10-Q: VanEck Merk Gold ETF Reports Strong Asset Growth in Q2

VanEck Merk Gold ETF saw its net assets increase by 34.13% to $1.76 billion for the six months ended July 31, 2025, driven by gold appreciation and share creations.

Summary

• Net assets increased to $1,763,218,226 at July 31, 2025, from $1,314,597,389 at January 31, 2025, representing a 34.13% increase for the six-month period.
• Net asset value (NAV) per share increased by 17.40% to $31.71 at July 31, 2025, from $27.01 at January 31, 2025, for the six months.
• Total gold bullion held by the Trust increased to 535,762 fine ounces at July 31, 2025, from 469,450 fine ounces at January 31, 2025.
• The net increase in net assets resulting from operations for the six months ended July 31, 2025, was $233,147,494, compared to $161,238,405 for the same period in 2024.
• Sponsor's fees are payable at an annualized rate of 0.25% of the Trust's NAV, accrued daily and paid monthly in arrears through the issuance of shares.
• The Trust changed its pricing index to the Solactive Gold Spot Index from the LBMA Gold Price on August 7, 2023.
• The settlement cycle for creations and redemptions of Baskets changed to a T+1 basis, effective May 28, 2024.

Sentiment

Score: 8

Explanation: The Trust demonstrated strong financial performance with significant growth in net assets and NAV per share, driven by appreciation in gold value and increased share creations. While there was a slight depreciation in unrealized gains for the most recent quarter, the overall six-month trend is very positive, indicating robust demand and favorable market conditions for gold.

Positives

• Net assets experienced significant growth, increasing by 34.13% to $1.76 billion for the six months ended July 31, 2025, compared to a 30.50% increase in the prior year period.
• NAV per share showed strong appreciation, rising by 17.40% to $31.71 for the six months ended July 31, 2025.
• The net increase in net assets from operations for the six months ended July 31, 2025, was $233,147,494, a substantial increase from $161,238,405 in the comparable prior year period.
• Gold bullion holdings increased to 535,762 fine ounces at July 31, 2025, reflecting increased investor interest and asset accumulation.
• The Trust maintains a competitive expense ratio, with net expenses at 0.25% of average net assets.

Negatives

• The Trust recorded a net investment loss of $(1,079,987) for the three months ended July 31, 2025, and $(1,973,954) for the six months ended July 31, 2025, primarily due to Sponsor's fees.
• A net change in unrealized depreciation on investment in gold bullion of $(4,550,044) was observed for the three months ended July 31, 2025, contrasting with appreciation in the prior year period.
• NAV per share decreased by 0.16% during the quarter ended July 31, 2025, from $31.76 to $31.71.

Risks

• The Trust's sole business activity is investment in gold bullion, making its value highly sensitive to global gold supply and demand, inflation expectations, currency exchange rates, interest rates, investment and trading activities of hedge funds and commodity funds, and global or regional political, economic or financial events.
• 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 value of an investment in the shares is expected to decline proportionately.
• The Trustee and Sponsor are indemnified against liability unless it results from gross negligence, bad faith, willful misconduct, or reckless disregard of their duties.
• In the unlikely event of a disruption in the Solactive Index calculation due to IDS being unable to publish pricing information for XAU, the last available Solactive Index calculation will be used, or an alternate basis identified by the Sponsor.

Future Outlook

The filing includes standard forward-looking statements indicating that future events or performance may differ materially from predictions. These statements are based on assumptions regarding commodity prices, market conditions, regulatory changes, and economic/political developments. No specific guidance or forecasts for future financial performance are provided.

Management Comments

• The Trust's primary objective is to provide investors with an opportunity to invest in gold through the shares and be able to take delivery of physical gold bullion and gold coins (physical gold) in exchange for their shares.
• The Trust's secondary objective is for the shares to reflect the performance of the price of gold less the expenses of the Trust's operations.
• The Sponsor has concluded that for financial statement reporting purposes the Trust meets the fundamental characteristics of an investment company.
• Management believes the risk of loss from indemnification arrangements is remote.
• Management has evaluated the events and transactions that have occurred through the date the financial statements were issued and noted no items requiring adjustment of the financial statements or additional disclosures.
• The principal executive officer and principal financial officer of the Sponsor concluded that, as of July 31, 2025, the Trust's disclosure controls and procedures were effective.

Industry Context

The Trust's performance is directly correlated with the price of gold, which is influenced by global economic conditions, inflation expectations, currency strength, and geopolitical stability. The reported appreciation in gold value and net assets suggests a generally favorable market environment for gold investments during the period, potentially driven by investor demand for safe-haven assets or inflation hedges. The adoption of the Solactive Gold Spot Index as the pricing benchmark aims to enhance transparency and align pricing with NYSE trading hours, reflecting a broader industry trend towards more robust and accessible commodity pricing mechanisms.

Comparison to Industry Standards

• The Trust's expense ratio of 0.25% is competitive within the gold ETF market, aligning with or being lower than some major competitors. For example, the SPDR Gold Shares (GLD) has an expense ratio of 0.40%, while iShares Gold Trust (IAU) also has 0.25%.
• The objective to reflect the performance of the price of gold less expenses is standard for physically-backed gold ETFs, with the ability for physical delivery being a distinguishing feature for OUNZ compared to some peers.

Corporate Governance

Related Party Transactions

• Merk Investments LLC, as the Sponsor, receives an annualized fee of 0.25% of the Trust's NAV, paid in shares.
• Van Eck Securities Corporation, an affiliate of the Sponsor, acts as the Marketing Agent. Fees for marketing assistance are paid by the Sponsor from its fee, not directly by the Trust. The Marketing Agent earned $222,448 for the calendar quarter ended July 31, 2025.
• Affiliates of The Bank of New York Mellon (Trustee) and JPMorgan Chase Bank, N.A. (Custodian) may from time to time act as Authorized Participants to purchase or sell gold or shares.

Stakeholder Impact

• Shareholders benefited from significant appreciation in NAV per share and total return due to rising gold prices and increased assets under management.
• Authorized Participants are impacted by the change in settlement cycle to T+1, which may streamline their creation and redemption processes.
• The Sponsor (Merk Investments LLC) benefits from increased assets under management, leading to higher Sponsor fees.
• The Marketing Agent (Van Eck Securities Corporation) benefits from increased assets under management, leading to higher marketing fees paid by the Sponsor.

Next Steps

• No specific future actions, events, or milestones are explicitly mentioned beyond the ongoing operations of the Trust.

Key Dates

Recommendation

The Trust exhibited robust financial performance for the six months ended July 31, 2025, with net assets growing 34.13% and NAV per share increasing 17.40%. This reflects a strong underlying gold market and efficient management of the ETF, with a competitive expense ratio of 0.25%. However, as a single-commodity ETF, its value is directly and solely tied to the volatile price of gold. While the six-month performance is strong, the most recent quarter showed a slight net change in unrealized depreciation on gold, indicating short-term price fluctuations. Therefore, a 'hold' recommendation is appropriate for existing investors to maintain exposure to gold's potential upside while acknowledging its inherent volatility. New investors should consider their broader portfolio diversification and risk tolerance before initiating a position.

Keywords

Gold ETF, OUNZ, VanEck, Merk Gold, Gold Bullion, Precious Metals, Exchange Traded Fund, Commodity, Investment, Financial Report, Quarterly Report, Solactive Gold Spot Index