10-QPeriod: Q2 FY2017

ISHARES GOLD TRUST Quarterly Report for Q2 Ended Jun 30, 2017

Filed August 8, 2017For Securities:IAU

Summary

This 10-Q filing for iShares Gold Trust (IAU) for the period ending June 30, 2017, shows a significant increase in the Trust's net assets and the value of its gold bullion holdings compared to the previous year. The Trust's net assets grew from $7.31 billion at the end of 2016 to $8.40 billion by mid-2017. This growth was driven by both an increase in outstanding shares, indicating investor demand, and a rise in the market price of gold during the first half of the year. The Trust operates as a passive investment vehicle, aiming to mirror the performance of gold prices, and its primary asset is gold bullion. Expenses are minimal, largely consisting of a sponsor's fee, as other administrative costs are assumed by the sponsor. The filing highlights the valuation of gold based on the LBMA Gold Price PM and details the mechanism for issuing and redeeming shares, which are conducted in exchange for physical gold rather than cash.

Financial Highlights

8 data points
Beta

Net Income

-$30.36M

EPS (Diluted)

$-0.08

Cash & Equivalents

$0.00

Free Cash Flow

$0.00

Financial Statements
Beta
Operating Expenses$5.14M
Operating Income-$5.14M
Net Income-$30.36M
EPS (Basic)$-0.08

Key Highlights

  • 1Net assets increased by approximately 14.9% to $8.40 billion as of June 30, 2017, from $7.31 billion as of December 31, 2016.
  • 2The number of shares outstanding grew significantly, from 655,000,000 at year-end 2016 to 703,100,000 by mid-2017, reflecting increased investor interest.
  • 3The Trust's primary asset is gold bullion, valued at $8.40 billion at June 30, 2017.
  • 4For the six months ended June 30, 2017, the Trust reported a net increase in net assets from operations of $513.4 million, primarily due to an unrealized gain of $518.8 million on gold bullion.
  • 5Total expenses for the six months ended June 30, 2017, were $9.94 million, primarily consisting of sponsor's fees (0.25% of NAV).
  • 6The net asset value (NAV) per share increased from $11.16 at December 31, 2016, to $11.95 at June 30, 2017.
  • 7The Trust holds gold bullion valued at fair value, which is categorized as Level 1 in the fair value hierarchy, indicating it is based on unadjusted quoted prices in active markets.

Frequently Asked Questions

The Trust's net assets significantly increased from $7.31 billion at December 31, 2016, to $8.40 billion at June 30, 2017. This growth was primarily driven by an increase in outstanding shares, indicating strong investor demand, and a rise in the market price of gold during the first half of 2017. The value of the Trust's gold bullion holdings also increased accordingly.

The primary expense of the Trust is the Sponsor's fee, which accrues daily at an annualized rate of 0.25% of the net asset value. Most other administrative and operational expenses, such as trustee fees, custodian fees, and listing fees, are assumed by the Sponsor. This structure results in very low ordinary expenses for the Trust, with sponsor's fees being the sole operational expense noted.

The Trust's primary asset, gold bullion, is valued at fair value based on the LBMA Gold Price PM (or LBMA Gold Price AM if PM is unavailable). This valuation is categorized as Level 1, meaning it uses unadjusted quoted prices in active markets. The primary risk to investors is concentration risk, as substantially all of the Trust's assets are holdings of gold bullion. Therefore, a decline in the price of gold will adversely affect the value of the Shares of the Trust.

Individual investors cannot directly buy or redeem Shares with the Trust. Shares are issued and redeemed continuously in large aggregations (Baskets) only in exchange for physical gold bullion, and these transactions are conducted with registered broker-dealers known as Authorized Participants. Investors typically buy and sell Shares on the NYSE Arca exchange (ticker: IAU) through their brokerage accounts.