10-K: abrdn Precious Metals Basket ETF Trust Reports Increased NAV Despite Share Decrease in 2024

The abrdn Precious Metals Basket ETF Trust saw its net asset value rise in 2024, driven by precious metal price increases, even as the number of outstanding shares declined.

Summary

• The abrdn Precious Metals Basket ETF Trust's primary goal is for its shares to mirror the performance of physical gold, silver, platinum, and palladium prices, minus trust expenses.
• The trust's net asset value (NAV) increased from $958.8 million on December 31, 2023, to $1.04 billion on December 31, 2024.
• Outstanding shares decreased from 10.45 million to 9.5 million during 2024, due to more redemptions than creations.
• The NAV per share rose by 19.31% to $109.47, but this increase was slightly less than the rise in proportionate metal prices due to the sponsor's fee.
• The sponsor's fee for 2024 was $6.06 million, equivalent to 0.60% of the trust's adjusted net asset value (ANAV).
• The trust's investment strategy is passive, with no active management to profit from price changes.
• The trust creates and redeems shares only in baskets of 25,000 shares with authorized participants.
• The trust's only recurring expense is the sponsor's fee, which covers administrative and marketing costs.
• The trust's assets consist of physical gold, silver, platinum, and palladium bullion held by a custodian.
• The trustee values the trust's holdings based on the LBMA Gold Price PM for gold, the LBMA Silver Price for silver, and the LBMA Price PM for platinum and palladium.
• The trust does not hold or trade in commodities futures contracts or other instruments regulated by the Commodity Exchange Act.

Sentiment

Score: 7

Explanation: The document presents a balanced view, highlighting both positive NAV growth and potential risks. The sentiment is neutral to slightly positive.

Positives

• The trust's NAV increased, indicating a positive return for investors.
• The trust provides a cost-effective way for investors to gain exposure to precious metals.
• The trust's holdings are transparent, with daily reporting of asset values.
• The trust has minimal credit risk, as it primarily holds physical bullion.
• The trust is not actively managed, reducing management fees and potential for poor investment decisions.
• The trust's custodian is a market maker, clearer and approved weigher under the rules of the LBMA and the LPPM.

Negatives

• The number of outstanding shares decreased, which could affect liquidity.
• The sponsor's fee reduces the overall return for investors.
• The trust is not actively managed, limiting its ability to respond to market changes.
• The trust is exposed to the price volatility of precious metals.
• The trust lacks insurance protection and has limited rights of legal recourse against the Trust, the Trustee, the Sponsor, the Custodian and any sub-custodian.
• The Custodians limited liability under the Custody Agreements and English law may impair the ability of the Trust to recover losses concerning its Bullion and any recovery may be limited, even in the event of fraud, to the market value of the Bullion at the time the fraud is discovered.

Risks

• Fluctuations in the price of gold, silver, platinum, and palladium could materially adversely affect an investment in the shares.
• The shares may trade at a price which is at, above or below the NAV per share and any discount or premium in the trading price relative to the NAV per share may widen as a result of non-concurrent trading hours between the NYSE Arca and London, Zurich and COMEX.
• The trusts bullion may be subject to loss, damage, theft or restriction on access.
• The trusts lack of insurance protection and the shareholders limited rights of legal recourse against the trust, the trustee, the sponsor, the custodian and any sub-custodian exposes the trust and its shareholders to the risk of loss of the trusts bullion for which no person is liable.
• The custodian's limited liability under the custody agreements and English law may impair the ability of the trust to recover losses concerning its bullion and any recovery may be limited, even in the event of fraud, to the market value of the bullion at the time the fraud is discovered.
• The trust relies on the information and technology systems of the trustee, the custodian, the marketing agent and the sponsor, which could be adversely affected by information systems interruptions, cybersecurity attacks or other disruptions which could have a material adverse effect on the trusts record keeping and operations.
• War, a major terrorist attack and other geopolitical events, including but not limited to the war between Russia and Ukraine, outbreaks or public health emergencies (as declared by the World Health Organization), the continuation or expansion of war or other hostilities, or a prolonged government shutdown may cause volatility in the price of Bullion due to the importance of a country or region to the Bullion markets, market access restrictions imposed on some local Bullion producers and refiners, potential impacts to global transportation and shipping and other supply chain disruptions.

Future Outlook

The document does not provide specific forward-looking statements beyond the general risks associated with precious metals investments.

Industry Context

The document provides an overview of the gold, silver, platinum, and palladium industries, including market participants, supply and demand dynamics, and price trends. It also discusses the role of central banks and other institutions in the gold market.

Comparison to Industry Standards

• The document references LBMA and LPPM standards for bullion quality and delivery.
• It compares the trust's performance to the LBMA Gold Price PM, LBMA Silver Price, and LBMA Price PM for platinum and palladium.
• The document also mentions other gold exchange markets, such as the Istanbul Gold Exchange, the Shanghai Gold Exchange, the Hong Kong Chinese Gold & Silver Exchange Society and the Singapore Mercantile Exchange.

Management Changes

Related Party Transactions

• The trust's primary related party transaction is the payment of the sponsor's fee to abrdn ETFs Sponsor LLC.

Stakeholder Impact

• Shareholders benefit from the increased NAV, but face risks associated with precious metal price volatility.
• Authorized participants are affected by the creation and redemption processes and associated fees.
• The trustee and custodian are responsible for managing the trust's assets and ensuring compliance with regulations.

Key Dates