10-Q: VanEck Merk Gold ETF Reports Strong Asset Growth in Latest Quarter

The VanEck Merk Gold ETF saw a significant increase in net asset value and share price during the quarter ended October 31, 2024, driven by rising gold prices.

Summary

• The VanEck Merk Gold ETF reported a substantial increase in net asset value (NAV) from $1,018,106,177 on July 31, 2024, to $1,241,717,488 on October 31, 2024, representing a 21.96% growth.
• This increase was primarily due to the appreciation in the value of gold bullion holdings.
• The number of outstanding shares rose from 43,037,292 to 46,838,224 during the same period, reflecting both new share creations by Authorized Participants and shares issued for sponsor fees.
• The NAV per share increased by 12.05%, from $23.66 to $26.51, during the quarter.
• For the nine months ended October 31, 2024, the NAV increased by 59.16%, from $780,184,347 to $1,241,717,488.
• The NAV per share increased by 34.64% during the nine-month period, from $19.69 to $26.51.
• The ETF's primary objective is to provide investors with exposure to gold prices, less the expenses of the trust's operations.
• The ETF is not actively managed and does not hold or trade in commodity futures contracts.

Sentiment

Score: 8

Explanation: The document conveys a positive sentiment due to the significant increase in the ETF's net asset value and share price. The report highlights strong performance driven by rising gold prices, which is favorable for investors. However, the document also includes standard risk disclosures and cautionary language, preventing a perfect score.

Positives

• The ETF experienced significant growth in net asset value and share price, driven by the increase in gold prices.
• The ETF's structure allows investors to take delivery of physical gold in exchange for their shares.
• The ETF's expenses are limited to the sponsor's fee, which is a fixed percentage of the NAV.
• The ETF's holdings are transparent, consisting primarily of physical gold bullion.

Negatives

• The ETF's performance is directly tied to the price of gold, which can be volatile.
• The ETF's expenses, while fixed, reduce the overall return for investors.
• The ETF is not actively managed, so it cannot adjust its holdings to mitigate losses or maximize gains.

Risks

• The price of gold is subject to various factors, including global supply and demand, inflation expectations, currency exchange rates, and political events.
• There is no guarantee that gold will maintain its long-term value in terms of purchasing power.
• A decline in the price of gold would result in a proportional decrease in the value of the ETF's shares.
• The ETF's reliance on a single asset class (gold) exposes it to concentration risk.

Future Outlook

The report includes forward-looking statements regarding future events and performance, but these are qualified by cautionary statements and subject to various risks and uncertainties. The sponsor does not undertake an obligation to update these statements.

Management Comments

• The sponsor has concluded that the trust meets the fundamental characteristics of an investment company.
• The trustee is responsible for the day-to-day administration of the trust.
• The sponsor is responsible for overseeing the performance of the trustee and the trust's principal service providers.
• The sponsor has evaluated the effectiveness of the trust's disclosure controls and procedures and concluded that they were effective as of October 31, 2024.

Industry Context

This report reflects the performance of a gold-backed ETF, which is influenced by broader market trends in precious metals and investor sentiment towards gold as a safe-haven asset. The change in pricing index to the Solactive Gold Spot Index is a notable shift in how the ETF values its gold holdings.

Comparison to Industry Standards

• The VanEck Merk Gold ETF's expense ratio of 0.25% is competitive with other physically-backed gold ETFs.
• The ETF's use of the Solactive Gold Spot Index for valuation is a departure from the traditional LBMA Gold Price used by many other gold ETFs.
• The ETF's structure, which allows for physical delivery of gold, is a feature not offered by all gold ETFs.
• The ETF's performance is comparable to other gold ETFs, with variations due to differences in expense ratios and valuation methodologies.
• Competitors include SPDR Gold Shares (GLD) and iShares Gold Trust (IAU), which are larger and more liquid but may have different expense ratios and tracking methodologies.

Related Party Transactions

• The sponsor pays the trustee's fees, custodian fees, marketing support fees, and other expenses.
• Affiliates of the trustee and custodian may act as authorized participants.
• The sponsor has a marketing agreement with Van Eck Securities Corporation, with fees paid from the sponsor's fee.

Stakeholder Impact

• Shareholders have benefited from the increase in the ETF's net asset value and share price.
• Authorized participants can create and redeem shares in exchange for gold.
• The sponsor receives a fee for managing the trust.
• The trustee and custodian provide services to the trust.

Next Steps

• The trust will continue to issue and redeem shares in baskets of 50,000 to authorized participants.
• The trustee will continue to value the gold held by the trust based on the Solactive Gold Spot Index.
• The sponsor will continue to oversee the performance of the trustee and the trust's principal service providers.

Key Dates

Keywords

Gold, ETF, Gold Bullion, VanEck Merk Gold ETF, OUNZ, Investment, Precious Metals, Solactive Gold Spot Index