10-QPeriod: Q1 FY2012

ISHARES GOLD TRUST Quarterly Report for Q1 Ended Mar 31, 2012

Filed May 9, 2012For Securities:IAU

Summary

The iShares Gold Trust (IAU) 10-Q filing for the period ending March 31, 2012, indicates a strong performance driven by an increase in the price of gold and a growth in outstanding shares. The Trust's net asset value (NAV) saw a significant increase of 14.80%, rising from $8.42 billion to $9.66 billion, largely due to an 8.59% increase in the London PM Fix price of gold. The number of outstanding shares also grew by approximately 5.9%, reflecting net creations of shares. Despite the positive movement in gold prices, the Trust reported a net income of $16.99 million for the quarter, a substantial decrease from $96.02 million in the same period of the previous year. This reduction is primarily attributable to a much lower gain on gold distributed for share redemptions compared to the prior year, alongside ongoing sponsor fees. Investors should note that the Trust's performance is directly tied to the price of gold, and its primary expense is the sponsor's fee.

Financial Highlights

8 data points
Beta

Net Income

$16.99M

EPS (Diluted)

$0.06

Total Assets

$7.14B

Financial Statements
Beta
Operating Expenses$5.99M
Net Income$16.99M
EPS (Basic)$0.06
Shares Outstanding (Basic)293.75M

Key Highlights

  • 1The Trust's net asset value (NAV) increased by 14.80% to $9.66 billion as of March 31, 2012, from $8.42 billion as of December 31, 2011.
  • 2The value of gold bullion inventory, measured at fair value, increased by 14.80% to $9.66 billion.
  • 3Outstanding redeemable capital shares increased to 596.45 million shares from 563.85 million shares, indicating net share creations.
  • 4Net income for the three months ended March 31, 2012, was $16.99 million, a significant decrease from $96.02 million in the same period of 2011.
  • 5Sponsor's fees for the quarter totaled $5.99 million, representing an annualized rate of 0.25% of the adjusted net asset value.
  • 6The net asset value per Share increased by 8.51% from $14.93 to $16.20, closely tracking the 8.59% rise in the London PM Fix gold price.

Frequently Asked Questions

The primary driver was the increase in the price of gold. The London PM Fix, a key valuation metric for the Trust, rose by 8.59% during the quarter, leading to a corresponding increase in the Trust's net asset value and the value of its gold bullion holdings.

The net income decreased from $96.02 million in the first quarter of 2011 to $16.99 million in the first quarter of 2012. This was primarily due to a substantially lower gain recognized on gold distributed for the redemption of Shares ($21.35 million in 2012 vs. $98.30 million in 2011). While the sponsor's fees remained consistent at 0.25% of NAV, the larger gains in the prior year significantly boosted its net income.

The Trust issues and redeems shares exclusively in exchange for gold bullion, not cash, in large aggregations called 'Baskets,' and only through 'Authorized Participants' (registered broker-dealers). During the quarter, there were net share creations, with 37.7 million shares created and 5.1 million shares redeemed, contributing to the growth in outstanding shares and the overall NAV.

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. The Sponsor also assumes other administrative and marketing expenses such as trustee fees, custodian fees, and listing fees, meaning these are not direct expenses to the Trust itself.