10-QPeriod: Q3 FY2016

ISHARES GOLD TRUST Quarterly Report for Q3 Ended Sep 30, 2016

Filed November 7, 2016For Securities:IAU

Summary

iShares Gold Trust (IAU) reported significant growth in its net assets for the nine months ended September 30, 2016, driven by a substantial increase in the price of gold and a corresponding rise in outstanding Shares. The Trust's net asset value grew by approximately 85% to $9.64 billion, with net asset value per Share increasing by 24.29% to $12.74. This performance was primarily fueled by a 24.50% increase in the LBMA Gold Price PM, reflecting a strong market for gold during the period. The Trust saw substantial inflows of gold bullion through the creation of new Shares, indicating investor demand for gold exposure via the IAU ETF. Despite a net investment loss due to sponsor fees, the significant unrealized gains from the appreciation of gold bullion more than offset these costs, resulting in a substantial net increase in net assets from operations.

Financial Highlights

9 data points
Beta

Net Income

-$6.54M

EPS (Diluted)

$-0.02

Cash & Equivalents

$0.00

Free Cash Flow

$0.00

Financial Statements
Beta
Operating Expenses$5.95M
Operating Income-$5.95M
Net Income-$6.54M
EPS (Basic)$-0.02
Shares Outstanding (Basic)369.28M

Key Highlights

  • 1Net assets increased by approximately 85% to $9.64 billion as of September 30, 2016, from $5.21 billion at the end of 2015.
  • 2Net asset value per Share grew by 24.29% to $12.74 for the nine months ended September 30, 2016.
  • 3The primary driver of this growth was a 24.50% increase in the price of gold (LBMA Gold Price PM).
  • 4Outstanding Shares increased significantly from 508.1 million at year-end 2015 to 756.25 million by September 30, 2016, indicating strong investor inflows.
  • 5The Trust generated a substantial unrealized gain on its gold bullion holdings of $1.44 billion for the nine months ended September 30, 2016.
  • 6Sponsor's fees were $15.03 million for the nine months ended September 30, 2016, representing an annualized expense ratio of 0.25% of average net assets.
  • 7The Trust holds all its assets in gold bullion, exposing investors directly to the price fluctuations of gold.

Frequently Asked Questions

The primary driver was the significant increase in the price of gold, which rose by 24.50% during the period. This appreciation in gold's value directly increased the net asset value of the Trust.

Investor demand was strong, evidenced by a substantial increase in outstanding Shares from 508.1 million to 756.25 million. This indicates significant inflows of gold bullion into the Trust through the creation of new Shares.

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

The fair value of the gold bullion is determined daily using the LBMA Gold Price PM (or LBMA Gold Price AM if PM is unavailable). This price is derived from an auction hosted by ICE Benchmark Administration and is considered a Level 1 input in the fair value hierarchy, meaning it's based on unadjusted quoted prices in active markets for identical assets.