10-QPeriod: Q3 FY2010

ISHARES GOLD TRUST Quarterly Report for Q3 Ended Sep 30, 2010

Filed November 8, 2010For Securities:IAU

Summary

The iShares Gold Trust (IAU) reported a strong third quarter for 2010, with its net asset value (NAV) increasing by 21.94% due to a 5.00% rise in the COMEX Spot Settlement Price for gold. The trust's NAV per share also saw a 4.92% increase, from $12.19 to $12.79. This growth was further supported by an increase in outstanding shares, indicating sustained investor interest and creation of new shares. For the nine-month period ending September 30, 2010, IAU demonstrated significant growth with its NAV rising by 50.14%. This was driven by a substantial 19.41% increase in the COMEX gold price and a considerable influx of new shares, offset by redemptions. The trust's primary expenses remain the Sponsor's fees, which represent a small fraction of the overall asset value. The trust's primary risk remains concentration in gold bullion, making it susceptible to fluctuations in gold prices.

Financial Highlights

6 data points
Beta

Net Income

-$1.47M

Total Assets

$2.77B

Cash & Equivalents

$0.00

Financial Statements
Beta
Operating Expenses$2.31M
Net Income-$1.47M

Key Highlights

  • 1Net Asset Value (NAV) increased by 21.94% in Q3 2010, reaching $4,192,264,691.
  • 2NAV per share rose by 4.92% to $12.79 in Q3 2010, largely tracking the 5.00% increase in the COMEX gold spot price.
  • 3For the nine months ended September 30, 2010, NAV grew by 50.14%.
  • 4Significant share creation occurred, with 45.7 million shares issued in Q3 2010 and 79.75 million shares issued in the first nine months of 2010.
  • 5Sponsor's fees were the primary expense, amounting to $2.3 million for Q3 2010 and $8.2 million for the nine-month period.
  • 6The Trust's assets are almost entirely comprised of gold bullion, presenting a significant concentration risk tied to gold price volatility.
  • 7The Trust experienced a net loss of $1.47 million for the three months ended September 30, 2010, primarily due to Sponsor's fees exceeding gains from gold sales.

Frequently Asked Questions

The Trust's primary asset was gold bullion, valued at the lower of cost or market using the average cost method. Fair value was determined using the COMEX Spot Settlement Price for the closest to maturity gold futures contract.

The primary ongoing expense for the Trust is the Sponsor's fee, which accrues daily at an annualized rate of 0.25% of the adjusted net asset value (reduced from 0.40% prior to July 1, 2010). The Sponsor also covers other administrative and marketing expenses.

Individual investors cannot buy or redeem shares directly from the Trust. Shares are issued and redeemed continuously in large aggregations (Baskets) through registered broker-dealers known as Authorized Participants, who then transact with the Trust. These Authorized Participants facilitate the creation and redemption of shares in the secondary market where individual investors trade.

The Trust's objective is to provide investors with a vehicle to gain exposure to the price of gold bullion. The main risk is concentration in gold bullion, meaning the Trust's performance is directly tied to the price of gold, and any significant decline in gold prices will adversely affect the value of the Trust's shares.