10-QPeriod: Q2 FY2009

ISHARES GOLD TRUST Quarterly Report for Q2 Ended Jun 30, 2009

Filed August 6, 2009For Securities:IAU

Summary

This 10-Q filing for iShares COMEX Gold Trust (IAU) for the period ending June 30, 2009, indicates a positive trend in its net asset value, primarily driven by an increase in outstanding shares rather than solely by the price appreciation of gold. The Trust's net asset value grew by approximately 4.92% during the quarter and 11.20% over the first six months of the year. This growth was largely a result of share creations outpacing redemptions, a common mechanism for ETFs to track underlying assets. While gold prices saw a moderate increase during the period, the Trust's net income for the quarter was negative due to sponsor fees, though the six-month period showed a net profit. The Trust's primary asset remains gold bullion, valued at fair market value, and it operates as a passive investment vehicle designed to track the price of gold, less expenses. Investors should note the concentration risk inherent in holding a single commodity and the impact of sponsor fees on overall returns.

Financial Highlights

4 data points
Beta

Net Income

-$1.52M

Cash & Equivalents

$0.00

Financial Statements
Beta
Operating Expenses$2.04M
Net Income-$1.52M

Key Highlights

  • 1The Trust's net asset value (NAV) increased by 4.92% in Q2 2009 and 11.20% in the first six months of 2009.
  • 2Share creations (1,000,000 shares in Q2, 2.3 million shares YTD) significantly outpaced redemptions (0 shares in Q2, 950,000 shares YTD), driving NAV growth.
  • 3Gold bullion inventory, valued at fair value, represented the entirety of the Trust's assets, totaling $1.59 billion at June 30, 2009.
  • 4The COMEX Spot Settlement Price for gold increased during the period, contributing to the rise in NAV per share, though net asset value per share growth lagged the gold price due to sponsor fees.
  • 5Sponsor's fees were the primary expense, amounting to $2.04 million for Q2 2009 and $4.01 million for the first six months of 2009.
  • 6The Trust is structured as a grantor trust, meaning it is not subject to federal income taxes, with gains and losses passing through to shareholders.
  • 7A potential change in ownership of the Trust's sponsor, Barclays Global Investors International, Inc., to BlackRock, Inc. was disclosed, with no expected material impact on the Trust.

Frequently Asked Questions

The primary driver of the Trust's net asset value (NAV) growth in this period was the increase in outstanding shares. Share creations by Authorized Participants exceeded redemptions, leading to an expansion of the Trust's share base, which, combined with gold price movements, increased the total NAV.

The primary expense for the iShares COMEX Gold Trust is the Sponsor's fee, which accrues daily at an annualized rate of 0.40% of the Trust's adjusted daily net asset value. Other operational expenses such as trustee, custodian, and listing fees are assumed by the Sponsor.

The gold bullion held by the Trust is valued at the lower of cost or market using the average cost method. For financial reporting, market values are based on the Commodity Exchange, Inc. (COMEX) settlement price for the spot month gold futures contract that is closest to maturity. This COMEX Spot Settlement Price is also used to determine the net asset value per share.

The Trust's primary market risk is concentration risk, as substantially all of its assets are holdings of gold bullion. Fluctuations in the price of gold directly impact the value of the Trust's shares. Factors influencing gold prices, such as official sector sales, hedging activities by producers, and market participant sentiment, are key risk drivers.