10-QPeriod: Q3 FY2013

SPDR GOLD TRUST Quarterly Report for Q3 Ended Jun 30, 2013

Filed August 8, 2013For Securities:GLD

Summary

The SPDR Gold Trust (GLD) 10-Q filing for the period ending June 29, 2013, reveals a significant decrease in the Trust's assets under management compared to the previous year. Total assets dropped from $50.7 billion to $37.1 billion, primarily due to a substantial outflow of gold and a decline in the market value of its gold holdings. This decrease is reflected in the number of outstanding shares, which fell from 437.9 million to 322.4 million. The Trust experienced a considerable unrealized loss on its investment in gold during the nine-month period, impacting its overall performance. Despite the asset depreciation, the Trust reported a net gain from operations for both the three and nine-month periods. This gain was largely driven by substantial unrealized gains on gold distributed for share redemptions, which offset the unrealized losses on the investment. While operational expenses remained relatively stable, the decline in AUM suggests a challenging market environment for gold during this period. Investors should note the Trust's operational model where gold is sold to cover expenses, resulting in zero cash balance from operations.

Financial Highlights

16 data points
Beta

Net Income

$959.07M

EPS (Diluted)

$2.72

Total Assets

$37.16B

Cash & Equivalents

$0.00

Free Cash Flow

$0.00

Financial Statements
Beta
Gross Profit$9.74M
Operating Expenses$48.42M
Net Income$959.07M
EPS (Basic)$2.72
Shares Outstanding (Basic)352.74M

Key Highlights

  • 1Total assets decreased significantly from $50.7 billion (September 30, 2012) to $37.1 billion (June 30, 2013).
  • 2The number of outstanding shares reduced from 437.9 million to 322.4 million, indicating net redemptions.
  • 3An unrealized loss on investment in gold was recorded as $840,230 for the nine months ended June 30, 2013.
  • 4The Trust reported a net gain from operations of $959.1 million for the three months ended June 30, 2013, and $3.44 billion for the nine months ended June 30, 2013.
  • 5The gain on gold distributed for redemption of shares was substantial ($1.84 billion for three months, $4.42 billion for nine months), significantly contributing to net gains.
  • 6The Trust maintained a zero cash balance, as gold is sold to cover operating expenses.
  • 7The market value of gold holdings decreased significantly, with the price per ounce falling from $1,776.00 (September 30, 2012) to $1,192.00 (June 28, 2013).

Frequently Asked Questions

The primary reason for the decrease in assets and outstanding shares is a decline in the market value of gold and significant redemptions by Authorized Participants. Investors redeemed more shares than were created during the period, leading to a decrease in the total amount of gold held by the Trust and consequently, the total assets under management.

The Trust covers its operating expenses, such as custody fees, trustee fees, and sponsor fees, by selling a portion of its gold holdings. The Trustee endeavors to sell only the minimum amount of gold required to cover these expenses. This process results in the Trust not holding any cash at the end of each reporting period and ensures that its assets primarily consist of gold.

The 'unrealized loss on investment in gold' reflects the decrease in the market value of the gold the Trust currently holds, based on the lower of cost or market valuation. Conversely, the 'gain on gold distributed for redemption of Shares' represents the profit made when gold is distributed to shareholders who redeem their shares. This gain is recognized when the market value of the gold distributed for redemptions exceeds its average cost, and it significantly contributed to the Trust's reported net gains despite the overall decline in gold prices.

The NAV of the Trust is determined by the Trustee based on the market value of the gold held, less accrued expenses and fees. The value of the gold is typically based on the London Gold Fix. The NAV per Share is calculated by dividing the total NAV by the number of outstanding shares. The report highlights that the difference between the Net Asset Value per share and the market value of ounces represented by each share was minimal (around -0.049% at period end).