UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| x | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended September 30, 2011
| ¨ | 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 BlackRock Asset Management International Inc.
400 Howard Street
San Francisco, California 94105
Attn: Product Management Team
iShares® Product Research & Development
(Address of principal executive offices)
(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)
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 x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | x | Accelerated filer | ¨ | |||||||
| Non-accelerated filer | ¨ | Smaller reporting company | ¨ | |||||||
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
Part I – FINANCIAL INFORMATION
Balance Sheets
At September 30, 2011 (Unaudited) and December 31, 2010
| (Dollar amounts in $000’s) |
September 30, 2011 |
December 31, 2010 |
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| ASSETS |
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| Current assets |
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| Gold bullion inventory (fair value of $8,528,070 and $5,317,017, respectively) |
$ | 6,141,161 | $ | 3,546,055 | ||||
| Payable for capital Shares redeemed |
(10,793 | ) | — | |||||
| Receivable for capital Shares sold |
— | 21,981 | ||||||
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| TOTAL ASSETS |
$ | 6,130,368 | $ | 3,568,036 | ||||
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| LIABILITIES, REDEEMABLE CAPITAL SHARES AND SHAREHOLDERS’ EQUITY (DEFICIT) |
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| Current liabilities |
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| Sponsor’s fees payable (Note 3) |
$ | 1,974 | $ | 1,067 | ||||
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| Total liabilities |
1,974 | 1,067 | ||||||
| Commitments and contingent liabilities (Note 5) |
— | — | ||||||
| Redeemable capital Shares, no par value, unlimited amount authorized (at redemption value) – 539,450,000 issued and outstanding at September 30, 2011 and 386,950,000 issued and outstanding at December 31, 2010 |
8,526,096 | 5,315,950 | ||||||
| Shareholders’ equity (deficit) |
(2,397,702 | ) | (1,748,981 | ) | ||||
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| TOTAL LIABILITIES, REDEEMABLE CAPITAL SHARES AND SHAREHOLDERS’ EQUITY (DEFICIT) |
$ | 6,130,368 | $ | 3,568,036 | ||||
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See notes to financial statements.
1
Income Statements (Unaudited)
For the three and nine months ended September 30, 2011 and 2010
| Three Months Ended September 30, |
Nine Months
Ended September 30, |
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| (Dollar amounts in $000’s, except for per Share amounts) |
2011 | 2010 | 2011 | 2010 | ||||||||||||
| Revenue |
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| Proceeds from sales of gold to pay expenses |
$ | 4,991 | $ | 2,597 | $ | 11,981 | $ | 8,354 | ||||||||
| Cost of gold sold to pay expenses |
(3,372 | ) | (1,763 | ) | (8,197 | ) | (5,595 | ) | ||||||||
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| Gain on sales of gold to pay expenses |
1,619 | 834 | 3,784 | 2,759 | ||||||||||||
| Gain on gold distributed for the redemption of Shares |
120,642 | — | 250,316 | 39,711 | ||||||||||||
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| Total gain on sales and distributions of gold |
122,261 | 834 | 254,100 | 42,470 | ||||||||||||
| Expenses |
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| Sponsor’s fees |
(5,539 | ) | (2,308 | ) | (12,888 | ) | (8,165 | ) | ||||||||
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| Total expenses |
(5,539 | ) | (2,308 | ) | (12,888 | ) | (8,165 | ) | ||||||||
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| NET INCOME (LOSS) |
$ | 116,722 | $ | (1,474 | ) | $ | 241,212 | $ | 34,305 | |||||||
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| Net income (loss) per Share |
$ | 0.22 | $ | (0.00 | ) | $ | 0.53 | $ | 0.12 | |||||||
| Weighted-average Shares outstanding |
529,401,087 | 306,336,957 | 456,297,619 | 276,712,637 | ||||||||||||
See notes to financial statements.
2
Statements of Changes in Shareholders’ Equity (Deficit)
For the nine months ended September 30, 2011 (Unaudited)
and the year ended December 31, 2010
| (Dollar amounts in $000’s) |
Nine Months Ended September 30, 2011 |
Year Ended December 31, 2010 |
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| Shareholders’ equity (deficit) – beginning of period |
$ | (1,748,981 | ) | $ | (878,372 | ) | ||
| Net income |
241,212 | 32,297 | ||||||
| Adjustment of redeemable capital Shares to redemption value |
(889,933 | ) | (902,906 | ) | ||||
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| Shareholders’ equity (deficit) – end of period |
$ | (2,397,702 | ) | $ | (1,748,981 | ) | ||
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See notes to financial statements.
3
Statements of Cash Flows (Unaudited)
For the nine months ended September 30, 2011 and 2010
| Nine Months Ended September 30, |
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| (Dollar amounts in $000’s) |
2011 | 2010 | ||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
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| Proceeds from sales of gold |
$ | 11,981 | $ | 8,354 | ||||
| Expenses – Sponsor’s fees paid |
(11,981 | ) | (8,354 | ) | ||||
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| Net cash provided by operating activities |
— | — | ||||||
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| Increase (decrease) in cash |
— | — | ||||||
| Cash, beginning of period |
— | — | ||||||
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| Cash, end of period |
$ | — | $ | — | ||||
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| RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: |
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| Net income |
$ | 241,212 | $ | 34,305 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
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| Gain on gold distributed for the redemption of Shares |
(250,316 | ) | (39,711 | ) | ||||
| Cost of gold sold to pay expenses |
8,197 | 5,595 | ||||||
| Increase (decrease) in Sponsor’s fees payable |
907 | (189 | ) | |||||
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| Net cash provided by operating activities |
$ | — | $ | — | ||||
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| Supplemental disclosure of non-cash information: |
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| Carrying value of gold received for creation of Shares (Note 2B) |
$ | 3,139,985 | $ | 947,410 | ||||
| Carrying value of gold distributed for redemption of Shares, at average cost (Note 2B) |
$ | (569,456 | ) | $ | (88,442 | ) | ||
See notes to financial statements.
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Notes to Financial Statements (Unaudited)
September 30, 2011
1 - Organization
The iShares® Gold Trust (the “Trust”) was organized on January 21, 2005 as a New York trust. Prior to September 2, 2010, the Trust was known as iShares® COMEX® Gold 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 BlackRock Asset Management International Inc. (the “Sponsor”), a Delaware corporation. The Trust is governed by the Second Amended and Restated Depositary Trust Agreement dated as of September 2, 2010 (as amended, the “Trust Agreement”). The Trust issues units of beneficial interest (or “Shares”) representing fractional undivided beneficial interests in its net assets.
The objective of the Trust is for the value of its Shares to reflect, at any given time, the price of gold owned by the Trust at that time, less the Trust’s expenses and liabilities. The Trust is designed to provide a vehicle for investors to own interests in gold bullion.
The accompanying unaudited financial statements were prepared in accordance with accounting principles generally accepted 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, 2010 as filed with the SEC on February 25, 2011.
The Trust is not an investment company registered under the Investment Company Act of 1940, as amended.
2 - Summary of Significant Accounting Policies
| A. | Basis of Accounting |
The following is a summary of significant accounting policies 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 and these differences could be material.
| B. | Gold Bullion |
JPMorgan Chase Bank N.A., London branch (the “Custodian”), is responsible for the safekeeping of gold bullion owned by the Trust.
For financial statement purposes, the gold bullion held by the Trust is valued at the lower of cost or market, using the average cost method. Should the market value of the gold bullion held be lower than its average cost during the interim periods of the same fiscal year, an adjustment of value below cost (“market value reserve”) is recorded by the Trust. Should the market value of the gold bullion held increase subsequent to the market value reserve being recorded, a “market value recovery” is recorded by the Trust. Gain or loss on sales of gold bullion is calculated on a trade date basis. Fair value of the gold bullion is based on the price of gold fixed in the afternoon of each working day (London time) by the London Gold Market Fixing Ltd. (“London PM Fix”). Prior to December 9, 2010, the fair value of the gold bullion was based on the Commodity Exchange, Inc. (“COMEX”) settlement price for the spot month gold futures contract, which at any time is the contract then closest to maturity. The change in price to the London PM Fix from the
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COMEX settlement price was due to the London PM Fix being a more widely followed and recognized benchmark for the price of gold.
The following table summarizes activity in gold bullion for the three months ended September 30, 2011 (all balances in 000’s):
| Ounces | Average Cost |
Fair Value |
Realized Gain (Loss) |
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| Beginning balance |
4,638.6 | $ | 4,978,476 | $ | 6,983,435 | $ | — | |||||||||
| Gold contributed |
847.7 | 1,409,816 | 1,409,816 | — | ||||||||||||
| Gold distributed |
(219.1 | ) | (254,552 | ) | (375,194 | ) | 120,642 | |||||||||
| Gold sold |
(3.0 | ) | (3,372 | ) | (4,991 | ) | 1,619 | |||||||||
| Adjustment for realized gain |
— | — | 122,261 | — | ||||||||||||
| Adjustment for unrealized gain on gold bullion |
— | — | 392,743 | — | ||||||||||||
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| Ending balance |
5,264.2 | $ | 6,130,368 | $ | 8,528,070 | $ | 122,261 | |||||||||
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The following table summarizes activity in gold bullion for the nine months ended September 30, 2011 (all balances in 000’s):
| Ounces | Average Cost |
Fair Value |
Realized Gain (Loss) |
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| Beginning balance |
3,783.0 | $ | 3,568,036 | $ | 5,317,017 | $ | — | |||||||||
| Gold contributed |
2,033.5 | 3,139,985 | 3,139,985 | — | ||||||||||||
| Gold distributed |
(544.4 | ) | (569,456 | ) | (819,772 | ) | 250,316 | |||||||||
| Gold sold |
(7.9 | ) | (8,197 | ) | (11,981 | ) | 3,784 | |||||||||
| Adjustment for realized gain |
— | — | 254,100 | — | ||||||||||||
| Adjustment for unrealized gain on gold bullion |
— | — | 648,721 | — | ||||||||||||
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| Ending balance |
5,264.2 | $ | 6,130,368 | $ | 8,528,070 | $ | 254,100 | |||||||||
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| C. | Redeemable Capital Shares |
Shares of the Trust are classified as “redeemable” for balance sheet purposes, since they are subject to redemption. 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 eligible to settle securities transactions through the book-entry facilities of the Depository Trust Company and which have entered into a contractual arrangement with the Trust 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 is calculated daily by the Trustee, using the London PM Fix to calculate the gold amount in respect of any liabilities for which covering gold sales have not yet been made, and represents the per Share amount of gold held by the Trust, after giving effect to its liabilities, sales to cover expenses and liabilities and any losses that may have occurred.
When gold is exchanged in settlement of a redemption, it is considered a sale of gold for financial statement purposes.
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Due to the expected continuing sales and redemption of capital stock and the three-day period for Share settlement, the Trust reflects capital Shares sold as a receivable, rather than as contra equity. Shares redeemed are reflected as a contra asset on the trade date. Outstanding Trust Shares are reflected at redemption value, which is the net asset value per Share at the period ended date. Adjustments to redemption value are reflected in shareholders’ equity.
Net asset value is computed by deducting all accrued fees, expenses and other liabilities of the Trust, including the Sponsor’s fees, from the fair value of the gold bullion held by the Trust.
Activity in redeemable capital Shares was as follows (all balances in 000’s):
| Three Months Ended September 30, 2011 |
Nine Months Ended September 30, 2011 |
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| Shares | Amount | Shares | Amount | |||||||||||||
| Beginning balance |
475,050 | $ | 6,982,009 | 386,950 | $ | 5,315,950 | ||||||||||
| Shares issued |
86,850 | 1,409,816 | 208,250 | 3,139,985 | ||||||||||||
| Shares redeemed |
(22,450 | ) | (375,194 | ) | (55,750 | ) | (819,772 | ) | ||||||||
| Redemption value adjustment |
— | 509,465 | — | 889,933 | ||||||||||||
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| Ending balance |
539,450 | $ | 8,526,096 | 539,450 | $ | 8,526,096 | ||||||||||
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| D. | 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 and gains and losses are deemed “passed through” to the holders of Shares of the Trust.
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 adjusted net asset value of the Trust, paid monthly in arrears. Prior to July 1, 2010, the Sponsor’s fee was accrued daily at an annualized rate equal to 0.40% of the adjusted net asset value of the Trust. 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
Under the Trust’s organizational documents, the Sponsor is indemnified against liabilities or expenses it incurs without negligence, bad faith or willful misconduct on its part. 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.
6 - 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,
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central banks and related institutions), an increase in the hedging activities of gold producers, and changes in the attitude towards gold of speculators, investors and other market participants.
7 - Subsequent Events
In connection with the preparation of the financial statements of the Trust as of and for the period ended September 30, 2011, management has evaluated the impact of all subsequent events through the date the financial statements were issued and has determined that there were no subsequent events requiring adjustment or disclosure in the financial statements.
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Item 2. Management’s 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,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or the negative of these terms or other comparable terminology. Neither the Sponsor, nor any other person assumes responsibility for the accuracy or completeness of any forward-looking statements. 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 Sponsor’s 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 Second Amended and Restated Depositary Trust Agreement (as amended, the “Trust Agreement”) between the Trustee and BlackRock Asset Management International Inc., the sponsor of the Trust (the “Sponsor”). The Trust issues units of beneficial interest (or “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 the objective of the Trust is for the value of each Share to approximately reflect, at any given time, the price of gold owned by the Trust less the Trust’s liabilities (anticipated to be principally for accrued operating expenses) divided by the number of outstanding Shares. 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 or integral multiples thereof (each, a “Basket”), and only in transactions with registered broker-dealers that have previously entered into an agreement with the Trust governing the terms and conditions of such issuance (such broker-dealers, the “Authorized Participants”). A list of current Authorized Participants is available from the Sponsor or the Trustee.
Shares of the Trust trade on NYSE Arca, Inc. under the symbol “IAU.”
Valuation of Gold; 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. The Trustee values the gold held by the Trust using the price fixed by the London Gold Market Fixing Ltd. in the afternoon (London time) of the day the valuation takes place (such price, the “London PM Fix”). Having valued the gold held by the Trust, the Trustee then subtracts all accrued fees (other than the fees to be computed by reference to the value of the Trust or its assets), expenses and other liabilities of the Trust from the value of the gold and other assets of the Trust. The result is the adjusted net asset value of the Trust, which is used to compute all fees (including the Sponsor’s fee), which are calculated from the value of the Trust’s assets. To determine the net asset value of the Trust, the Trustee subtracts from the adjusted net asset value of the Trust the amount of accrued fees computed from the value of the Trust’s assets. The Trustee also 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.
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.
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Critical Accounting Policies
The financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted 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. Below we describe the valuation of gold bullion, a critical accounting policy that we believe is important to understanding our results of operations and financial position. In addition, please refer to Note 2 to the financial statements for further discussion of our accounting policies.
Valuation of Gold Bullion
Gold bullion held by the Trust is recorded at the lower of cost or market. For purposes of this calculation, market values are based on the London PM Fix. Should the market value of the gold bullion held be lower than its average cost, an adjustment of value below cost (“market value reserve”) is recorded by the Trust and the London PM Fix is used as the value for financial statement purposes. Should the market value of the gold bullion held increase subsequent to the market value reserve being recorded, a “market value recovery” is recorded by the Trust. As indicated above, the London PM Fix is also used to value gold bullion held for purposes of calculating the net asset value of the Trust, which in turn is used for the calculation of the redemption value of outstanding Trust Shares.
There are other indicators of the value of gold bullion that are available that could be different than that chosen by the Trust. The London PM Fix is used by the Trust because it is commonly used by the U.S. gold market as an indicator of the value of gold, and is permitted to be used by the Trust Agreement. The use of an indicator of the value of gold bullion other than the London PM Fix could result in materially different fair value pricing of the gold in the Trust, and as such, could result in different lower of cost or market adjustments or in different redemption value adjustments of the outstanding redeemable capital Shares.
Results of Operations
The Quarter Ended September 30, 2011
The Trust’s net asset value grew from $6,982,008,847 at June 30, 2011 to $8,526,095,564 at September 30, 2011, a 22.12% increase. The increase in the Trust’s net asset value resulted primarily from an increase in the outstanding Shares, which rose from 475,050,000 Shares at June 30, 2011 to 539,450,000 Shares at September 30, 2011, a consequence of 86,850,000 Shares (1,737 Baskets) being created and 22,450,000 Shares (449 Baskets) being redeemed during the quarter.
A positive change in the London PM Fix, which rose 7.61% from $1,505.50 at June 30, 2011 to $1,620.00 at September 30, 2011, directly relates to the 7.55% increase in the Trust’s net asset value per Share from $14.70 at June 30, 2011 to $15.81 at September 30, 2011.
The Trust’s net asset value per Share increased slightly less than the price of gold on a percentage basis due to Sponsor’s fees, which were $5,538,841 for the quarter, or 0.06% of the Trust’s average weighted assets of $8,805,889,270 during the quarter. The net asset value per Share of $18.49 on September 6, 2011 was the highest during the quarter, compared with a low during the quarter of $14.48 on July 1, 2011. The net asset value of the Trust is obtained by subtracting the Trust’s expenses and liabilities on any day from the value of the gold owned by the Trust on that day; the net asset value per Share is obtained by dividing the net asset value of the Trust on a given day by the number of Shares outstanding on that day.
Net income for the quarter ended September 30, 2011 was $116,722,264, resulting from a net gain of $1,619,065 on the sales of gold to pay expenses, and a net gain of $120,642,040 on gold distributed for the redemption of Shares, offset by the Sponsor’s fees of $5,538,841. Other than the Sponsor’s fees, the Trust had no expenses during the quarter.
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The Trust pays to the Sponsor a Sponsor’s fee that accrues daily at an annualized rate equal to 0.25% of the adjusted net asset value of the Trust. Prior to July 1, 2010, the Sponsor’s fee was accrued daily at an annualized rate equal to 0.40% of the adjusted net asset value of the Trust. Had the Sponsor’s fee continued to be accrued daily at an annualized rate of 0.40%, the Sponsor’s fee accrued on the income statement for the quarter ended September 30, 2011 would have been higher by $3,322,504.
The Nine Months Ended September 30, 2011
The Trust’s net asset value grew from $5,315,950,285 at December 31, 2010 to $8,526,095,564 at September 30, 2011, a 60.39% increase. The increase in the Trust’s net asset value resulted primarily from an increase in the outstanding Shares, which rose from 386,950,000 Shares at December 31, 2010 to 539,450,000 Shares at September 30, 2011, a consequence of 208,250,000 Shares (4,165 Baskets) being created and 55,750,000 Shares (1,115 Baskets) being redeemed during the period.
A positive change in the London PM Fix, which rose 15.26% from $1,405.50 at December 31, 2010 to $1,620.00 at September 30, 2011, directly relates to the 15.07% increase in the Trust’s net asset value per Share from $13.74 at December 31, 2010 to $15.81 at September 30, 2011.
The Trust’s net asset value per Share increased slightly less than the price of gold on a percentage basis due to Sponsor’s fees, which were $12,888,041 for the period, or 0.19% of the Trust’s average weighted assets of $6,904,259,259 during the period. The net asset value per Share of $18.49 on September 6, 2011 was the highest during the period, compared with a low during the period of $12.89 on January 28, 2011. The net asset value of the Trust is obtained by subtracting the Trust’s expenses and liabilities on any day from the value of the gold owned by the Trust on that day; the net asset value per Share is obtained by dividing the net asset value of the Trust on a given day by the number of Shares outstanding on that day.
Net income for the nine months ended September 30, 2011 was $241,211,813, resulting from a net gain of $3,783,570 on the sales of gold to pay expenses, and a net gain of $250,316,284 on gold distributed for the redemption of Shares, offset by the Sponsor’s fees of $12,888,041. Other than the Sponsor’s fees, the Trust had no expenses during the period.
The Trust pays to the Sponsor a Sponsor’s fee that accrues daily at an annualized rate equal to 0.25% of the adjusted net asset value of the Trust. Prior to July 1, 2010, the Sponsor’s fee was accrued daily at an annualized rate equal to 0.40% of the adjusted net asset value of the Trust. Had the Sponsor’s fee continued to be accrued daily at an annualized rate of 0.40%, the Sponsor’s fee accrued on the income statement for the nine months ended September 30, 2011 would have been higher by $7,732,810.
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, and 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 have been 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.
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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.
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None.
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, 2010, filed with the Securities and Exchange Commission on February 25, 2011.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
| a) | None. |
| b) | Not applicable. |
| c) | 22,450,000 Shares (449 Baskets) were redeemed during the quarter ended September 30, 2011. |
| Period |
Total Number of Shares Redeemed |
Average Ounces of Gold Per Share |
||||||
| 07/01/11 to 07/31/11 |
— | — | ||||||
| 08/01/11 to 08/31/11 |
5,550,000 | 0.0098 | ||||||
| 09/01/11 to 09/30/11 |
16,900,000 | 0.0098 | ||||||
|
|
|
|||||||
| Total |
22,450,000 | 0.0098 | ||||||
|
|
|
|||||||
Item 3. Defaults Upon Senior Securities
None.
None.
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| Exhibit No. |
Description | |
| 4.1 | Second Amended and Restated Depositary Trust Agreement is incorporated by reference to Exhibit 4.1 filed with Current Report on Form 8-K on September 2, 2010 | |
| 4.2 | Standard Terms for Authorized Participant Agreements is incorporated by reference to Exhibit 4.2 filed with Amendment No. 1 to Annual Report on Form 10-K filed by the registrant on November 12, 2008 | |
| 10.1 | First 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 filed with Current Report on Form 8-K on September 2, 2010 | |
| 10.2 | Sub-license Agreement is incorporated by reference to Exhibit 10.2 filed with 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* | XBRL Instance Document | |
| 101.SCH* | XBRL Taxonomy Extension Schema Document | |
| 101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.LAB* | XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document | |
| * | Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for the purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections. |
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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.
BlackRock Asset Management International Inc.
Sponsor of the iShares® Gold Trust (registrant)
| /s/ Michael A. Latham |
| Michael A. Latham |
| President and Chief Executive Officer |
| (Principal executive officer) |
Date: November 8, 2011
| /s/ Geoffrey D. Flynn |
| Geoffrey D. Flynn |
| Chief Operating Officer and Chief Financial Officer |
| (Principal financial and accounting officer) |
Date: November 8, 2011
| * | The registrant is a trust and the persons are signing in their capacities as officers of BlackRock Asset Management International Inc., the Sponsor of the registrant. |
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