10-K: GraniteShares Gold Trust Reports Strong FY25 Growth

GraniteShares Gold Trust saw its net asset value surge by nearly 40% in fiscal year 2025, driven by a significant increase in gold prices.

Summary

• The Trust's Net Asset Value (NAV) increased by 39.77% from $790,994,009 on June 30, 2024, to $1,105,575,430 on June 30, 2025.
• The NAV per Share rose by 40.77% from $23.03 to $32.42 during the fiscal year ended June 30, 2025.
• This growth was primarily driven by a 41.04% increase in the gold price, from $2,330.90 per ounce on June 30, 2024, to $3,287.45 per ounce on June 30, 2025.
• The number of outstanding shares slightly decreased by 0.73% from 34,350,000 to 34,100,000 shares, as 3,050,000 shares were created and 3,300,000 shares were redeemed.
• The Sponsor's Fee for fiscal year 2025 was $1,639,442, representing an annualized rate of 0.1749% of the Trust's net asset value.
• Total gain on gold for the fiscal year was $317,293,000, contributing to a change in net assets from operations of $315,654,000.

Sentiment

Score: 8

Explanation: The Trust demonstrated strong financial performance in fiscal year 2025, with significant increases in NAV and NAV per share, directly benefiting from a substantial rise in gold prices. Management confirmed effective internal controls and disclosure procedures. While the Trust is a passive investment vehicle and subject to inherent gold market volatility and specific structural risks, its ability to track the appreciating commodity price effectively is a positive indicator for investors seeking gold exposure.

Positives

• The Trust's Net Asset Value (NAV) increased significantly by 39.77% to over $1.1 billion, reflecting strong asset growth.
• NAV per Share increased by 40.77%, demonstrating substantial value appreciation for shareholders.
• The Trust provides a simple and cost-effective means of investing in gold, removing complexities associated with physical bullion.
• Shares are backed primarily by allocated physical gold bullion, offering minimal credit risk.
• The Trust's disclosure controls and procedures were deemed effective as of June 30, 2025.
• Internal control over financial reporting was maintained effectively as of June 30, 2025.
• Regular biannual inspections of gold bars and custodian records are conducted by an independent firm, Bureau Veritas, ensuring oversight of physical holdings.

Negatives

• The number of outstanding shares decreased by 0.73% during the fiscal year, indicating that redemptions exceeded creations.
• The NAV per Share increased slightly less than the percentage increase in the gold price due to the impact of the Sponsor's Fee.
• The Trust is a passive investment vehicle and does not engage in activities to mitigate losses from gold price changes or employ hedging techniques.
• Shares may trade at a discount or premium to their Net Asset Value (NAV), influenced by market supply and demand and non-concurrent trading hours.
• Shareholders have limited statutory rights compared to corporate shareholders, including no right to elect directors or bring derivative actions.
• The Trust is not registered as an investment company or commodity pool, meaning investors do not receive certain regulatory protections.
• The Trust does not insure its gold, and the Custodian's liability for loss or damage is limited and may not cover the full amount of gold held.
• Shareholders may incur a tax liability from gold sales by the Trust even without a corresponding distribution.

Risks

• The market price of Shares is unpredictable and subject to wide fluctuations, similar to gold prices, leading to potential losses.
• Large sales of gold by the official sector (governments, central banks) could adversely affect world gold prices and Share value.
• A significant increase in gold hedging activity by producers could cause a decline in world gold prices.
• Negative shifts in speculator and investor attitudes towards gold, influenced by inflation expectations, currency volatility, interest rates, and geopolitical incidents, could impact prices.
• The amount of gold represented by each Share will decrease over time due to sales necessary to pay the Sponsor's Fee and other Trust expenses.
• An increase in Trust expenses not assumed by the Sponsor, or unexpected liabilities, will force larger gold sales and a more rapid decrease in Share value.
• Future governmental decisions, such as regulations concerning physical commodities trading, may significantly impact gold prices.
• As a passive investment vehicle, the Trust cannot actively manage or hedge against losses from gold price decreases.
• The price received upon the sale of Shares may be less than the value of the gold represented by them due to market dynamics.
• Competition from other gold investment methods could adversely affect the Trust's market capitalization and NAV.
• The Trust may be forced to sell gold earlier than anticipated if expenses are higher than expected, reducing NAV.
• The Trust is not a diversified investment and may be more volatile than a broadly diversified portfolio.
• Liquidation of the Trust may occur at a time of low gold prices, resulting in losses for investors.
• Authorized Participants may be unable to redeem Baskets during trading suspensions or emergencies, leading to reduced liquidity and potential losses.
• Holders of 75% of the Shares have the power to terminate the Trust, which could be exercised by a small number of holders.
• The lack of an active trading market for Shares may adversely affect the price received upon disposition.
• Difficulties in the creation and redemption processes could cause the Share price to diverge from NAV.
• Shareholders lack the rights normally associated with ownership of corporate shares, such as electing directors or receiving dividends.
• Investors do not have the regulatory protections afforded to investment companies or commodity pools.
• The Custodian's liability for loss or damage to the Trust's gold is limited, and the Trust does not insure its gold.
• Legal disputes concerning custody arrangements governed by English law may be difficult to interpret or enforce in U.S. courts.
• Shareholders and Authorized Participants lack the right to assert claims directly against the Custodian.
• Gold held in unallocated accounts is not segregated from the Custodian's assets, posing a risk in case of insolvency.
• Subcustodian obligations are based on LBMA rules and customs, which may prevent recovery of damages for losses.
• Neither the Trustee nor the Custodian monitors subcustodian activities, increasing the risk of loss.
• Sudden termination of service providers could adversely affect Share value.
• The Trust may be required to indemnify the Sponsor, Trustee, or Custodian, reducing the net asset value.
• Service providers may not carry adequate insurance to cover claims against them.
• Conflicts of interest may arise as the Sponsor and its affiliates manage other funds that invest in precious metals.
• The Trust Agreement can be amended by the Sponsor and Trustee without Shareholder consent, potentially increasing fees.
• Shareholders could incur a tax liability without an associated distribution from the Trust.
• Geopolitical events, including the conflict in the Middle East and the war in Ukraine, could disrupt business activities and cause volatility in gold prices.
• Public health crises, such as the COVID-19 pandemic, could cause operating delays, market disruption, and volatility.

Future Outlook

Statements regarding future events or performance are forward-looking and inherently subject to uncertainties and risks, including changes in commodity prices, market conditions, and regulatory developments. There is no assurance that actual results will conform to the Sponsor's expectations, and neither the Trust nor the Sponsor undertakes an obligation to publicly update or conform any forward-looking statement, except as required by law. The Trust has no fixed termination date.

Management Comments

• The Trust does not engage in any activities designed to obtain a profit from or to improve the losses caused by changes in the price of gold.
• The Sponsor believes that the arbitrage opportunities may provide a mechanism to mitigate the effect of such premium or discount between the Share price and NAV.
• Presently, the Sponsor does not intend to waive any part of its fee.
• The Sponsor has determined that no reserves for uncertain tax positions are required as of June 30, 2025 and June 30, 2024.
• The Chief Executive Officer and Chief Financial Officer of the Sponsor concluded that, as of June 30, 2025, the Trust's disclosure controls and procedures were effective.
• 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, 2025.

Industry Context

The Trust operates within the global gold market, which includes mining, banking, official (central banks), investment, and manufacturing sectors. The market is influenced by supply and demand dynamics, central bank activities (which became a net source of demand in 2010), and geopolitical events. The London Bullion Market Association (LBMA) plays a crucial role in setting industry standards and maintaining the London Good Delivery List. Recent geopolitical conflicts, such as those in the Middle East and Ukraine, along with associated sanctions and trade restrictions (e.g., bans on Russian gold imports by the UK, US, and EU), have increased financial market volatility and can disturb the gold market. Public health crises, like the COVID-19 pandemic, also pose risks to business activities and market stability.

Comparison to Industry Standards

• The Trust's expense ratio, represented by the Sponsor's Fee of 0.1749% annually, is competitive compared to other major gold exchange-traded products. For instance, the SPDR Gold Shares (GLD) has an expense ratio of 0.40%, and the iShares Gold Trust (IAU) has an expense ratio of 0.25%.
• The Trust's structure as a grantor trust, which is not regulated as an investment company under the Investment Company Act of 1940 or a commodity pool under the Commodity Exchange Act, means it does not offer the same regulatory protections as these types of vehicles. This is a key differentiator from regulated funds.
• The Trust's reliance on physical gold bullion held by a custodian (ICBC Standard Bank Plc) and its adherence to London Good Delivery Standards aligns with industry best practices for physical gold investment products.

Corporate Governance

Related Party Transactions

• The Sponsor, GraniteShares LLC, receives a Sponsor's Fee from the Trust, which was $1,639,442 for the fiscal year ended June 30, 2025.
• Affiliates of The Bank of New York Mellon (the Trustee) may act as Authorized Participants or purchase/sell gold or shares for their own account or as agents for customers.

Stakeholder Impact

• Shareholders: Directly impacted by the volatility of gold prices, Trust expenses, and potential tax liabilities without corresponding distributions. Benefit from a cost-effective and flexible means of investing in gold.
• Authorized Participants: Engage in the creation and redemption of Baskets, subject to transaction fees and gold transfer requirements.
• Sponsor (GraniteShares LLC): Receives fees and is responsible for assuming certain Trust expenses and marketing activities.
• Trustee (The Bank of New York Mellon): Responsible for day-to-day administration, processing orders, calculating NAV, and selling gold for expenses.
• Custodian (ICBC Standard Bank Plc): Responsible for holding the Trust's gold, receiving and converting allocated/unallocated gold, with limited liability for loss or damage.

Next Steps

• The Trustee will continue the day-to-day administration of the Trust.
• The Sponsor will continue the ongoing registration of Shares for public offering in the United States and their listing on the NYSE Arca.
• Biannual inspections of the gold bars held by the Custodian and the Custodian's records will continue to be conducted by a specialist bullion assaying firm.

Key Dates

Recommendation

The Trust's performance is directly linked to the price of gold, which experienced a significant increase in the past fiscal year, leading to substantial growth in Net Asset Value and Net Asset Value per Share. The Trust provides a cost-effective and liquid avenue for exposure to physical gold. While it is a passive investment vehicle and subject to inherent gold price volatility, limited shareholder rights, and specific custody risks, its recent performance reflects the strong underlying commodity market. For investors seeking continued exposure to gold, holding the shares aligns with the Trust's objective of tracking gold prices. A 'buy' or 'sell' recommendation would necessitate a specific outlook on future gold prices, which is beyond the scope of this filing's factual reporting.

Keywords

Gold, Trust, ETF, Precious Metals, Investment, Bullion, SEC Filing, 10-K, Financial Report, GraniteShares, BAR, NYSE Arca, Commodity