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IAU Ishares Gold Trust

Filed: 4 May 21, 12:10pm
 

Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 10-Q

 


 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2021

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from       to        

 

Commission File Number: 001-32418

 


 

iShares® Gold Trust

(Exact name of registrant as specified in its charter)

 


 

New York

81-6124036

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

 

c/o iShares Delaware Trust Sponsor LLC
400 Howard Street
San Francisco, California 94105
Attn: Product Management Team
iShares Product Research & Development

(Address of principal executive offices) (Zip Code)

 

(415) 670-2000

(Registrant’s telephone number, including area code)

 


 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 


 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Shares

IAU

NYSE Arca, Inc.

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☒

Accelerated filer ☐

 

Non-accelerated filer ☐

Smaller reporting company ☐

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

As of April 30, 2021, the Registrant had 1,672,900,000 Shares outstanding.



 

 

 

Table of Contents

 

 Page
  

PART I – FINANCIAL INFORMATION

 

   
Item 1.

Financial Statements (Unaudited)

1
   
 

Statements of Assets and Liabilities at March 31, 2021 and December 31, 2020

1
   
 

Statements of Operations for the three months ended March 31, 2021 and 2020

2
   
 

Statements of Changes in Net Assets for the three months ended March 31, 2021 and 2020

3
   
 

Statements of Cash Flows for the three months ended March 31, 2021 and 2020

5
   
 

Schedules of Investments at March 31, 2021 and December 31, 2020

6
   
 

Notes to Financial Statements

7
   
Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

11
   
Item 3.

Quantitative and Qualitative Disclosures About Market Risk

12
   
Item 4.

Controls and Procedures

12
  

PART II – OTHER INFORMATION

 
  
Item 1.

Legal Proceedings

13
   
Item 1A.

Risk Factors

13
   
Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

14
   
Item 3.

Defaults Upon Senior Securities

14
   
Item 4.

Mine Safety Disclosures

14
   
Item 5.

Other Information

14
   
Item 6.

Exhibits

15
   

SIGNATURES

16

 

 

PART I FINANCIAL INFORMATION

 

 

Item 1. Financial Statements

 

 

 

iShares® Gold Trust

Statements of Assets and Liabilities (Unaudited)

At March 31, 2021 and December 31, 2020

 

  

March 31,
2021

  

December 31,
2020

 

Assets

        

Investment in gold bullion, at fair value(a)

 $27,398,975,237  $31,924,891,396 

Total Assets

  27,398,975,237   31,924,891,396 
         

Liabilities

        

Sponsor’s fees payable

  5,968,228   6,622,260 

Total Liabilities

  5,968,228   6,622,260 
         

Commitments and contingent liabilities (Note 6)

        
         

Net Assets

 $27,393,007,009  $31,918,269,136 
         

Shares issued and outstanding(b)

  1,700,250,000   1,770,450,000 

Net asset value per Share (Note 2C)

 $16.11  $18.03 

 


(a)

Cost of investment in gold bullion: $24,106,918,759 and $25,014,142,586, respectively.

(b)

No par value, unlimited amount authorized.

 

 

See notes to financial statements.

 

 

 

iShares® Gold Trust

Statements of Operations (Unaudited)

For the three months ended March 31, 2021 and 2020

 

  

Three Months Ended
March 31,

 
  

2021

  

2020

 

Expenses

        

Sponsor’s fees

 $18,536,656  $11,818,169 

Total expenses

  18,536,656   11,818,169 

Net investment loss

  (18,536,656)  (11,818,169)
         

Net Realized and Unrealized Gain (Loss)

        

Net realized gain from:

        

Gold bullion sold to pay expenses

  3,764,720   1,813,190 

Gold bullion distributed for the redemption of Shares

  254,372,227   149,833,292 

Net realized gain

  258,136,947   151,646,482 

Net change in unrealized appreciation/depreciation

  (3,618,692,332)  831,013,860 

Net realized and unrealized gain (loss)

  (3,360,555,385)  982,660,342 
         

Net increase (decrease) in net assets resulting from operations

 $(3,379,092,041) $970,842,173 
         

Net increase (decrease) in net assets per Share(a)

 $(1.93) $0.77 

 


(a)

Net increase (decrease) in net assets per Share based on average shares outstanding during the period.

 

 

See notes to financial statements.

 

 

 

iShares® Gold Trust

Statements of Changes in Net Assets (Unaudited)

For the three months ended March 31, 2021

 

  

Three Months Ended
March 31, 2021

 

Net Assets at December 31, 2020

 $31,918,269,136 
     

Operations:

    

Net investment loss

  (18,536,656)

Net realized gain

  258,136,947 

Net change in unrealized appreciation/depreciation

  (3,618,692,332)

Net decrease in net assets resulting from operations

  (3,379,092,041)
     

Capital Share Transactions:

    

Contributions for Shares issued

  533,856,902 

Distributions for Shares redeemed

  (1,680,026,988)

Net decrease in net assets from capital share transactions

  (1,146,170,086)
     

Decrease in net assets

  (4,525,262,127)
     

Net Assets at March 31, 2021

 $27,393,007,009 
     

Shares issued and redeemed

    

Shares issued

  30,450,000 

Shares redeemed

  (100,650,000)

Net decrease in Shares issued and outstanding

  (70,200,000)

 

 

See notes to financial statements.

 

 

iShares® Gold Trust

Statements of Changes in Net Assets (Unaudited)

For the three months ended March 31, 2020

 

  Three Months Ended 
  

March 31, 2020

 

Net Assets at December 31, 2019

 $17,628,525,082 
     

Operations:

    

Net investment loss

  (11,818,169)

Net realized gain

  151,646,482 

Net change in unrealized appreciation/depreciation

  831,013,860 

Net increase in net assets resulting from operations

  970,842,173 
     

Capital Share Transactions:

    

Contributions for Shares issued

  2,615,209,304 

Distributions for Shares redeemed

  (991,396,287)

Net increase in net assets from capital share transactions

  1,623,813,017 
     

Increase in net assets

  2,594,655,190 
     

Net Assets at March 31, 2020

 $20,223,180,272 
     

Shares issued and redeemed

    

Shares issued

  171,400,000 

Shares redeemed

  (66,550,000)

Net increase in Shares issued and outstanding

  104,850,000 

 

 

See notes to financial statements.

 

 

 

iShares® Gold Trust

Statements of Cash Flows (Unaudited)

For the three months ended March 31, 2021 and 2020

 

  

Three Months Ended
March 31,

 
  

2021

  

2020

 

Cash Flows from Operating Activities

        

Proceeds from gold bullion sold to pay expenses

 $19,190,688  $11,284,961 

Expenses – Sponsor’s fees paid

  (19,190,688)  (11,284,961)

Net cash provided by operating activities

  0   0 

Increase (decrease) in cash

  0   0 

Cash, beginning of period

  0   0 

Cash, end of period

 $0  $0 
         

Reconciliation of Net Increase (Decrease) in Net Assets Resulting from Operations to Net Cash Provided by (Used in) Operating Activities

        

Net increase (decrease) in net assets resulting from operations

 $(3,379,092,041) $970,842,173 

Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:

        

Proceeds from gold bullion sold to pay expenses

  19,190,688   11,284,961 

Net realized (gain) loss

  (258,136,947)  (151,646,482)

Net change in unrealized appreciation/depreciation

  3,618,692,332   (831,013,860)

Change in operating assets and liabilities:

        

Sponsor’s fees payable

  (654,032)  533,208 

Net cash provided by (used in) operating activities

 $0  $0 
         

Supplemental disclosure of non-cash information:

        

Gold bullion contributed for Shares issued

 $533,856,902  $2,615,209,304 

Gold bullion distributed for Shares redeemed

 $(1,680,026,988) $(991,396,287)

 

 

See notes to financial statements.

 

 

 

iShares® Gold Trust

Schedules of Investments (Unaudited)

At March 31, 2021 and December 31, 2020

 

March 31, 2021

 

Description

 

Ounces

  

Cost

  

Fair Value

 

Gold bullion

  16,202,345  $24,106,918,759  $27,398,975,237 
             

Total Investments – 100.02%

          27,398,975,237 

Less Liabilities – (0.02)%

          (5,968,228)

Net Assets – 100.00%

         $27,393,007,009 

 

December 31, 2020

 

Description

 

Ounces

  

Cost

  

Fair Value

 

Gold bullion

  16,881,652  $25,014,142,586  $31,924,891,396 
             

Total Investments – 100.02%

          31,924,891,396 

Less Liabilities – (0.02)%

          (6,622,260)

Net Assets – 100.00%

         $31,918,269,136 

 

 

See notes to financial statements.

 

 

iShares® Gold Trust

Notes to Financial Statements (Unaudited)

March 31, 2021

 

 

1 -

Organization

 

The iShares Gold Trust (the “Trust”) was organized on January 21, 2005 as a New York trust. The trustee is The Bank of New York Mellon (the “Trustee”), which is responsible for the day-to-day administration of the Trust. The Trust’s sponsor is iShares Delaware Trust Sponsor LLC, a Delaware limited liability company (the “Sponsor”). The Trust is governed by the provisions of the Fourth Amended and Restated Depositary Trust Agreement (the “Trust Agreement”) executed by the Trustee and the Sponsor as of December 22, 2016. The Trust issues units of beneficial interest (“Shares”) representing fractional undivided beneficial interests in its net assets.

 

The Trust seeks to reflect generally the performance of the price of gold. The Trust seeks to reflect such performance before payment of the Trust’s expenses and liabilities. The Trust is designed to provide a vehicle for investors to make an investment similar to an investment in gold.

 

The accompanying unaudited financial statements were prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions for Form 10-Q and the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). In the opinion of management, all material adjustments, consisting only of normal recurring adjustments considered necessary for a fair statement of the interim period financial statements, have been made. Interim period results are not necessarily indicative of results for a full-year period. These financial statements and the notes thereto should be read in conjunction with the Trust’s financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC on March 1, 2021.

 

The Trust qualifies as an investment company solely for accounting purposes and not for any other purpose and follows the accounting and reporting guidance under the Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services - Investment Companies, but is not registered, and is not required to be registered, as an investment company under the Investment Company Act of 1940, as amended.

 

 

2 -

Significant Accounting Policies

 

A.

Basis of Accounting

 

The following significant accounting policies are consistently followed by the Trust in the preparation of its financial statements in conformity with U.S. GAAP. The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

 

Certain statements and captions in the financial statements for the prior periods have been changed to conform to the current financial statement presentation.

 

B.

Gold Bullion

 

JPMorgan Chase Bank N.A., London branch (the “Custodian”), is responsible for the safekeeping of gold bullion owned by the Trust.

 

Fair value of the gold bullion held by the Trust is based on that day’s London Bullion Market Association (“LBMA”) Gold Price PM. “LBMA Gold Price PM” is the price per fine troy ounce of gold, stated in U.S. dollars, determined by ICE Benchmark Administration (“IBA”) following an electronic auction consisting of one or more 30-second rounds starting at 3:00 p.m. (London time), on each day that the London gold market is open for business and published shortly thereafter. If there is no LBMA Gold Price PM on any day, the Trustee is authorized to use the most recently announced price of gold determined in an electronic auction hosted by IBA that begins at 10:30 a.m. (London time) (“LBMA Gold Price AM”) unless the Trustee, in consultation with the Sponsor, determines that such price is inappropriate as a basis for evaluation.

 

Gain or loss on sales of gold bullion is calculated on a trade date basis using the average cost method.

 

7

 

The following tables summarize activity in gold bullion for the three months ended March 31, 2021 and 2020:

 

Three Months Ended March 31, 2021

 

Ounces

  

Cost

  

Fair
Value

  

Realized
Gain (Loss)

 

Beginning balance

  16,881,652  $25,014,142,586  $31,924,891,396  $ 

Gold bullion contributed

  290,219   533,856,902   533,856,902    

Gold bullion distributed

  (959,139)  (1,425,654,761)  (1,680,026,988)  254,372,227 

Gold bullion sold to pay expenses

  (10,387)  (15,425,968)  (19,190,688)  3,764,720 

Net realized gain

        258,136,947    

Net change in unrealized appreciation/depreciation

        (3,618,692,332)   

Ending balance

  16,202,345  $24,106,918,759  $27,398,975,237  $258,136,947 

 

Three Months Ended March 31, 2020

 

Ounces

  

Cost

  

Fair Value

  

Realized

Gain (Loss)

 

Beginning balance

  11,577,252  $15,094,673,874  $17,632,155,037  $ 

Gold bullion contributed

  1,637,506   2,615,209,304   2,615,209,304    

Gold bullion distributed

  (635,791)  (841,562,995)  (991,396,287)  149,833,292 

Gold bullion sold to pay expenses

  (7,201)  (9,471,771)  (11,284,961)  1,813,190 

Net realized gain

        151,646,482    

Net change in unrealized appreciation/depreciation

        831,013,860    

Ending balance

  12,571,766  $16,858,848,412  $20,227,343,435  $151,646,482 

 

C.

Calculation of Net Asset Value

 

On each business day, as soon as practicable after 4:00 p.m. (New York time), the net asset value of the Trust is obtained by subtracting all accrued fees, expenses and other liabilities of the Trust from the fair value of the gold and other assets held by the Trust. The Trustee computes the net asset value per Share by dividing the net asset value of the Trust by the number of Shares outstanding on the date the computation is made.

 

8

 

D.

Offering of the Shares

 

Trust Shares are issued and redeemed continuously in aggregations of 50,000 Shares in exchange for gold bullion rather than cash. Individual investors cannot purchase or redeem Shares in direct transactions with the Trust. The Trust only transacts with registered broker-dealers that are eligible to settle securities transactions through the book-entry facilities of the Depository Trust Company and that have entered into a contractual arrangement with the Trustee and the Sponsor governing, among other matters, the creation and redemption of Shares (such broker-dealers, the “Authorized Participants”). Holders of Shares of the Trust may redeem their Shares at any time acting through an Authorized Participant and in the prescribed aggregations of 50,000 Shares; provided, that redemptions of Shares may be suspended during any period while regular trading on NYSE Arca, Inc. (“NYSE Arca”) is suspended or restricted, or in which an emergency exists as a result of which delivery, disposal or evaluation of gold is not reasonably practicable.

 

The per Share amount of gold exchanged for a purchase or redemption represents the per Share amount of gold held by the Trust, after giving effect to its liabilities.

 

When gold bullion is exchanged in settlement of a redemption, it is considered a sale of gold bullion for accounting purposes.

 

E.

Federal Income Taxes

 

The Trust is treated as a grantor trust for federal income tax purposes and, therefore, no provision for federal income taxes is required. Any interest, expenses, gains and losses are passed through to the holders of Shares of the Trust.

 

The Sponsor has analyzed applicable tax laws and regulations and their application to the Trust as of March 31, 2021 and does not believe that there are any uncertain tax positions that require recognition of a tax liability.

 

 

3 -

Trust Expenses

 

The Trust pays to the Sponsor a Sponsor’s fee that accrues daily at an annualized rate equal to 0.25% of the net asset value of the Trust, paid monthly in arrears. The Sponsor has agreed to assume the following administrative and marketing expenses incurred by the Trust: the Trustee’s fee, the Custodian’s fee, NYSE Arca listing fees, SEC registration fees, printing and mailing costs, audit fees and expenses, and up to $100,000 per annum in legal fees and expenses.

 

 

4 -

Related Parties

 

The Sponsor and the Trustee are considered to be related parties to the Trust. The Trustee’s fee is paid by the Sponsor and is not a separate expense of the Trust.

 

 

5 -

Indemnification

 

The Trust Agreement provides that the Trustee shall indemnify the Sponsor, its directors, employees and agents against, and hold each of them harmless from, any loss, liability, cost, expense or judgment (including reasonable fees and expenses of counsel) (i) caused by the negligence or bad faith of the Trustee or (ii) arising out of any information furnished in writing to the Sponsor by the Trustee expressly for use in the registration statement, or any amendment thereto or periodic or other report filed with the SEC relating to the Shares that is not materially altered by the Sponsor.

 

The Trust Agreement provides that the Sponsor and its shareholders, directors, officers, employees, affiliates (as such term is defined under the Securities Act of 1933, as amended) and subsidiaries shall be indemnified from the Trust and held harmless against any loss, liability or expense incurred without their (1) negligence, bad faith, willful misconduct or willful malfeasance arising out of or in connection with the performance of their obligations under the Trust Agreement or any actions taken in accordance with the provisions of the Trust Agreement or (2) reckless disregard of their obligations and duties under the Trust Agreement.

 

The Trust has agreed that the Custodian will only be responsible for any loss or damage suffered by the Trust as a direct result of the Custodian’s negligence, fraud or willful default in the performance of its duties.

 

 

6 -

Commitments and Contingent Liabilities

 

In the normal course of business, the Trust may enter into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred.

 

 

7 -

Concentration Risk

 

Substantially all of the Trust’s assets are holdings of gold bullion, which creates a concentration risk associated with fluctuations in the price of gold. Accordingly, a decline in the price of gold will have an adverse effect on the value of the Shares of the Trust. Factors that may have the effect of causing a decline in the price of gold include large sales by the official sector (governments, central banks, and related institutions); a significant increase in the hedging activities of gold producers; significant changes in the attitude of speculators, investors and other market participants towards gold; global gold supply and demand; global or regional political, economic or financial events and situations; investors’ expectations with respect to the rate of inflation; interest rates; investment and trading activities of hedge funds and commodity funds; other economic variables such as income growth, economic output, and monetary policies; and investor confidence.

 

9

 

 

8 -

Financial Highlights

 

The following financial highlights relate to investment performance and operations for a Share outstanding for the three months ended March 31, 2021 and 2020.

 

  

Three Months Ended
March 31,

 
  

2021

  

2020

 

Net asset value per Share, beginning of period

 $18.03  $14.56 

Net investment loss(a)

  (0.01)  (0.01)

Net realized and unrealized gain (loss)(b)

  (1.91)  0.82 

Net increase (decrease) in net assets from operations

  (1.92)  0.81 

Net asset value per Share, end of period

 $16.11  $15.37 
         

Total return, at net asset value(c), (d)

  (10.65)%   5.56% 
         

Ratio to average net assets:

        

Net investment loss(e)

  (0.25)%   (0.25)% 

Expenses(e)

  0.25%   0.25% 

 


(a)

Based on average Shares outstanding during the period.

(b)

The amounts reported for a Share outstanding may not accord with the change in aggregate gains and losses on investment for the period due to the timing of Trust Share transactions in relation to the fluctuating fair values of the Trust’s underlying investment.

(c)

Based on the change in net asset value of a Share during the period.

(d)

Percentage is not annualized.

(e)

Percentage is annualized.

 

 

9 -

Investment Valuation

 

U.S. GAAP defines fair value as the price the Trust would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The Trust’s policy is to value its investment at fair value.

 

Various inputs are used in determining the fair value of assets and liabilities. Inputs may be based on independent market data (“observable inputs”) or they may be internally developed (“unobservable inputs”). These inputs are categorized into a disclosure hierarchy consisting of three broad levels for financial reporting purposes. The level of a value determined for an asset or liability within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy are as follows:

 

 

Level 1 − 

Unadjusted quoted prices in active markets for identical assets or liabilities;

 

 

Level 2 − 

Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not considered to be active, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived principally from or corroborated by observable market data by correlation or other means; and

 

 

Level 3 − 

Unobservable inputs that are unobservable for the asset or liability, including the Trust’s assumptions used in determining the fair value of investments.

 

At March 31, 2021 and December 31, 2020, the value of the gold bullion held by the Trust is categorized as Level 1.

 

 

10 - Subsequent Events

 

Management’s evaluation of the impact of all subsequent events on the Trust’s financial statements was completed through the date the financial statements were available to be issued and the following item was noted:

 

On March 3, 2021, BlackRock announced a one-for-2 reverse stock split for the iShares Gold Trust, which will be effective on May 24, 2021, at market open. The impact of the reverse stock split will be to decrease the number of shares outstanding by a factor of two, while increasing the net assets per share by a factor of two, resulting in no effect on the net assets of the Trust.

 

10

 

 

Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.

 

This information should be read in conjunction with the financial statements and notes to financial statements included in Item 1 of Part I of this Form 10‑Q. The discussion and analysis that follows may contain statements that relate to future events or future performance. In some cases, such forward‑looking statements can be identified by terminology such as may, should, could, expect, plan, anticipate, believe, estimate, predict, potential or the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. These statements are based upon certain assumptions and analyses made by the Sponsor on the basis of its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. Whether or not actual results and developments will conform to the Sponsors expectations and predictions, however, is subject to a number of risks and uncertainties, including the special considerations discussed below, general economic, market and business conditions, changes in laws or regulations, including those concerning taxes, made by governmental authorities or regulatory bodies, and other world economic and political developments. Although the Sponsor does not make forward-looking statements unless it believes it has a reasonable basis for doing so, the Sponsor cannot guarantee their accuracy. Except as required by applicable disclosure laws, neither the Trust nor the Sponsor is under a duty to update any of the forward-looking statements to conform such statements to actual results or to a change in the Sponsors expectations or predictions.

 

Introduction

 

The iShares Gold Trust (the “Trust”) is a grantor trust formed under the laws of the State of New York. The Trust does not have any officers, directors, or employees, and is administered by The Bank of New York Mellon (the “Trustee”) acting as trustee pursuant to the Fourth Amended and Restated Depositary Trust Agreement (the “Trust Agreement”) between the Trustee and iShares Delaware Trust Sponsor LLC, the sponsor of the Trust (the “Sponsor”). The Trust issues units of beneficial interest (“Shares”) representing fractional undivided beneficial interests in its net assets. The assets of the Trust consist primarily of gold bullion held by a custodian as an agent of the Trust responsible only to the Trustee.

 

The Trust is a passive investment vehicle and seeks to reflect generally the performance of the price of gold. The Trust seeks to reflect such performance before payment of the Trust’s expenses and liabilities. The Trust does not engage in any activities designed to obtain a profit from, or ameliorate losses caused by, changes in the price of gold.

 

The Trust issues and redeems Shares only in exchange for gold, only in aggregations of 50,000 Shares (a “Basket”) or integral multiples thereof, and only in transactions with registered broker-dealers that have previously entered into an agreement with the Sponsor and the Trustee governing the terms and conditions of such issuance (such broker-dealers, the “Authorized Participants”). A list of the current Authorized Participants is available from the Sponsor or the Trustee.

 

Shares of the Trust trade on NYSE Arca, Inc. under the ticker symbol IAU.

 

Valuation of Gold Bullion; Computation of Net Asset Value

 

On each business day, as soon as practicable after 4:00 p.m. (New York time), the Trustee evaluates the gold held by the Trust and determines the net asset value of the Trust and the net asset value per Share (“NAV”). The Trustee values the gold held by the Trust using the price per fine troy ounce of gold determined in an electronic auction hosted by ICE Benchmark Administration (“IBA”) that begins at 3:00 p.m. (London time) and published shortly thereafter, on the day the valuation takes place (such price, the “LBMA Gold Price PM”). If there is no announced LBMA Gold Price PM on any day, the Trustee is authorized to use the most recently announced price of gold determined in an electronic auction hosted by IBA that begins at 10:30 a.m. (London time) (such price, the “LBMA Gold Price AM”), unless the Trustee, in consultation with the Sponsor, determines that such price is inappropriate as a basis for evaluation. The LBMA Gold Price AM and LBMA Gold Price PM are used by the Trust because they are commonly used by the U.S. gold market as indicators of the value of gold and are permitted to be used under the Trust Agreement. The use of indicators of the value of gold bullion other than the LBMA Gold Price AM and LBMA Gold Price PM could result in materially different fair value pricing of the gold held by the Trust, and as such, could result in different cost or market adjustments or in different redemption value adjustments of the outstanding redeemable capital Shares. Having valued the gold held by the Trust, the Trustee then subtracts all accrued fees, expenses and other liabilities of the Trust from the total value of the gold held by the Trust and other assets of the Trust. The result is the net asset value of the Trust. The Trustee computes NAV by dividing the net asset value of the Trust by the number of Shares outstanding on the date the computation is made.

 

Liquidity

 

The Trust is not aware of any trends, demands, conditions or events that are reasonably likely to result in material changes to its liquidity needs. In exchange for a fee, the Sponsor has agreed to assume most of the expenses incurred by the Trust. As a result, the only ordinary expense of the Trust during the period covered by this report was the Sponsor’s fee. The Trust’s only source of liquidity is its sales of gold.

 

Critical Accounting Policies

 

The financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States of America. The preparation of these financial statements relies on estimates and assumptions that impact the Trust’s financial position and results of operations. These estimates and assumptions affect the Trust’s application of accounting policies. A description of the valuation of gold bullion, a critical accounting policy that the Trust believes is important to understanding its results of operations and financial position, is provided in the section entitled “Valuation of Gold Bullion; Computation of Net Asset Value” above. In addition, please refer to Note 2 to the financial statements included in this report for further discussion of the Trust’s accounting policies.

 

 

Results of Operations

 

The Quarter Ended March 31, 2021

 

The Trust’s net asset value fell from $31,918,269,136 at December 31, 2020 to $27,393,007,009 at March 31, 2021, a 14.18% decrease. The decrease in the Trust’s net asset value resulted primarily from a decline in the price of gold, which fell 10.58% from $1,891.10 (LBMA Gold Price AM) at December 31, 2020 to $1,691.05 (LBMA Gold Price PM) at March 31, 2021. The Trust’s net asset value was also affected by a decrease in the number of outstanding Shares, which fell from 1,770,450,000 Shares at December 31, 2020 to 1,700,250,000 Shares at March 31, 2021, a consequence of 30,450,000 Shares (609 Baskets) being created and 100,650,000 Shares (2,013 Baskets) being redeemed during the quarter.

 

The 10.65% decrease in the Trust’s NAV from $18.03 at December 31, 2020 to $16.11 at March 31, 2021 is directly related to the 10.58% decrease in the price of gold.

 

The Trust’s NAV decreased slightly more than the price of gold on a percentage basis due to the Sponsor’s fees, which were $18,536,656 for the quarter, or 0.06% of the Trust’s average weighted assets of $30,020,525,411 during the quarter. The NAV of $18.52 on January 04, 2021 was the highest during the quarter, compared with a low during the quarter of $16.04 on March 30, 2021.

 

Net decrease in net assets resulting from operations for the quarter ended March 31, 2021 was $3,379,092,041, resulting from an unrealized loss on investment in gold bullion of $3,618,692,332, a net realized gain of $254,372,227 on gold distributed for the redemption of Shares and a net realized gain of $3,764,720 from gold bullion sold to pay expenses during the quarter, and a net investment loss of $18,536,656. Other than the Sponsor’s fees of $18,536,656, the Trust had no expenses during the quarter.

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

Not applicable.

 

 

Item 4. Controls and Procedures.

 

The duly authorized officers of the Sponsor performing functions equivalent to those a principal executive officer and principal financial officer of the Trust would perform if the Trust had any officers, with the participation of the Trustee, have evaluated the effectiveness of the Trust’s disclosure controls and procedures, and have concluded that the disclosure controls and procedures of the Trust were effective as of the end of the period covered by this report to provide reasonable assurance that information required to be disclosed in the reports that the Trust files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to the duly authorized officers of the Sponsor performing functions equivalent to those a principal executive officer and principal financial officer of the Trust would perform if the Trust had any officers, as appropriate to allow timely decisions regarding required disclosure.

 

There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures.

 

There were no changes in the Trust’s internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Trust’s internal control over financial reporting.

 

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

None.

 

 

Item 1A. Risk Factors

 

There have been no material changes to the Risk Factors last reported under Part I, Item 1A of the registrant’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission on March 1, 2021.

 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

a) None.

 

b) Not applicable.

 

c) 100,650,000 Shares (2,013 Baskets) were redeemed during the quarter ended March 31, 2021.

 

Period

 

Total Number of Shares
Redeemed

  

Average Ounces of
Gold Paid Per Share

 

01/01/21 to 01/31/21

  12,300,000  $ 0.0095 

02/01/21 to 02/28/21

  28,900,000   0.0095 

03/01/21 to 03/31/21

  59,450,000   0.0095 

Total

  100,650,000  $ 0.0095 

 

 

Item 3. Defaults Upon Senior Securities

 

None.

 

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

 

Item 5. Other Information.

 

Not applicable.

 

 

Item 6. Exhibits

 

Exhibit No.

 

Description

4.1

 

Fourth Amended and Restated Depositary Trust Agreement is incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K filed by the Registrant on December 22, 2016

   

4.2

 

Standard Terms for Authorized Participant Agreements is incorporated by reference to Exhibit 4.2 of the Current Report on Form 8-K filed by the Registrant on December 22, 2016

   

10.1

 

Second Amended and Restated Custodian Agreement between The Bank of New York Mellon and JPMorgan Chase Bank N.A., London branch is incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed by the Registrant on December 22, 2016

   

10.2

 

Amendment Agreement to Second Amended and Restated Custodian Agreement between The Bank of New York Mellon and JP Morgan Chase Bank N.A., London branch is incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q filed by the Registrant on August 5, 2020

   

10.3

 

Sub-license Agreement is incorporated by reference to Exhibit 10.2 of the Amendment No. 1 to Annual Report on Form 10-K filed by the Registrant on November 12, 2008

   

31.1

 

Certification by Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

   

31.2

 

Certification by Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

   

32.1

 

Certification by Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002

   

32.2

 

Certification by Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002

   

101.INS

 

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

   

101.SCH

 

Inline XBRL Taxonomy Extension Schema Document

   

101.CAL

 

Inline XBRL Taxonomy Extension Calculation Linkbase Document

   

101.DEF

 

Inline XBRL Taxonomy Extension Definition Linkbase Document

   

101.LAB

 

Inline XBRL Taxonomy Extension Label Linkbase Document

   

101.PRE

 

Inline XBRL Taxonomy Extension Presentation Linkbase Document

   

104

 

Cover Page Interactive Data File included as Exhibit 101 (embedded within the Inline XBRL document)

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned in the capacities* indicated thereunto duly authorized.

 

iShares Delaware Trust Sponsor LLC,
Sponsor of the iShares Gold Trust (registrant)

 

/s/ Paul Lohrey
Paul Lohrey
Director, President and Chief Executive Officer
(Principal executive officer)

 

Date:May 4, 2021

 

 

/s/ Mary Cronin
Mary Cronin
Director and Chief Financial Officer
(Principal financial and accounting officer)

 

Date:May 4, 2021

 


*

The registrant is a trust and the persons are signing in their respective capacities as officers of iShares Delaware Trust Sponsor LLC, the Sponsor of the registrant.

 

 

 

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