10-QPeriod: Q2 FY2010

SPDR GOLD TRUST Quarterly Report for Q2 Ended Mar 31, 2010

Filed May 10, 2010For Securities:GLD

Summary

This 10-Q filing for SPDR Gold Trust (GLD) for the period ending March 31, 2010, showcases a significant increase in assets and a substantial net gain from operations compared to the prior year. The Trust's "Investment in Gold" grew to over $30.1 billion at cost, with a market value reaching approximately $40.3 billion, reflecting a considerable unrealized gain. This growth was driven by strong inflows of gold, indicated by the substantial increase in "Redeemable Shares" and "Shares issued and outstanding." Financially, the Trust reported a net gain from operations of $286 million for the quarter and $501.7 million for the first six months of the fiscal year, a dramatic improvement from a net loss in the comparable periods of the prior year. This profitability is primarily attributable to significant gains on gold distributed for share redemptions and sales to cover expenses, driven by the overall upward trend in gold prices. Investors should note that the Trust's primary risk remains the volatility of gold prices, which directly impacts the value of the Shares.

Financial Highlights

17 data points
Beta

Net Income

$286.01M

EPS (Diluted)

$0.78

Total Assets

$30.29B

Cash & Equivalents

$0.00

Free Cash Flow

$0.00

Financial Statements
Beta
Gross Profit$10.02M
Operating Expenses$39.12M
Net Income$286.01M
EPS (Basic)$0.78
Shares Outstanding (Basic)365.75M

Key Highlights

  • 1Total assets increased to $30.29 billion as of March 31, 2010, up from $28.50 billion as of September 30, 2009.
  • 2Investment in Gold, at market value, was $40.33 billion as of March 31, 2010, an increase from $35.03 billion at the end of the prior fiscal year, indicating significant unrealized gains.
  • 3The Trust reported a net gain from operations of $286 million for the three months ended March 31, 2010, a substantial improvement from a net loss of $22 million in the same period of 2009.
  • 4For the six months ended March 31, 2010, the Trust reported a net gain of $501.7 million, compared to $34.8 million in the prior year period.
  • 5The number of outstanding Shares increased to 370.9 million as of March 31, 2010, from 358.9 million as of September 30, 2009, indicating strong investor demand.
  • 6Gold prices have shown a strong upward trend, with the average price for the six months ended March 31, 2010, being $1,104.41 per ounce.
  • 7The Trust holds its gold with HSBC Bank USA, N.A. as Custodian and operates under a 'grantor trust' structure for U.S. federal income tax purposes, meaning income and expenses flow through to shareholders.

Frequently Asked Questions

The primary driver of the SPDR Gold Trust's financial performance is the price of gold bullion. The Trust's objective is for its Shares to reflect the performance of gold prices, less the Trust's operational expenses. Significant gains reported in this period are largely due to the appreciation in the market value of the gold held by the Trust.

The Trust does not generate income and therefore sells a portion of its gold holdings to cover its operational expenses, such as custody fees, trustee fees, and sponsor fees. This sale of gold to pay expenses can lead to a gradual decrease in the amount of gold represented by each Share over time.

The Trust's Net Asset Value (NAV) per Share is intended to closely track the market price of gold, minus accrued expenses. The NAV is determined daily based on the London gold fix. However, factors such as the Trust's expenses and the timing of gold sales for expense payment can cause the NAV per Share to diverge slightly from the immediate spot price of gold.

The primary risk for investors in the SPDR Gold Trust is the volatility of the price of gold. Fluctuations in gold prices, driven by factors like global supply and demand, inflation expectations, currency exchange rates, and geopolitical events, can materially affect the value of an investment in the Shares. Additionally, the ongoing sale of gold to cover expenses means the amount of gold per share decreases over time.