10-QPeriod: Q2 FY2018

ISHARES GOLD TRUST Quarterly Report for Q2 Ended Jun 30, 2018

Filed August 6, 2018For Securities:IAU

Summary

This filing covers the iShares Gold Trust (IAU) for the quarter ending June 30, 2018. The Trust's net assets decreased to $10.80 billion from $10.15 billion at the end of 2017. This decline was primarily driven by a significant unrealized loss on gold bullion, reflecting a decrease in the market price of gold during the period. Despite the overall decrease in net assets, the Trust saw an increase in the number of outstanding shares due to more share creations than redemptions. Investors should note that the Trust's performance is directly tied to the price of gold. The period was characterized by a weakening gold price, leading to a decline in the Trust's net asset value per share. While the Trust experienced net investment losses and significant unrealized depreciation, it also generated realized gains from gold distributed for share redemptions and gold sold to cover expenses. The primary expense remains the Sponsor's fee.

Financial Highlights

8 data points
Beta

Net Income

-$675.39M

EPS (Diluted)

$-1.42

Cash & Equivalents

$0.00

Free Cash Flow

$0.00

Financial Statements
Beta
Operating Expenses$7.41M
Operating Income-$7.41M
Net Income-$675.39M
EPS (Basic)$-1.42

Key Highlights

  • 1Total assets under management stood at $10.80 billion as of June 30, 2018, up from $10.15 billion at December 31, 2017.
  • 2Net asset value (NAV) per share decreased to $12.00 from $12.45 during the six-month period, reflecting a decline in the price of gold.
  • 3The Trust experienced a significant unrealized loss of $491.3 million on its gold bullion holdings for the six months ended June 30, 2018.
  • 4Sponsor's fees amounted to $14.3 million for the first six months of 2018, representing the primary operational expense.
  • 5There was a net increase in the number of outstanding shares, with 168.7 million shares issued and 83.35 million shares redeemed during the six-month period.
  • 6The Trust's investment in gold bullion is valued at $10.80 billion, with a cost basis of $10.81 billion as of June 30, 2018.
  • 7Gold bullion is classified as a Level 1 asset in the fair value hierarchy, indicating it is valued based on unadjusted quoted prices in active markets.

Frequently Asked Questions

The primary driver of the change in the Trust's net assets was the fluctuation in the market price of gold. For the six months ended June 30, 2018, a significant unrealized loss on gold bullion holdings due to a declining gold price resulted in a decrease in the net asset value per share, although the total net assets saw an increase due to capital share transactions.

The primary expense for the iShares Gold Trust is the Sponsor's fee, which accrues daily at an annualized rate of 0.25% of the net asset value. Other expenses like trustee and custodian fees are assumed by the Sponsor and are not separate expenses of the Trust.

Individual investors cannot buy or sell Shares directly with the Trust. Instead, they must transact through registered broker-dealers known as Authorized Participants. These participants can create or redeem 'Baskets' of 50,000 Shares directly with the Trust in exchange for physical gold, and then trade these Shares on the open market (NYSE Arca) to meet investor demand.

An unrealized loss represents a decrease in the market value of an asset (in this case, gold bullion) below its cost basis or carrying value. Since the Trust holds physical gold, the value of its holdings fluctuates daily with the market price of gold. An unrealized loss indicates that the current market value of the gold held is less than what it was at a previous valuation point, but this loss is not realized (i.e., it does not become a permanent loss) until the gold is sold.