10-QPeriod: Q1 FY2016

ISHARES GOLD TRUST Quarterly Report for Q1 Ended Mar 31, 2016

Filed May 6, 2016For Securities:IAU

Summary

The iShares Gold Trust (IAU) reported a significant increase in net assets for the quarter ended March 31, 2016, primarily driven by a substantial rise in the price of gold and an increase in the number of outstanding shares. The Trust's net asset value grew by 42.21% to $7.41 billion, with net asset value per share increasing from $10.25 to $11.93. This performance reflects the strong positive trend in gold prices during the period, which saw a 16.45% increase. Key operational figures show a net increase in assets from operations of $937.9 million, largely attributable to a substantial unrealized gain on its gold bullion holdings. The Trust experienced significant share creation activity, with 140.95 million new shares issued compared to 28.2 million redeemed, indicating strong investor demand. Despite a nominal net investment loss due to sponsor fees, the overall operational gains and capital inflows resulted in robust growth for the Trust.

Financial Highlights

9 data points
Beta

Net Income

$937.92M

EPS (Diluted)

$3.18

Cash & Equivalents

$0.00

Free Cash Flow

$0.00

Financial Statements
Beta
Operating Expenses$4.18M
Operating Income-$4.18M
Net Income$937.92M
EPS (Basic)$3.18
Shares Outstanding (Basic)295.69M

Key Highlights

  • 1Net Assets increased by 42.21% to $7.41 billion for the quarter ended March 31, 2016.
  • 2Net Asset Value (NAV) per Share rose from $10.25 to $11.93, a 16.49% increase.
  • 3The Trust experienced a significant net increase in net assets from operations of $937.9 million, primarily due to a large unrealized gain on gold bullion ($935.1 million).
  • 4Investor demand was strong, with 140.95 million Shares created versus 28.2 million Shares redeemed during the quarter.
  • 5Gold bullion holdings increased from 4,905.6 ounces at December 31, 2015, to 5,990.5 ounces at March 31, 2016.
  • 6The Trust reported a net investment loss of $4.18 million for the quarter, primarily due to sponsor fees (0.25% of NAV).
  • 7The Trust experienced an inadvertent issuance of 20.1 million unregistered shares between February 19 and March 3, 2016, which could expose the Trust to rescission rights or damages claims.

Frequently Asked Questions

The primary driver was the significant increase in the price of gold, which rose by 16.45% during the quarter. This led to a substantial unrealized gain on the Trust's gold bullion holdings, which is its main asset.

Investor demand was strong, as evidenced by the creation of 140.95 million Shares, significantly more than the 28.2 million Shares redeemed. This influx of new shares contributed to the growth in the Trust's net assets.

The Trust inadvertently issued 20.1 million shares without proper registration. This could lead to investors exercising rescission rights, requiring the Trust to repurchase these shares at their original purchase price plus interest, potentially impacting the Trust's financial resources and reputation. The Trust may also face penalties from regulatory bodies.

The primary expense is the Sponsor's fee, which accrues daily at an annualized rate of 0.25% of the Trust's net asset value. Other administrative and operational expenses like Trustee and Custodian fees are assumed by the Sponsor.