10-K: GraniteShares Gold Trust Reports Decrease in Net Asset Value Amidst Share Redemptions

GraniteShares Gold Trust experienced a decrease in net asset value due to significant share redemptions, despite an increase in the price of gold.

Summary

• The GraniteShares Gold Trust's net asset value decreased from $935.8 million on June 30, 2023, to $791 million on June 30, 2024.
• This decrease was primarily due to a reduction in outstanding shares from 49.45 million to 34.35 million, resulting from 1.9 million shares being created and 17 million shares being redeemed.
• Despite the decrease in net asset value, the net asset value per share increased by 21.72% from $18.92 to $23.03.
• The price of gold increased by 21.89% during the same period, from $1,912.25 to $2,330.90 per ounce.
• The Trust's expenses, primarily the Sponsor's fee, totaled $1.67 million for the fiscal year, which slightly reduced the per share increase compared to the gold price increase.
• The Trust's objective is for the value of its shares to reflect the price of gold, less the Trust's liabilities and expenses.
• The Trust does not engage in active management or hedging strategies.

Sentiment

Score: 5

Explanation: The sentiment is neutral to slightly negative due to the decrease in net asset value, despite the increase in gold prices. The report highlights both positive and negative aspects of the Trust's performance and risks.

Positives

• The net asset value per share increased by 21.72%, reflecting the increase in the price of gold.
• The Trust's structure provides a cost-effective way for investors to participate in the gold market.
• The Trust's shares are backed by allocated physical gold bullion held by a custodian.

Negatives

• The Trust's net asset value decreased by 15.48% due to significant share redemptions.
• The amount of gold represented by each share decreases over time due to the Sponsor's fee and other expenses.
• The Trust is a passive investment vehicle and does not actively manage its gold holdings.

Risks

• The price of gold is volatile and can fluctuate significantly, impacting the value of the shares.
• Large sales of gold by the official sector or increased hedging activity by gold producers could negatively affect gold prices.
• The Trust may be forced to sell gold earlier than anticipated if expenses are higher than expected.
• The Trust is not a diversified investment and may be more volatile than other investments.
• The Trust may be terminated if certain events occur, potentially resulting in losses for investors.
• The Custodian's liability for loss or damage to the Trust's gold is limited.
• The Trust does not insure its gold, and the Custodian's insurance may not cover all losses.
• The Trust is vulnerable to the effects of geopolitical events and the continuation of the war in Ukraine or other hostilities.

Future Outlook

The report includes forward-looking statements regarding future events and performance, which are subject to risks and uncertainties. The Trust does not undertake an obligation to update these statements.

Management Comments

• The Sponsor's management is responsible for establishing and maintaining adequate internal control over financial reporting.
• The Chief Executive Officer and Chief Financial Officer of the Sponsor concluded that the Trust's disclosure controls and procedures were effective as of June 30, 2024.
• The Chief Executive Officer and Chief Financial Officer of the Sponsor concluded that the Trust maintained effective internal control over financial reporting as of June 30, 2024.

Industry Context

The Trust operates within the gold industry, which is influenced by various factors including supply and demand, central bank activities, and investor sentiment. The Trust competes with other gold-backed securities and direct investments in gold.

Comparison to Industry Standards

• The GraniteShares Gold Trust is similar to other exchange-traded funds (ETFs) that track the price of gold, such as the SPDR Gold Trust (GLD).
• The Trust's expense ratio of 0.1749% is comparable to other gold ETFs.
• The Trust's performance is directly tied to the price of gold, similar to other gold-backed investment vehicles.
• The Trust's use of London Good Delivery gold bars and its custody arrangements are standard practices in the gold market.

Related Party Transactions

• The Sponsor receives a fee for its services, and has agreed to assume certain expenses of the Trust.

Stakeholder Impact

• Shareholders are exposed to the risks and rewards of gold price fluctuations.
• Authorized Participants are responsible for creating and redeeming shares in exchange for gold.
• The Sponsor and Trustee are responsible for the management and administration of the Trust.
• The Custodian is responsible for the safekeeping of the Trust's gold.

Next Steps

• The Sponsor will continue to monitor the Trust's performance and manage its operations.
• The Trustee will continue to administer the Trust and ensure compliance with the Trust Agreement.
• The Custodian will continue to hold the Trust's gold and facilitate transactions.

Key Dates

Keywords

gold, GraniteShares Gold Trust, gold bullion, net asset value, share redemptions, physical gold, LBMA Gold Price, investment, NYSE Arca, authorized participants