10-QPeriod: Q1 FY2011

SPDR GOLD TRUST Quarterly Report for Q1 Ended Dec 31, 2010

Filed February 4, 2011For Securities:GLD

Summary

SPDR Gold Trust (GLD) reported strong performance for the quarter ending December 31, 2010, driven by a significant increase in the price of gold. The Trust experienced substantial gains on gold distributed for share redemptions, contributing to a net gain from operations of $1.12 billion, a significant increase from $215.65 million in the prior year's comparable quarter. The market value of the Trust's gold holdings rose considerably to $58.39 billion from $54.65 billion at the end of the previous quarter, reflecting the upward trend in gold prices. Investors should note that the Trust's financial results are directly tied to the performance of gold, and while this period saw substantial gains, the value of an investment in GLD will fluctuate with gold prices. Key operational aspects include a decrease in the number of outstanding shares from 429.2 million to 421.7 million during the quarter, indicating net redemptions. Despite the increase in gold's market value, the Trust's statement of financial condition shows a shareholders' deficit of $20.02 billion, which is an accounting presentation related to the valuation of redeemable shares and should be viewed in conjunction with the significant unrealized gains on the gold holdings. The Trust continues to operate without any cash balances, as gold is directly used to cover operational expenses.

Financial Highlights

17 data points
Beta

Net Income

$1.12B

EPS (Diluted)

$2.64

Total Assets

$38.37B

Cash & Equivalents

$0.00

Free Cash Flow

$0.00

Financial Statements
Beta
Gross Profit$18.79M
Operating Expenses$57.24M
Net Income$1.12B
EPS (Basic)$2.64
Shares Outstanding (Basic)425.40M

Key Highlights

  • 1Total gain on gold surged to $1.179 billion for the three months ended December 31, 2010, a significant increase from $255.39 million in the same period of 2009.
  • 2Net gain from operations reached $1.122 billion, compared to $215.65 million in the prior year's quarter, reflecting strong gold price performance.
  • 3The market value of gold holdings increased to $58.39 billion by December 31, 2010, from $54.65 billion at September 30, 2010.
  • 4Shareholders' deficit stood at $(20.02) billion as of December 31, 2010, a result of the accounting treatment for redeemable shares and unrealized gains.
  • 5Outstanding shares decreased from 429.2 million to 421.7 million during the quarter, indicating net redemptions.
  • 6The Trust maintained zero cash balance, with gold being sold to cover operating expenses.
  • 7The average price of gold for the three months ended December 31, 2010, was $1,367.68 per ounce.

Frequently Asked Questions

The primary driver of 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 the price of gold, less expenses. Therefore, increases in the price of gold generally lead to higher gains for the Trust, while decreases in gold prices result in lower gains or losses.

The Trust covers its operating expenses, such as custody fees, trustee fees, and sponsor fees, by selling portions of its gold holdings. As a result, the Trust typically holds no cash and aims to sell only the minimum amount of gold necessary to cover these costs, thereby minimizing the impact on its gold reserves.

The Shareholders' Deficit is an accounting presentation that arises from the Trust's structure as a grantor trust. It reflects the difference between the value of the Trust's assets (gold) and its liabilities, including the value of redeemable shares. The deficit is significantly influenced by the accounting for redeemable shares at their redemption value and is offset by large unrealized gains on the Trust's gold holdings, which are not recognized directly in equity until realized.

The Trustee determines both the NAV and ANAV daily. The ANAV is calculated by valuing the Trust's gold holdings and subtracting all estimated accrued but unpaid fees and expenses (except for those computed by reference to ANAV or custody fees). The NAV is then derived by subtracting specific fees (including those computed by reference to ANAV and custody fees) from the ANAV. The NAV per Share is calculated by dividing the NAV by the number of outstanding shares.