange rates, interest rates, and geopolitical events, will materially affect the value of the Shares.

The Trust's expenses are paid by selling gold. As a result, the amount of gold represented by each Share gradually declines over time, irrespective of the trading price of the shares. This means that for the share price to remain constant relative to the price of gold, the price of gold must increase to offset the erosion of gold per share due to expenses.