10-QPeriod: Q1 FY2017

ISHARES GOLD TRUST Quarterly Report for Q1 Ended Mar 31, 2017

Filed May 5, 2017For Securities:IAU

Summary

The iShares Gold Trust (IAU) reported a strong first quarter in 2017, with net assets increasing by 9.40% from $7.31 billion to $7.99 billion by March 31, 2017. This growth was primarily driven by a significant increase in the price of gold, which rose by 7.40% during the quarter. The Trust also saw an increase in outstanding shares, reflecting investor demand. Despite the appreciation in gold prices, the Trust experienced a net investment loss due to sponsor fees, though this was more than offset by substantial realized and unrealized gains on its gold bullion holdings. For investors, the key takeaway is the Trust's direct correlation to gold prices, with the reported gains largely mirroring the upward movement in the precious metal. The Trust's structure as a passive investment vehicle means its performance is a direct reflection of gold market dynamics. While sponsor fees represent an ongoing expense, the substantial unrealized appreciation highlights the potential for capital appreciation in periods of rising gold prices. The Trust's liquidity remains tied to the creation and redemption of shares through Authorized Participants, which is facilitated by gold bullion exchanges.

Financial Highlights

8 data points
Beta

Net Income

$543.78M

EPS (Diluted)

$1.64

Cash & Equivalents

$0.00

Free Cash Flow

$0.00

Financial Statements
Beta
Operating Expenses$4.80M
Operating Income-$4.80M
Net Income$543.78M
EPS (Basic)$1.64

Key Highlights

  • 1Net assets increased by 9.40% to $7.99 billion as of March 31, 2017, up from $7.31 billion at year-end 2016.
  • 2The value of investment in gold bullion saw a significant unrealized appreciation of $546.56 million during the quarter.
  • 3The net asset value per share rose to $11.98 from $11.16, reflecting the increase in gold prices and operational gains.
  • 4Total return for the quarter was 7.35%, primarily driven by the appreciation in the underlying gold price.
  • 5The Trust experienced a net investment loss of $4.8 million, largely attributable to sponsor fees.
  • 6Shares outstanding increased by 12.6 million, indicating net creation of Shares by Authorized Participants.
  • 7The Trust's primary asset, gold bullion, is valued using the LBMA Gold Price PM, categorized as Level 1 in the fair value hierarchy.

Frequently Asked Questions

The primary driver of the iShares Gold Trust's performance is the price of gold bullion. The Trust is designed to reflect the performance of gold prices before expenses. As seen in this report, the significant increase in net assets and net asset value per share was directly correlated with the rise in gold prices during the quarter.

The main expense incurred by the Trust is the Sponsor's fee, which accrues daily at an annualized rate of 0.25% of the net asset value. The Sponsor also assumes other administrative expenses such as trustee fees, custodian fees, listing fees, and audit fees, which are not directly charged to the Trust as separate expenses.

Individual investors cannot directly buy or sell shares with the Trust. Instead, shares are issued and redeemed by the Trust in large blocks (Baskets of 50,000 shares) only with registered broker-dealers known as Authorized Participants. These Authorized Participants then buy or sell shares on the open market, allowing individual investors to purchase or sell IAU shares through their brokerage accounts.

As of March 31, 2017, the fair value of the gold bullion held by the Trust was approximately $7.99 billion. This value is determined daily using the LBMA Gold Price PM (or LBMA Gold Price AM if PM is unavailable). This valuation is considered Level 1 in the fair value hierarchy, meaning it is based on unadjusted quoted prices in active markets for identical assets.