e10vq
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
FORM 10-Q
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x
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Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the
quarterly period ended March 31, 2011
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o
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Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the transition period from
to
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Commission file number: 001-32356
SPDR®
GOLD TRUST
SPONSORED BY WORLD GOLD TRUST
SERVICES, LLC
(Exact Name of Registrant as
Specified in Its Charter)
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New York
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81-6124035
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer
Identification No.)
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c/o World
Gold Trust Services, LLC
424 Madison Avenue, 3rd
Floor
New York, New York
10017
(Address of Principal Executive
Offices)
(212) 317-3800
(Registrants Telephone
Number, Including Area Code)
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 o
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 during the
preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).
Yes x No o
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. (Check one):
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Large
accelerated
filer x
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Accelerated
filer o
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Non-accelerated
filer o
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Smaller reporting
company o
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(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 o No x
As of May 4, 2011 the Registrant had
402,200,000 Shares outstanding.
SPDR®
GOLD TRUST
INDEX
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Page
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PART I
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-
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FINANCIAL INFORMATION
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1
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Item 1.
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Financial Statements (unaudited)
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1
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Unaudited Condensed Statements of Financial Condition at
March 31, 2011 and September 30, 2010
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1
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Unaudited Condensed Statements of Operations for the three and
six months ended March 31, 2011 and 2010
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2
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Unaudited Condensed Statements of Cash Flows for the three and
six months ended March 31, 2011 and 2010
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3
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Unaudited Condensed Statement of Changes in Shareholders
Deficit for the six months ended March 31, 2011
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4
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Notes to the Unaudited Condensed Financial Statements
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5
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Item 2.
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Managements Discussion and Analysis of Financial Condition
and Results of Operations
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11
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
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16
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Item 4.
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Controls and Procedures
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16
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PART II
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-
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OTHER INFORMATION
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17
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Item 1.
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Legal Proceedings
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17
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Item 1A.
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Risk Factors
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17
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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17
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Item 3.
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Defaults Upon Senior Securities
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17
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Item 4.
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[Removed and Reserved.]
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17
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Item 5.
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Other Information
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17
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Item 6.
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Exhibits
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17
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SIGNATURES
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18
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i
SPDR®
GOLD TRUST
PART I -
FINANCIAL INFORMATION:
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Item 1.
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Financial
Statements (Unaudited)
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Unaudited
Condensed Statements of Financial Condition
at March 31, 2011 and September 30,
2010
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Mar-31,
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Sep-30,
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(Amounts in 000s of US$ except for share data)
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2011
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2010(1)
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ASSETS
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Investment in Gold, at
cost(2)
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$
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36,729,489
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$
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37,736,064
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Gold Receivable
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255,409
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Total Assets
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$
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36,729,489
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$
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37,991,473
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LIABILITIES
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Gold payable
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$
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28,065
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$
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76,622
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Accounts payable to related parties
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17,435
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16,065
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Accounts payable
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799
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2,192
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Accrued expenses
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2,375
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425
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Total Liabilities
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48,674
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95,304
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Redeemable Shares:
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Shares at redemption value to
investors(3)
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56,017,248
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54,809,779
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Shareholders Deficit
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(19,336,433
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)
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(16,913,610
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Total Liabilities, Redeemable Shares &
Shareholders Deficit
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$
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36,729,489
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$
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37,991,473
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(1) |
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Derived from audited statement of condition as of
September 30, 2010. |
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(2) |
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The market value of Investment in Gold at March 31, 2011 is
$56,065,922 and at September 30, 2010, is $54,649,674. |
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(3) |
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Authorized share capital is unlimited and the par value of the
Shares is $0.00. Shares issued and outstanding at March 31,
2011 was 399,200,000 and at September 30, 2010 was
429,200,000. |
See notes to the unaudited condensed financial statements
1
SPDR®
GOLD TRUST
Unaudited
Condensed Statements of Operations
For the three months ended March 31, 2011
and 2010 and the six months ended March 31, 2011 and 2010
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Three Months
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Three Months
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Six Months
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Six Months
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Ended
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Ended
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Ended
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Ended
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Mar-31,
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Mar-31,
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Mar-31,
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Mar-31,
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(Amounts in 000s of US$, except for share and per share
data)
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2011
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2010
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2011
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2010
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REVENUES
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Proceeds from sales of gold
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$
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53,427
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$
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37,685
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$
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109,500
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$
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74,973
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Cost of gold sold to pay expenses
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(36,035
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(27,664
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(73,323
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(55,012
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Gain on gold sold to pay expenses
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17,392
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10,021
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36,177
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19,961
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Gain on gold distributed for the redemption of Shares
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1,676,026
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315,102
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2,836,504
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560,554
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Total Gain on gold
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1,693,418
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325,123
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2,872,681
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580,515
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EXPENSES
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Custody fees
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8,881
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6,452
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18,227
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12,996
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Trustee fees
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493
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493
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997
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997
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Sponsor fees
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20,321
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14,606
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41,779
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29,439
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Marketing agent fees
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20,321
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14,606
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41,779
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29,439
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Other expenses
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4,172
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2,959
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8,644
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5,983
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Total expenses
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54,188
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39,116
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111,426
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78,854
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Net Gain from Operations
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$
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1,639,230
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$
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286,007
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$
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2,761,255
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$
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501,661
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Net Gain per Share
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$
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4.04
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$
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0.78
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$
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6.64
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$
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1.37
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Weighted average number of Shares (000s)
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406,074
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365,749
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415,846
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365,863
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See notes to the unaudited condensed financial statements
2
SPDR®
GOLD TRUST
Unaudited
Condensed Statements of Cash Flows
For the three months ended March 31, 2011
and 2010 and the six months ended March 31, 2011 and 2010
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Three Months
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Three Months
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Six Months
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Six Months
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Ended
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Ended
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Ended
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Ended
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Mar-31,
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Mar-31,
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Mar-31,
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Mar-31,
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(Amounts in 000s of US$)
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2011
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2010
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2011
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2010
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INCREASE / DECREASE IN CASH FROM OPERATIONS:
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Cash proceeds received from sales of gold
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$
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53,427
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$
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37,685
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$
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109,500
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$
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74,973
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Cash expenses paid
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(53,427
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)
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(37,685
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)
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(109,500
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)
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(74,973
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(Decrease) / Increase in cash resulting from operations
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Cash and cash equivalents at beginning of period
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Cash and cash equivalents at end of period
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$
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$
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$
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$
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SUPPLEMENTAL DISCLOSURE OF
NON-CASH FINANCING ACTIVITIES:
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Value of gold received for creation of shares net
of gold receivable
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$
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2,258,501
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$
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904,330
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$
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4,779,733
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$
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3,197,937
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Value of gold distributed for redemption of
Shares net of gold payable
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$
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3,554,085
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$
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882,666
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$
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5,901,458
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$
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1,540,794
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Three Months
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Three Months
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Six Months
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Six Months
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Ended
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Ended
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Ended
|
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Ended
|
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Mar-31,
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Mar-31,
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Mar-31,
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Mar-31,
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(Amount in 000s of US$)
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2011
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2010
|
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2011
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2010
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RECONCILIATION OF NET GAIN/(LOSS) FROM OPERATIONS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
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Net Gain/(Loss) from Operations
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$
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1,639,230
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$
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286,007
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$
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2,761,255
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$
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501,661
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Adjustments to reconcile net gain to net cash provided by
operating activities
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(Increase)/Decrease in investment in gold
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1,638,554
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(25,125
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)
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1,006,575
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(1,639,868
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)
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(Increase)/Decrease in gold receivable
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(153,197
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)
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255,409
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(146,585
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)
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Decrease in gold payable
|
|
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(288,555
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)
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(48,557
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)
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Increase in liabilities
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|
761
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1,431
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1,927
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3,881
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Increase/(Decrease) in redeemable Shares
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|
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|
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Creations
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2,258,501
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1,088,652
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4,779,733
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|
|
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3,382,259
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Redemptions
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(5,248,491
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)
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(1,197,768
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)
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|
|
(8,756,342
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)
|
|
|
(2,101,348
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)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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Net cash provided by operating activities
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|
$
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|
|
|
$
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|
|
$
|
|
|
|
$
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
See notes to the unaudited condensed financial statements
3
SPDR®
GOLD TRUST
Unaudited
Condensed Statement of Changes in Shareholders
Deficit
For the six months ended March 31, 2011
|
|
|
|
|
|
|
Six Months
|
|
|
|
Ended
|
|
(Amounts in 000s of US$)
|
|
Mar-31, 2011
|
|
|
Shareholders Deficit - Opening Balance
|
|
$
|
(16,913,610
|
)
|
Net Gain for the period
|
|
|
2,761,255
|
|
Adjustment of Redeemable Shares to redemption value
|
|
|
(5,184,078
|
)
|
|
|
|
|
|
Shareholders Deficit - Closing Balance
|
|
$
|
(19,336,433
|
)
|
|
|
|
|
|
See notes to the unaudited condensed financial statements
4
SPDR®
GOLD TRUST
Notes to
the Unaudited Condensed Financial Statements
The
SPDR®
Gold Trust (the Trust) is an investment trust formed
on November 12, 2004 (Date of Inception) under
New York law pursuant to a trust indenture. The fiscal year end
for the Trust is September 30th. The Trust holds gold and
issues shares (Shares) (in minimum blocks of
100,000 Shares, also referred to as Baskets) in
exchange for deposits of gold and distributes gold in connection
with redemption of Baskets. The investment objective of the
Trust is for the Shares to reflect the performance of the price
of gold bullion, less the Trusts expenses.
The condensed statements of financial condition at
March 31, 2011 and September 30, 2010, the condensed
statements of operations and of cash flows for the three and six
months ended March 31, 2011 and 2010 and the condensed
statement of changes in shareholders deficit for the six
months ended March 31, 2011 have been prepared on behalf of
the Trust without audit. In the opinion of management of the
sponsor of the Trust, World Gold Trust Services, LLC (the
Sponsor), all adjustments (which include normal
recurring adjustments) necessary to present fairly the financial
position, results of operations and cash flows as of and for the
three and six months ended March 31, 2011 and for all
periods presented have been made.
Certain information and footnote disclosures normally included
in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America
have been condensed or omitted. These condensed financial
statements should be read in conjunction with the financial
statements and notes thereto included in the Trusts Annual
Report on
Form 10-K
for the fiscal year ended September 30, 2010. The results
of operations for the three and six months ended March 31,
2011 are not necessarily indicative of the operating results for
the full year.
|
|
2.
|
Significant
accounting policies
|
The preparation of financial statements in accordance with
accounting principles generally accepted in the United States of
America requires those responsible for preparing financial
statements to make estimates and assumptions that affect the
reported amounts and disclosures. Actual results could differ
from those estimates. The following is a summary of significant
accounting policies followed by the Trust.
Gold is held by HSBC Bank USA, N.A. (the Custodian),
on behalf of the Trust, and is valued, for financial statement
purposes, at the lower of cost or market. The cost of gold is
determined according to the average cost method and the market
value is based on the price of gold set by the London gold fix
(London Fix) used to determine the Net Asset Value
(NAV) of the Trust. Realized gains and losses on
sales of gold, or gold distributed for the redemption of Shares,
are calculated on a trade date basis using average cost.
The table below summarizes the impact of unrealized gains or
losses on the Trusts gold holdings as of March 31,
2011 and September 30, 2010:
|
|
|
|
|
|
|
|
|
|
|
Mar-31,
|
|
|
Sep-30,
|
|
(Amounts in 000s of US$)
|
|
2011
|
|
|
2010
|
|
|
Investment in gold - average cost
|
|
$
|
36,729,489
|
|
|
$
|
37,736,064
|
|
Unrealized gain on investment in gold
|
|
|
19,336,433
|
|
|
|
16,913,610
|
|
|
|
|
|
|
|
|
|
|
Investment in gold - market value
|
|
$
|
56,065,922
|
|
|
$
|
54,649,674
|
|
|
|
|
|
|
|
|
|
|
The Trust recognizes the diminution in value of the investment
in gold which arises from market declines on an interim basis.
Increases in the value of the investment in gold through market
price recoveries in later interim periods of the same fiscal
year are recognized in the later interim period. Increases in
value recognized on an interim basis may not exceed the
previously recognized diminution in value.
5
SPDR®
GOLD TRUST
Notes to
the Unaudited Condensed Financial Statements
|
|
2.
|
Significant
accounting policies (continued)
|
2.2. Gold
receivable
Gold receivable represents the quantity of gold covered by
contractually binding orders for the creation of Shares where
the gold has not yet been transferred to the Trusts
account. Generally, ownership of the gold is transferred within
three business days of the trade date.
|
|
|
|
|
|
|
|
|
|
|
Mar-31,
|
|
Sept 30,
|
(Amounts in 000s of US$)
|
|
2011
|
|
2010
|
|
Gold receivable
|
|
$
|
|
|
|
$
|
255,409
|
|
2.3 Gold
Payable
Gold payable represents the quantity of gold covered by
contractually binding orders for the redemption of Shares where
the gold has not yet been transferred out of the Trusts
account. Generally, ownership of the gold is transferred within
three business days of the trade date.
|
|
|
|
|
|
|
|
|
|
|
Mar-31,
|
|
Sept 30,
|
(Amounts in 000s of US$)
|
|
2011
|
|
2010
|
|
Gold payable
|
|
$
|
28,065
|
|
|
$
|
76,622
|
|
2.4. Creations
and Redemptions of Shares
The Trust creates and redeems Shares from time to time, but only
in one or more Baskets (a Basket equals a block of
100,000 Shares). The Trust issues Shares in Baskets to
certain authorized participants (Authorized
Participants) on an ongoing basis. The creation and
redemption of Baskets is only made in exchange for the delivery
to the Trust or the distribution by the Trust of the amount of
gold and any cash represented by the Baskets being created or
redeemed, the amount of which will be based on the combined net
asset value of the number of Shares included in the Baskets
being created or redeemed determined on the day the order to
create or redeem Baskets is properly received.
As the Shares of the Trust are redeemable in Baskets at the
option of the Authorized Participants, the Trust has classified
the Shares as Redeemable Shares on the Statement of Financial
Condition. The Trust records the redemption value, which
represents its maximum obligation, as Redeemable Shares with the
difference from cost as an offsetting amount to
Shareholders Equity. Changes in the Shares for the six
months ended March 31, 2011 and for the year ended
September 30, 2010, are as follows:
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
Year Ended
|
|
|
|
Mar-31,
|
|
|
Sep-30,
|
|
(All amounts are in 000s)
|
|
2011
|
|
|
2010
|
|
|
Number of Redeemable Shares:
|
|
|
|
|
|
|
|
|
Opening Balance
|
|
|
429,200
|
|
|
|
358,900
|
|
Creations
|
|
|
35,600
|
|
|
|
114,000
|
|
Redemptions
|
|
|
(65,600
|
)
|
|
|
(43,700
|
)
|
|
|
|
|
|
|
|
|
|
Closing Balance
|
|
|
399,200
|
|
|
|
429,200
|
|
|
|
|
|
|
|
|
|
|
6
SPDR®
GOLD TRUST
Notes to
the Unaudited Condensed Financial Statements
|
|
2.
|
Significant
accounting policies (continued)
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
Year Ended
|
|
|
|
Mar-31,
|
|
|
Sep-30,
|
|
(Amounts in 000s of US$ except per Share)
|
|
2011
|
|
|
2010
|
|
|
Redeemable Shares:
|
|
|
|
|
|
|
|
|
Opening Balance
|
|
$
|
54,809,779
|
|
|
$
|
35,054,043
|
|
Creations
|
|
|
4,779,733
|
|
|
|
13,221,048
|
|
Redemptions
|
|
|
(8,756,342
|
)
|
|
|
(5,023,591
|
)
|
Adjustment to redemption value
|
|
|
5,184,078
|
|
|
|
11,558,279
|
|
|
|
|
|
|
|
|
|
|
Closing Balance
|
|
$
|
56,017,248
|
|
|
$
|
54,809,779
|
|
|
|
|
|
|
|
|
|
|
Redemption Value per Redeemable Share at Period End
|
|
$
|
140.32
|
|
|
$
|
127.70
|
|
|
|
|
|
|
|
|
|
|
2.5. Revenue
Recognition Policy
BNY Mellon Asset Servicing, a division of The Bank of New York
Mellon (the Trustee), will, at the direction of the
Sponsor or in its own discretion, sell the Trusts gold as
necessary to pay the Trusts expenses. When selling gold to
pay expenses, the Trustee will endeavor to sell the smallest
amount of gold needed to pay expenses in order to minimize the
Trusts holdings of assets other than gold. Unless
otherwise directed by the Sponsor, when selling gold, the
Trustee will endeavor to sell at the price established by the
London Fix at 3 p.m. London time (London PM
Fix). The Trustee will place orders with dealers (which
may include the Custodian) through which the Trustee expects to
receive the most favorable price and execution of orders. The
Custodian may be the purchaser of such gold only if the sale
transaction is made at the next London gold price fix (either AM
or PM) following the sale order. A gain or loss is recognized
based on the difference between the selling price and the
average cost of the gold sold.
2.6. Income
Taxes
The Trust is classified as a grantor trust for US
federal income tax purposes. As a result, the Trust itself will
not be subject to US federal income tax. Instead, the
Trusts income and expenses will flow through
to the Shareholders, and the Trustee will report the
Trusts proceeds, income, deductions, gains, and losses to
the Internal Revenue Service on that basis. The Sponsor of the
Trust has evaluated whether or not there are uncertain tax
positions that require financial statement recognition and has
determined that no reserves for uncertain tax positions are
required as of March 31, 2011 or September 30, 2010.
7
SPDR®
GOLD TRUST
Notes to
the Unaudited Condensed Financial Statements
The following represents the changes in ounces of gold and the
respective values for the six months ended March 31, 2011
and for the year ended September 30, 2010:
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
Year Ended
|
|
|
|
Mar-31,
|
|
|
Sep-30,
|
|
(Ounces of gold are in 000s and value of gold is in
000s of US$)
|
|
2011
|
|
|
2010
|
|
|
Ounces of Gold:
|
|
|
|
|
|
|
|
|
Opening Balance
|
|
|
41,813.1
|
|
|
|
35,176.6
|
|
Creations (excluding gold receivable at March 31,
2011 - 0 and at September 30, 2010 - 195.4)
|
|
|
3,670.4
|
|
|
|
11,001.2
|
|
Redemptions (excluding gold payable at March 31,
2011 - 19.5 and at September 30, 2010 - 58.6)
|
|
|
(6,442.1
|
)
|
|
|
(4,218.0
|
)
|
Sales of gold
|
|
|
(79.7
|
)
|
|
|
(146.7
|
)
|
|
|
|
|
|
|
|
|
|
Closing Balance
|
|
|
38,961.7
|
|
|
|
41,813.1
|
|
|
|
|
|
|
|
|
|
|
Investment in Gold (lower of cost or market):
|
|
|
|
|
|
|
|
|
Opening Balance
|
|
$
|
37,736,064
|
|
|
$
|
28,463,669
|
|
Creations (excluding gold receivable at March 31,
2011 - $0 and at September 30, 2010 -
$255,409)
|
|
|
5,035,143
|
|
|
|
13,004,707
|
|
Redemptions (excluding gold payable at March 31,
2011 - $28,065 and at September 30, 2010 -
$76,622)
|
|
|
(5,968,395
|
)
|
|
|
(3,607,548
|
)
|
Sales of gold
|
|
|
(73,323
|
)
|
|
|
(124,764
|
)
|
|
|
|
|
|
|
|
|
|
Closing Balance
|
|
$
|
36,729,489
|
|
|
$
|
37,736,064
|
|
|
|
|
|
|
|
|
|
|
|
|
4.
|
Related
Parties - Sponsor, Trustee, Custodian and Marketing Agent
Fees
|
Fees are paid to the Sponsor as compensation for services
performed under the Trust Indenture and for services
performed in connection with maintaining the Trusts
website and marketing the Shares. The Sponsors fee is
payable monthly in arrears and is accrued daily at an annual
rate equal to 0.15% of the adjusted net asset value
(ANAV) of the Trust, subject to reduction as
described below. The Sponsor will receive reimbursement from the
Trust for all of its disbursements and expenses incurred in
connection with the Trust.
Fees are paid to the Trustee, as compensation for services
performed under the Trust Indenture. The Trustees fee
is payable monthly in arrears and is accrued daily at an annual
rate equal to 0.02% of the ANAV of the Trust, subject to a
minimum fee of $500,000 and a maximum fee of $2 million per
year. The Trustees fee is subject to modification as
determined by the Trustee and the Sponsor in good faith to
account for significant changes in the Trusts
administration or the Trustees duties. The Trustee will
charge the Trust for its expenses and disbursements incurred in
connection with the Trust (including the expenses of the
Custodian paid by the Trustee), exclusive of fees of agents for
services to be performed by the Trustee, and for any
extraordinary services performed by the Trustee for the Trust.
Affiliates of the Trustee may from time to time act as
Authorized Participants or purchase or sell gold or Shares for
their own account, as agent for their customers and for accounts
over which they exercise investment discretion.
Fees are paid to the Custodian under the Allocated Bullion
Account Agreement (as amended, the Allocated Bullion
Account Agreement) as compensation for its custody
services. Under the Allocated Bullion Account Agreement, the
Custodians fee is computed at an annual rate equal to
0.10% of the average daily aggregate value of the first
4.5 million ounces of gold held in the Trusts
allocated gold account (Trust Allocated
Account) and the Trusts unallocated gold account
(Trust Unallocated Account) and 0.06% of the
average
8
SPDR®
GOLD TRUST
Notes to
the Unaudited Condensed Financial Statements
|
|
4.
|
Related
Parties - Sponsor, Trustee, Custodian and Marketing Agent
Fees (continued)
|
daily aggregate value of all gold held in the
Trust Allocated Account and the Trust Unallocated
Account in excess of 4.5 million ounces. The Custodian does
not receive a fee under the Unallocated Bullion Account
Agreement.
The Custodian and its affiliates may from time to time act as
Authorized Participants or purchase or sell gold or Shares for
their own account, as agent for their customers and for accounts
over which they exercise investment discretion.
Fees are paid to the marketing agent for the Trust, State Street
Global Markets, LLC (the Marketing Agent), by the
Trustee from the assets of the Trust as compensation for
services performed pursuant to the agreement, as amended,
between the Sponsor and the Marketing Agent (the Marketing
Agent Agreement). The Marketing Agents fee is
payable monthly in arrears and is accrued daily at an annual
rate equal to 0.15% of the ANAV of the Trust, subject to
reduction as described below.
The Marketing Agent and its affiliates may from time to time act
as Authorized Participants or purchase or sell gold or Shares
for their own account, as agent for their customers and for
accounts over which they exercise investment discretion.
Until the earlier of November 11, 2011, or the termination
of the Marketing Agent Agreement, if at the end of any month
during such period the estimated ordinary expenses of the Trust
exceed an amount equal to 0.40% per year of the daily ANAV of
the Trust for such month, the fees payable to the Sponsor and
the Marketing Agent from the assets of the Trust for such month
will be reduced by the amount of such excess in equal shares up
to the amount of their fees. Investors should be aware that if
the gross value of the Trusts assets is less than
approximately $1.2 billion, the ordinary expenses of the
Trust will be accrued at a rate greater than 0.40% per year of
the daily ANAV of the Trust, even after the Sponsor and the
Marketing Agent have completely reduced their combined fees of
0.30% per year of the daily ANAV of the Trust. This amount is
based on the estimated ordinary expenses of the Trust and may be
higher if the Trusts actual ordinary expenses exceed those
estimates. Additionally, if the Trust incurs unforeseen expenses
that cause the total ordinary expenses of the Trust to exceed
0.70% per year of the daily ANAV of the Trust, the ordinary
expenses will accrue at a rate greater than 0.40% per year of
the daily ANAV of the Trust, even after the Sponsor and the
Marketing Agent have completely reduced their combined fees of
0.30% per year of the daily ANAV of the Trust.
Upon the earlier of November 11, 2011, or the termination
of the Marketing Agent Agreement, the fee reduction will expire
and the estimated ordinary expenses of the Trust which are
payable from the assets of the Trust each month may be more than
they would have been during the period when the fee reduction
was in effect, thus reducing the NAV of the Trust more rapidly
than if the fee reduction was in effect and adversely affecting
the value of the Shares.
For the three and six months ended March 31, 2011, the fees
payable to the Sponsor and the Marketing Agent were each reduced
by $0 and $6,798 respectively. For the three and six months
ended March 31, 2010, the comparable reduction in fees was
$63,032 and $132,146 respectively.
Amounts
Payable to Related Parties
|
|
|
|
|
|
|
|
|
|
|
Mar-31,
|
|
|
Sep-30,
|
|
(Amounts in 000s of US$)
|
|
2011
|
|
|
2010
|
|
|
Payable to Custodian
|
|
$
|
3,095
|
|
|
$
|
2,841
|
|
Payable to Trustee
|
|
|
170
|
|
|
|
164
|
|
Payable to Sponsor
|
|
|
7,085
|
|
|
|
6,530
|
|
Payable to Marketing Agent
|
|
|
7,085
|
|
|
|
6,530
|
|
|
|
|
|
|
|
|
|
|
Accounts Payable to related parties
|
|
$
|
17,435
|
|
|
$
|
16,065
|
|
|
|
|
|
|
|
|
|
|
9
SPDR®
GOLD TRUST
Notes to
the Unaudited Condensed Financial Statements
The Trusts sole business activity is the investment in
gold. Several factors could affect the price of gold:
(i) global gold supply and demand, which is influenced by
such factors as forward selling by gold producers, purchases
made by gold producers to unwind gold hedge positions, central
bank purchases and sales, and production and cost levels in
major gold-producing countries such as China, Australia, South
Africa and the United States; (ii) investors
expectations with respect to the rate of inflation;
(iii) currency exchange rates; (iv) interest rates;
(v) investment and trading activities of hedge funds and
commodity funds; and (vi) global or regional political,
economic or financial events and situations. In addition, there
is no assurance that gold will maintain its long-term value in
terms of purchasing power in the future. In the event that the
price of gold declines, the Sponsor expects the value of an
investment in the Shares to decline proportionately. Each of
these events could have a material affect on the Trusts
financial position and results of operations.
The Sponsor and its shareholders, members, directors, officers,
employees, affiliates and subsidiaries are indemnified from the
Trust and held harmless against certain losses, liabilities or
expenses incurred in the performance of its duties under the
Trust Indenture without gross negligence, bad faith,
willful misconduct, willful malfeasance or reckless disregard of
the indemnified partys obligations and duties under the
Trust Indenture. Such indemnity includes payment from the
Trust of the costs and expenses incurred in defending against
any claim or liability under the Trust Indenture. Under the
Trust Indenture, the Sponsor may be able to seek
indemnification from the Trust for payments it makes in
connection with the Sponsors activities under the
Trust Indenture to the extent its conduct does not
disqualify it from receiving such indemnification under the
terms of the Trust Indenture. The Sponsor will also be
indemnified from the Trust and held harmless against any loss,
liability or expense arising under the Marketing Agent Agreement
or any agreement entered into with an Authorized Participant
which provides the procedures for the creation and redemption of
Baskets and for the delivery of gold and any cash required for
creations and redemptions insofar as such loss, liability or
expense arises from any untrue statement or alleged untrue
statement of a material fact contained in any written statement
provided to the Sponsor by the Trustee. Any amounts payable to
the Sponsor are secured by a lien on the Trust.
The Sponsor has agreed to indemnify certain parties against
certain liabilities and to contribute to payments that such
parties may be required to make in respect of those liabilities.
The Trustee has agreed to reimburse such parties, solely from
and to the extent of the Trusts assets, for
indemnification and contribution amounts due from the Sponsor in
respect of such liabilities to the extent the Sponsor has not
paid such amounts when due. The Sponsor has agreed that, to the
extent the Trustee pays any amount in respect of the
reimbursement obligations described in the preceding sentence,
the Trustee, for the benefit of the Trust, will be subrogated to
and will succeed to the rights of the party so reimbursed
against the Sponsor.
The Trust has evaluated events subsequent to the March 31,
2011 quarter end through to the date of filing of this
Form 10-Q.
During this period, no material disclosable subsequent events
were identified.
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 included in Item 1 of
Part I of this Quarterly Report. The discussion and
analysis which follows may contain trend analysis and other
forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934 which
reflect our current views with respect to future events and
financial results. Words such as anticipate,
expect, intend, plan,
believe, seek, outlook and
estimate as well as similar words and phrases
signify forward-looking statements.
SPDR®
Gold Trusts forward-looking statements are not
guarantees of future results and conditions and important
factors, risks and uncertainties may cause our actual results to
differ materially from those expressed in our forward-looking
statements.
Trust Overview
SPDR®
Gold Trust is an investment trust that was formed on
November 12, 2004. The Trust issues baskets of Shares, or
Baskets, in exchange for deposits of gold and distributes gold
in connection with the redemption of Baskets. The investment
objective of the Trust is for the Shares to reflect the
performance of the price of gold bullion, less the expenses of
the Trusts operations. The Shares are designed to provide
investors with a cost effective and convenient way to invest in
gold.
Investing in the Shares does not insulate the investor from
certain risks, including price volatility. The following chart
illustrates the movement in the price of the Shares and NAV of
the Shares against the corresponding gold price
(per 1/10
of an oz. of gold) since inception:
Share
price & NAV v. gold price from fund inception to
March 31, 2011
The divergence of the price of the Shares and NAV of the Shares
from the gold price over time reflects the cumulative effect of
the Trust expenses that arise if an investment had been held
since inception.
11
Valuation
of Gold, Definition of NAV and ANAV
As of the London PM Fix on each day that the NYSE Arca is open
for regular trading or, if there is no London PM Fix on such day
or the London PM Fix has not been announced by 12:00 PM New
York time on such day, as of 12:00 PM New York time on such
day (the Valuation Time), the Trustee values the
gold held by the Trust and determines both the ANAV and the NAV
of the Trust.
At the Valuation Time, the Trustee values the Trusts gold
on the basis of that days London PM Fix or, if no London
PM Fix is made on such day or has not been announced by the
Valuation Time, the next most recent London gold price fix (AM
or PM) determined prior to the Valuation Time will be used,
unless the Trustee, in consultation with the Sponsor, determines
that such price is inappropriate as a basis for valuation. In
the event the Trustee and the Sponsor determine that the London
PM Fix or last prior London gold price fix (AM or PM) is not an
appropriate basis for valuation of the Trusts gold, they
will identify an alternative basis for such valuation to be
employed by the Trustee.
Once the value of the gold has been determined, the Trustee
subtracts all estimated accrued but unpaid fees (other than the
fees to be computed by reference to the value of the ANAV of the
Trust or custody fees computed by reference to the value of gold
held in the Trust), expenses and other liabilities of the Trust
from the total value of the gold and all other assets of the
Trust (other than any amounts credited to the Trusts
reserve account, if established). The resulting figure is the
ANAV of the Trust. The ANAV of the Trust is used to compute the
fees of the Trustee, the Sponsor, and the Marketing Agent.
To determine the Trusts NAV, the Trustee subtracts from
the ANAV of the Trust the amount of estimated accrued but unpaid
fees computed by reference to the value of the ANAV of the Trust
and computed by reference to the value of the gold held in the
Trust (i.e., the fees of the Trustee, the Sponsor, the Marketing
Agent and the Custodian). The Trustee determines the NAV per
Share by dividing the NAV of the Trust by the number of Shares
outstanding as of the close of trading on the NYSE Arca.
Gold acquired, or disposed of, by the Trust is recorded at the
lower of average cost or market value. The table below
summarizes the impact of unrealized gains or losses on the
Trusts gold holdings at March 31, 2011 and
September 30, 2010:
|
|
|
|
|
|
|
|
|
|
|
Mar-31,
|
|
|
Sep-30,
|
|
(Amounts in 000s of US$)
|
|
2011
|
|
|
2010
|
|
|
Investment in gold - average cost
|
|
$
|
36,729,489
|
|
|
$
|
37,736,064
|
|
Unrealized gain on investment in gold
|
|
|
19,336,433
|
|
|
|
16,913,610
|
|
|
|
|
|
|
|
|
|
|
Investment in gold - market value
|
|
$
|
56,065,922
|
|
|
$
|
54,649,674
|
|
|
|
|
|
|
|
|
|
|
Critical
Accounting Policy
Valuation
of Gold
Gold is held by the Custodian on behalf of the Trust and is
valued, for financial statement purposes, at the lower of cost
or market. The cost of gold is determined according to the
average cost method and the market value is based on the London
Fix used to determine the NAV of the Trust. Realized gains and
losses on sales of gold, or gold distributed for the redemption
of Shares, are calculated on a trade date basis using average
cost.
Review of
Financial Results
Financial
Highlights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
|
Three Months
|
|
|
Six Months
|
|
|
Six Months
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
|
Mar-31,
|
|
|
Mar-31,
|
|
|
Mar-31,
|
|
|
Mar-31,
|
|
(All amounts in the following table and paragraphs except per
share, are in 000s of US$)
|
|
2011
|
|
|
2010
|
|
|
2011
|
|
|
2010
|
|
|
Total Gain on gold
|
|
$
|
1,693,418
|
|
|
$
|
325,123
|
|
|
$
|
2,872,681
|
|
|
$
|
580,515
|
|
Net Gain from operations
|
|
$
|
1,639,230
|
|
|
$
|
286,007
|
|
|
$
|
2,761,255
|
|
|
$
|
501,661
|
|
Net Gain per Share
|
|
$
|
4.04
|
|
|
$
|
0.78
|
|
|
$
|
6.64
|
|
|
$
|
1.37
|
|
Net cash flows from operating activities
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
12
The Trusts total gain on gold for the three months ended
March 31, 2011 of $1,693,418 is made up of a gain of
$17,392 on the sale of gold to pay expenses plus a gain of
$1,676,026 on gold distributed on the redemption of Shares.
The Trusts total gain on gold for the three months ended
March 31, 2010 of $325,123 is made up of a gain of $10,021
on the sale of gold to pay expenses plus a gain of $315,102 on
gold distributed on the redemption of Shares.
The Trusts total gain on gold for the six months ended
March 31, 2011 of $2,872,681 was made up of a gain of
$36,177 on the sale of gold to pay expenses plus a gain of
$2,836,504 on gold distributed on the redemption of Shares
The Trusts total gain on gold for the six months ended
March 31, 2010 of $580,515 is made up of a gain of $19,961
on the sale of gold to pay expenses plus a gain of $560,554 on
gold distributed on the redemption of Shares.
Selected
Supplemental Data - For the six months ended March 31,
2011 and for the year ended September 30, 2010.
|
|
|
|
|
|
|
|
|
|
|
Six Months
|
|
|
Year
|
|
|
|
Ended
|
|
|
Ended
|
|
|
|
Mar-31,
|
|
|
Sep-30,
|
|
(All amounts, except per ounce and per share, are in
000s)
|
|
2011
|
|
|
2010
|
|
|
Ounces of Gold:
|
|
|
|
|
|
|
|
|
Opening Balance
|
|
|
41,813.1
|
|
|
|
35,176.6
|
|
Creations (excluding gold receivable at March 31,
2011 0 and at September 30, 2010
195.4)
|
|
|
3,670.4
|
|
|
|
11,001.2
|
|
Redemptions (excluding gold payable at March 31,
2011 19.5 and at September 30, 2010
58.6)
|
|
|
(6,442.1
|
)
|
|
|
(4,218.0
|
)
|
Sales of gold
|
|
|
(79.7
|
)
|
|
|
(146.7
|
)
|
|
|
|
|
|
|
|
|
|
Closing Balance
|
|
|
38,961.7
|
|
|
|
41,813.1
|
|
|
|
|
|
|
|
|
|
|
Gold price per ounce - London PM Fix
|
|
$
|
1,439.00
|
|
|
$
|
1,307.00
|
|
|
|
|
|
|
|
|
|
|
Market value of gold holdings
|
|
$
|
56,065,922
|
|
|
$
|
54,649,674
|
|
|
|
|
|
|
|
|
|
|
Number of Shares:
|
|
|
|
|
|
|
|
|
Opening Balance
|
|
|
429,200
|
|
|
|
358,900
|
|
Creations
|
|
|
35,600
|
|
|
|
114,000
|
|
Redemptions
|
|
|
(65,600
|
)
|
|
|
(43,700
|
)
|
|
|
|
|
|
|
|
|
|
Closing Balance
|
|
|
399,200
|
|
|
|
429,200
|
|
|
|
|
|
|
|
|
|
|
Net Asset Value per share:
|
|
|
|
|
|
|
|
|
Creations
|
|
$
|
134.26
|
|
|
$
|
115.97
|
|
Redemptions
|
|
$
|
133.48
|
|
|
$
|
114.96
|
|
|
|
|
|
|
|
|
|
|
Shares at redemption value to investors at Period End
|
|
$
|
56,017,248
|
|
|
$
|
54,809,779
|
|
|
|
|
|
|
|
|
|
|
Redemption Value per Redeemable Share at Period End
|
|
$
|
140.32
|
|
|
$
|
127.70
|
|
|
|
|
|
|
|
|
|
|
Change in Redemption Value through Period End
|
|
|
2.2
|
%
|
|
|
56.4
|
%
|
|
|
|
|
|
|
|
|
|
% Difference between Net Asset Value per share and market
value of ounces represented by each share
|
|
|
(0.037
|
)%
|
|
|
(0.034
|
)%
|
|
|
|
|
|
|
|
|
|
Results
of Operations
In the six months ended March 31, 2011,
35,600,000 Shares (356 Baskets) were created in
exchange for 3,474,995 ounces of gold,
65,600,000 Shares (656 Baskets) were redeemed in
exchange for 6,402,955 ounces of gold including
19,503 ounces of gold payable and 79,674 ounces of
gold were sold to pay expenses.
13
As at March 31, 2011, the amount of gold owned by the Trust
was 38,942,222 ounces with a market value of
$56,037,857,087 (cost $36,701,424,046), including
gold payable of 19,503 ounces with a market value of
$28,064,754 based on the London PM Fix on March 31, 2011.
As at March 31, 2011, the Custodian held
38,961,725 ounces in its vault (38,961,316 ounces of
allocated gold in the form of London Good Delivery gold bars and
409 ounces of unallocated gold), excluding gold payable,
with a market value of $56,065,921,840 (cost
$36,729,488,799).
As at September 30, 2010, the amount of gold owned by the
Trust was 41,949,855 ounces, with a market value of
$54,828,461,021 (cost $37,914,851,219), including
gold receivable of 195,416 ounces with a market value of
$255,409,156 and gold payable of 58,624 ounces with a market
value of $76,622,029, based on the London PM fix on
September 30, 2010 (in accordance with the
Trust Indenture).
As at September 30, 2010, the Custodian held 41,813,063
ounces of gold in its vault excluding gold receivable and gold
payable, (41,812,885 ounces of allocated gold in the form of
London Good Delivery gold bars and 178 ounces of unallocated
gold), with a market value of $54,649,673,894 (cost
$37,736,064,092). Subcustodians held nil ounces of gold in their
vaults on behalf of the Trust and 195,416 ounces of gold were
receivable and 58,624 ounces of gold were payable by the Trust
in connection with the creation and redemption of Baskets.
Cash flow
from operations
The Trust had no net cash flow resulting from operations in the
six months ended March 31, 2011 and 2010. Cash received in
respect of gold sold to pay expenses in the six months ended
March 31, 2011 and 2010 was the same as those expenses,
resulting in zero cash balances at March 31, 2011 and 2010.
Off-Balance
Sheet Arrangements
The Trust is not a party to any off-balance sheet arrangements.
Cash
Resources and Liquidity
At March 31, 2011 the Trust did not have any cash balances.
When selling gold to pay expenses, the Trustee endeavors to sell
the exact amount of gold needed to pay expenses in order to
minimize the Trusts holdings of assets other than gold. As
a consequence, we expect that the Trust will not record any cash
flow from its operations and that its cash balance will be zero
at the end of each reporting period.
Analysis
of Movements in the Price of Gold
As movements in the price of gold are expected to directly
affect the price of the Trusts Shares, investors should
understand what the recent movements in the price of gold have
been. Investors, however, should also be aware that past
movements in the gold price are not indicators of future
movements. This section identifies recent trends in the
movements of the gold price and discusses some of the important
events that have influenced these movements.
14
The following chart provides historical background on the price
of gold. The chart illustrates movements in the price of gold in
US dollars per ounce over the period from April 1, 2006 to
March 31, 2011, and is based on the London PM Fix.
Daily
gold price - April 1, 2006 to March 31, 2011
The average, high, low and
end-of-period
gold prices for the three and twelve month periods over the
prior three years and for the period from the Date of Inception
through March 31, 2011, based on the London PM Fix, were:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Last
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End of
|
|
|
business
|
|
Period
|
|
Average
|
|
|
High
|
|
|
Date
|
|
|
Low
|
|
|
Date
|
|
|
period
|
|
|
day(1)
|
|
|
Three months to June 30, 2008
|
|
$
|
896.29
|
|
|
$
|
946.00
|
|
|
|
Apr 17, 2008
|
|
|
$
|
853.00
|
|
|
|
May 01, 2008
|
|
|
$
|
930.25
|
|
|
|
Jun 30, 2008
|
|
Three months to September 30, 2008
|
|
$
|
871.60
|
|
|
$
|
986.00
|
|
|
|
Jul 15, 2008
|
|
|
$
|
740.75
|
|
|
|
Sep 11, 2008
|
|
|
$
|
884.50
|
|
|
|
Sep 30, 2008
|
|
Three months to December 31, 2008
|
|
$
|
796.52(3
|
)
|
|
$
|
903.50
|
|
|
|
Oct 08, 2008
|
|
|
$
|
712.50
|
|
|
|
Oct 24, 2008
|
|
|
$
|
865.00
|
|
|
|
Dec 31,
2008(2
|
)
|
Three months to March 31, 2009
|
|
$
|
908.41
|
|
|
$
|
989.00
|
|
|
|
Feb 20, 2009
|
|
|
$
|
810.00
|
|
|
|
Jan 15, 2009
|
|
|
$
|
916.50
|
|
|
|
Mar 31, 2009
|
|
Three months to June 30, 2009
|
|
$
|
922.18
|
|
|
$
|
981.75
|
|
|
|
Jun 01, 2009
|
|
|
$
|
870.25
|
|
|
|
Apr 06, 2009
|
|
|
$
|
934.50
|
|
|
|
Jun 30, 2009
|
|
Three months to September 30, 2009
|
|
$
|
960.00
|
|
|
$
|
1,018.50
|
|
|
|
Sep 17, 2009
|
|
|
$
|
908.50
|
|
|
|
Jul 13,2009
|
|
|
$
|
995.75
|
|
|
|
Sep 30, 2009
|
|
Three months to December 31, 2009
|
|
$
|
1,099.77(3
|
)
|
|
$
|
1,212.50
|
|
|
|
Dec 02, 2009
|
|
|
$
|
1,003.50
|
|
|
|
Oct 02, 2009
|
|
|
$
|
1,104.00
|
|
|
|
Dec 31,
2009(2
|
)
|
Three months to March 31, 2010
|
|
$
|
1,109.12
|
|
|
$
|
1,153.00
|
|
|
|
Jan 11, 2010
|
|
|
$
|
1,058.00
|
|
|
|
Feb 05, 2010
|
|
|
$
|
1,115.50
|
|
|
|
Mar 31, 2010
|
|
Three months to June 30, 2010
|
|
$
|
1,196.74
|
|
|
$
|
1,261.00
|
|
|
|
Jun 28, 2010
|
|
|
$
|
1,123.50
|
|
|
|
Apr 01, 2010
|
|
|
$
|
1,244.00
|
|
|
|
Jun 30, 2010
|
|
Three month to September 30, 2010
|
|
$
|
1,226.75
|
|
|
$
|
1,307.50
|
|
|
|
Sep 29, 2010
|
|
|
$
|
1,157.00
|
|
|
|
Jul 28, 2010
|
|
|
$
|
1,307.00
|
|
|
|
Sep 30, 2010
|
|
Three months to December 31, 2010
|
|
$
|
1,367.68(3
|
)
|
|
$
|
1,421.00
|
|
|
|
Nov 09, 2010
|
|
|
$
|
1,313.50
|
|
|
|
Oct 04, 2010
|
|
|
$
|
1,410.25
|
|
|
|
Dec 31,
2010(2
|
)
|
Three months to March 31, 2011
|
|
$
|
1,386.27
|
|
|
$
|
1,447.00
|
|
|
|
Mar 24, 2011
|
|
|
$
|
1,319.00
|
|
|
|
Jan 28, 2011
|
|
|
$
|
1,439.00
|
|
|
|
Mar 31, 2011
|
|
|
|
Twelve months ended March 31, 2009
|
|
$
|
867.95
|
|
|
$
|
989.00
|
|
|
|
Feb 20, 2009
|
|
|
$
|
712.50
|
|
|
|
Oct 24, 2008
|
|
|
$
|
916.50
|
|
|
|
Mar 31, 2009
|
|
Twelve months ended March 31, 2010
|
|
$
|
1,023.37
|
|
|
$
|
1,212.50
|
|
|
|
Dec 02, 2009
|
|
|
$
|
870.25
|
|
|
|
Apr 06, 2009
|
|
|
$
|
1,115.50
|
|
|
|
Mar 31, 2010
|
|
Twelve months ended March 31, 2011
|
|
$
|
1,294.69
|
|
|
$
|
1,447.00
|
|
|
|
Mar 24, 2011
|
|
|
$
|
1,123.50
|
|
|
|
Apr 01, 2010
|
|
|
$
|
1,439.00
|
|
|
|
Mar 31, 2011
|
|
|
|
November 12, 2004 to March 31, 2011
|
|
$
|
818.32
|
|
|
$
|
1,447.00
|
|
|
|
Mar 24, 2011
|
|
|
$
|
411.10
|
|
|
|
Feb 08, 2005
|
|
|
$
|
1,439.00
|
|
|
|
Mar 31, 2011
|
|
|
|
|
(1) |
|
The end of period gold price is the London PM Fix on the last
business day of the period. This is in accordance with the
Trust Indenture and the basis used for calculating the Net
Asset Value of the Trust. |
|
(2) |
|
There was no London PM Fix on the last business day of December
2008, 2009 and 2010. The London AM Fix on such business days was
$865.00, $1,104.00 and $1,410.25 respectively. The Net Asset
Value of the Trust on December 31, 2008, 2009 and 2010 was
calculated using the London AM Fix, in accordance with the
Trust Indenture. |
15
|
|
|
(3) |
|
There was no London PM Fix for both December 24th and
December 31st for the periods ended 2008, 2009 and 2010.
For comparative purposes, the average was calculated using the
London AM Fix for those business days. Accordingly, the Net
Asset Value of the Trust for December 24th and
December 31st for the periods ended 2008, 2009 and 2010 was
calculated using the London AM Fix. |
The upward price trend that began in 2001 has continued for much
of the period since the Date of Inception, except for a period
of several months during which the gold price corrected between
May and October 2006. After reaching a peak of $725.00 at the
London PM Fix on May 12, 2006, gold corrected down to a low
of $560.75 at the London PM Fix on October 6, 2006. The
reason most often cited for the correction was a concern among
investors that monetary authorities, especially in the U.S.,
would move to counter the threat of rising inflation by
aggressively raising interest rates. These concerns quickly
ebbed, however, and as the dollar continued to fall, the gold
price rallied from the October 2006 low. In any event, beginning
in August 2007, the U.S. authorities began to reduce interest
rates in response to the subprime mortgage crisis. The continued
reduction in the fed funds rate helped to drive gold to a new
high of $1,011.25 on March 17, 2008. As the subprime
mortgage problems escalated into a global financial crisis, gold
traded in a range from the mid-$900s down to the low-$700s. The
higher prices have tended to coincide with investor buying on
fresh news of distress for companies in the financial sector,
and the lows appear to have been triggered by selling from
investors in the search for liquidity. The gold price broke out
of this range in the second half of 2009, once again breaching
the symbolic $1,000 per ounce level and reaching a new high of
$1,212.50 per ounce at the London PM fix on December 2,
2009. The reasons for this included increased investment inflows
and a shift in behavior in central bank reserve management as
western central banks slowed gold sales and emerging nations
increased their gold reserves. This trend has continued during
2011 with the gold prices breaking a series of historic levels
and trading as high as $1,447.00 per ounce at the London PM fix
on March 24, 2011. This has been supported by a recovery in
jewelry consumption, strong investment demand on the back of
currency concerns and a slow economic recovery, and a
continuation of the trend in central bank reserve management.
The average price for the six months ended March 31, 2011
was $1,376.90 per ounce.
|
|
Item 3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
The Trust Indenture does not authorize the Trustee to
borrow for payment of the Trusts ordinary expenses. The
Trust does not engage in transactions in foreign currencies
which could expose the Trust or holders of Shares to any foreign
currency related market risk. The Trust does not invest in any
derivative financial instruments or long-term debt instruments.
|
|
Item 4.
|
Controls
and Procedures
|
Disclosure controls and procedures. Under the
supervision and with the participation of the Sponsor, World
Gold Trust Services, LLC, including its chief executive
officer and chief financial officer, we carried out an
evaluation of the effectiveness of the design and operation of
the Trusts disclosure controls and procedures. Based upon
that evaluation, our chief executive officer and chief financial
officer concluded that the disclosure controls and procedures
were effective as of the end of the period covered by this
quarterly report.
Internal control over financial
reporting. There has been no change in the
internal control of the Trust over financial reporting that
occurred during our most recent fiscal quarter that has
materially affected, or is reasonably likely to materially
affect, the internal control over financial reporting.
16
PART II -
OTHER INFORMATION:
|
|
Item 1.
|
Legal
Proceedings
|
Not applicable.
You should carefully consider the factors discussed in
Part I, Item 1A. Risk Factors in our
Annual Report on
Form 10-K
for the year ended September 30, 2010, which could
materially affect our business, financial condition or future
results. The risks described in our Annual Report on
Form 10-K
are not the only risks facing the Trust. Additional risks and
uncertainties not currently known to us or that we currently
deem to be immaterial also may materially adversely affect our
business, financial condition
and/or
operating results.
|
|
Item 2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
As of the date of the formation of the Trust on
November 12, 2004, the NAV of the Trust, which represents
the value of the gold deposited into the Trust, was $13,081,500,
and the NAV per Share was $43.60. Since formation and through
March 31, 2011, 6,912 Baskets
(691,200,000 Shares) have been created and
2,920 Baskets (292,000,000 Shares) have been redeemed.
As of May 4, 2011, 402,200,000 Shares were outstanding
and the estimated NAV per Share as determined by the Trustee for
May 4, 2011 was $150.22.
|
|
Item 3.
|
Defaults
Upon Senior Securities
|
None.
|
|
Item 4.
|
[Removed
and Reserved.]
|
|
|
Item 5.
|
Other
Information
|
None.
The exhibits listed on the accompanying Exhibit Index, and
such Exhibit Index, are filed or incorporated by reference
as a part of this report.
17
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.
WORLD GOLD TRUST SERVICES, LLC
Sponsor of the Equity Gold Trust
(Registrant)
Jason Toussaint
Managing Director
(principal executive officer)
Robin Lee
Chief Financial Officer and Treasurer
(principal financial officer and
principal accounting officer)
Date: May 6, 2011
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* |
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The Registrant is a trust and the persons are signing in their
capacities as officers of World Gold Trust Services, LLC,
the Sponsor of the Registrant. |
18
EXHIBIT INDEX
Pursuant
to Item 601 of
Regulation S-K
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Exhibit No.
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Description of Exhibit
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31.1
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Certification of Chief Executive Officer pursuant to
Rule 13a-14(a)
and
15d-14(a)
under the Securities Exchange Act of 1934, as amended, with
respect to the Trusts Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2011.
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31.2
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Certification of Chief Financial Officer pursuant to
Rule 13a-14(a)
and
15d-14(a)
under the Securities Exchange Act of 1934, as amended, with
respect to the Trusts Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2011.
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32.1
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Certification of Principal Executive Officer pursuant to
Section 906 of the
Sarbanes-Oxley
Act of 2002, with respect to the Trusts Quarterly Report
on
Form 10-Q
for the quarter ended March 31, 2011.
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32.2
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Certification of Principal Financial Officer pursuant to
Section 906 of the
Sarbanes-Oxley
Act of 2002, with respect to the Trusts Quarterly Report
on
Form 10-Q
for the quarter ended March 31, 2011.
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19