10-KPeriod: FY2012

ISHARES GOLD TRUST Annual Report, Year Ended Dec 31, 2012

Filed February 28, 2013For Securities:IAU

Summary

The iShares Gold Trust (IAU) 2012 annual report highlights a significant increase in its net asset value, growing by 38.36% to $11.65 billion by year-end. This growth was driven by both an increase in outstanding shares and a rise in the price of gold, as measured by the London PM Fix. The Trust's objective remains to provide investors with a cost-effective way to gain exposure to the price of gold, with its shares backed by physical gold held by a custodian. The report details the Trust's passive investment strategy and the mechanisms for share creation and redemption through Authorized Participants. Key operational and financial aspects for investors include the Sponsor's fee of 0.25% of net asset value, which is the primary recurring expense. The Trust's performance is directly tied to the fluctuations in the gold market, and the report outlines various risk factors associated with this, including potential for losses due to gold price volatility and the gradual decrease in the amount of gold per share due to expense accruals. The Trust also notes its classification as a grantor trust for tax purposes, meaning income and expenses flow through to shareholders.

Financial Highlights

14 data points
Beta

Revenue

$161.69M

Net Income

$136.33M

84.3% Net Margin

EPS (Diluted)

$0.44

Total Assets

$9.32B

Cash & Equivalents

$0.00

Free Cash Flow

$0.00

Financial Statements
Beta
Revenue$161.69M
Operating Expenses$25.36M
Net Income$136.33M
EPS (Basic)$0.44
Shares Outstanding (Basic)312.45M

Key Highlights

  • 1The Trust's net asset value increased by 38.36% to $11.65 billion in 2012, up from $8.42 billion in 2011.
  • 2Outstanding shares grew from 563.85 million to 719.55 million during 2012.
  • 3The London PM Fix price for gold increased by 8.69% from December 31, 2011, to December 31, 2012.
  • 4The Sponsor's fee was 0.25% of the Trust's average net asset value, amounting to $25.36 million for the year.
  • 5The Trust operates as a passive investment vehicle, with its performance directly linked to the price of gold.
  • 6The report reiterates that shares may trade at a premium or discount to their Net Asset Value (NAV).
  • 7The Trust is structured as a grantor trust for U.S. federal income tax purposes, with income and expenses flowing through to shareholders.

Frequently Asked Questions

The primary objective of the iShares Gold Trust (IAU) is for the value of its Shares to reflect, at any given time, the price of the gold owned by the Trust, less the Trust's expenses and liabilities. It aims to provide investors with a simple and cost-effective way to gain exposure to the price movements of gold.

The primary recurring expense for the Trust is the Sponsor's fee, which accrues daily at an annualized rate of 0.25% of the Trust's net asset value. The Sponsor also assumes various administrative and marketing expenses, including trustee fees, custodian fees, listing fees, and SEC registration fees.

The Trustee determines the Trust's NAV daily by valuing the gold held using the London PM Fix price. From the total value of the gold and other assets, all accrued fees, expenses, and liabilities are subtracted. The NAV per Share is then calculated by dividing the Trust's net asset value by the number of outstanding Shares.

The main risks include the volatility of the price of gold, which directly impacts the Share price. There is also a risk that the amount of gold represented by each Share will gradually decrease due to the sale of gold to cover expenses. Shares may trade at a premium or discount to their NAV, and the Trust may be liquidated, potentially resulting in losses if gold prices are low at that time.