GraniteShares Gold Trust 10-Q

Item 1. Financial Statements Statements of Assets and Liabilities At September 30, 2024 (unaudited) and June 30, 2024 Amounts in 000’s of US$, except share and per share data September 30, 2024 June 30, 2024 (unaudited) Assets Investment in gold bullion, at fair value (1) $ 879,231 $ 791,131 Total Assets $ 879,231 $ 791,131 Liabilities Fees payable to Sponsor $ 123 $ 137 Total Liabilities 123 137 Net Assets $ 879,108 $ 790,994 Shares issued and outstanding (2) 33,850,000 34,350,000 Net asset value per Share $ 25.97 $ 23.03 (1) Cost of investment in gold bullion: $ 548,310 and $ 554,189 , respectively. (2) No par value, Unlimited amount authorized. See Notes to the Financial Statements 3 Schedules of Investments At September 30, 2024 (unaudited) and June 30, 2024 Amounts in 000’s of US$, except for ounces and percentages September 30, 2024 (unaudited) Ounces of gold Cost Value % of Net Assets Gold bullion 334,314.713 $ 548,310 $ 879,231 100.01 % Total investment $ 548,310 $ 879,231 100.01 % Liabilities in excess of other assets $ ( 123 ) ( 0.01 )% Net assets $ 879,108 100.00 % June 30, 2024 Ounces of gold Cost Value % of Net Assets Gold bullion 339,410.178 $ 554,189 $ 791,131 100.02 % Total investment $ 554,189 $ 791,131 100.02 % Liabilities in excess of other assets $ ( 137 ) ( 0.02 )% Net assets $ 790,994 100.00 % See Notes to the Financial Statements 4 Statements of Operations (Unaudited) For the three months ended September 30, 2024 and 2023 Amounts in 000’s of US$, except per share data Three Months Ended September 30, 2024 Three Months Ended September 30, 2023 Expenses Sponsor fees $ 367 $ 409 Total expenses 367 409 Net investment loss ( 367 ) ( 409 ) Net realized and unrealized gains (losses) Net realized gain (loss) from: Gold bullion sold to pay expenses 124 69 Gold bullion distributed for the redemption of Shares 6,274 4,237 Net realized gain (loss) 6,398 4,306 Net change in unrealized appreciation (depreciation) 93,979 ( 24,285 ) Net realized and unrealized gain (loss) 100,377 ( 19,979 ) Net increase (decrease) in net assets resulting from operations $ 100,010 $ ( 20,388 ) Net increase (decrease) in net assets per share $ 2.94 $ ( 0.42 ) Weighted average number of shares (in 000’s) 34,015 48,739 See Notes to the Financial Statements 5 Statements of Changes in Net Assets (Unaudited) For the three months ended September 30, 2024 and 2023 Amounts in 000’s of US$ Three Months Ended September 30, 2024 Three Months Ended September 30, 2023 Net Assets – beginning of the period $ 790,994 $ 935,811 Creations of 300,000 and 250,000 shares respectively 7,280 4,785 Redemptions of ( 800,000 ) and ( 1,950,000 ) shares respectively ( 19,176 ) ( 36,688 ) Net investment income/(loss) ( 367 ) ( 409 ) Net realized gain (loss) from gold bullion sold to pay expenses 124 69 Net realized gain (loss) from gold bullion distributed for redemptions 6,274 4,237 Net change in unrealized appreciation (depreciation) on investment in gold bullion 93,979 ( 24,285 ) Net Assets – end of period $ 879,108 $ 883,520 See Notes to the Financial Statements 6 Financial Highlights (Unaudited) For the three months ended September 30, 2024 and 2023 Per Share Performance (for a Share outstanding throughout the entire period) Three Months Ended September 30, 2024 Three Months Ended September 30, 2023 Net asset value per Share at beginning of period $ 23.03 $ 18.92 Net investment income (loss) (1) ( 0.01 ) ( 0.01 ) Net realized and unrealized gain (loss) on investment in gold bullion 2.95 ( 0.41 ) Net change in net assets from operations 2.94 ( 0.42 ) Net asset value per Share at end of period $ 25.97 $ 18.50 Market price per Share at end of period $ 25.97 $ 18.28 Total return ratio, at net asset value (2) 12.77 % ( 2.22 )% Total return ratio, at market price (2) 13.11 % ( 3.84 )% Net assets ($000’s) $ 879,108 $ 883,520 Ratio to average net assets Net investment loss (3) ( 0.18 )% ( 0.17 )% Expenses (3) 0.18 % 0.17 % (1) Calculated using the average shares outstanding method. (2) Percentage not annualized. (3) Percentage annualized. See Notes to the Financial Statements 7 Notes to the Financial Statements (Unaudited) 1. Organization GraniteShares Gold Trust (the “Trust”) is an investment trust formed on August 24, 2017 under New York law pursuant to a trust indenture. The Sponsor of the Trust, GraniteShares LLC (the “Sponsor”), is responsible for, among other things, overseeing the performance of The Bank of New York Mellon (the “Trustee”) and the Trust’s principal service providers, including the preparation of financial statements. The Trustee is responsible for the day-to-day administration of the Trust. The objective of the Trust is for the value of the Shares to reflect, at any given time, the value of the assets owned by the Trust at that time less the Trust’s accrued expenses and liabilities as of that time. The Shares are intended to constitute a simple and cost-effective means of making an investment similar to an investment in gold. The fiscal year end for the Trust is June 30. Undefined capitalized terms shall have the meaning as set forth in the Trust’s registration statement. 2. Basis of Accounting and Significant Accounting Policies The Sponsor has determined that the Trust falls within the scope of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 946, Financial Services—Investment Companies, and has concluded that for reporting purposes, the Trust is classified as an Investment Company. The Trust is not registered as an investment company under the Investment Company Act of 1940 and is not required to register under such act. The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires those responsible for preparing financial statements to make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from those estimates. The following is a summary of significant accounting policies followed by the Trust. 2.1. Custody and Fair Valuation of Gold The Trust follows the provisions of ASC 820, Fair Value Measurements (“ASC 820”). ASC 820 provides guidance for determining fair value and requires increased disclosure regarding the inputs to valuation techniques used to measure fair value. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Gold is held by ICBC Standard Bank Plc (the “Custodian”), on behalf of the Trust, at the Custodian’s London, United Kingdom vaulting premises. 99.94 % and 99.98 % of gold is allocated gold in the form of good delivery gold bars as of September 30, 2024 and 2023, respectively. A current list of all gold held by the Custodian is available on the sponsor’s website. The cost of gold is determined according to the average cost method and the fair value is based on the London Bullion Market Association (“LBMA”) PM Gold Price. If there is no LBMA Gold Price PM on any day, the Trustee is authorized to use the most recently announced LBMA Gold Price AM unless the Trustee, in consultation with the Sponsor, determines that such price is inappropriate as a basis for evaluation. The LBMA PM Gold Price is set using the afternoon session of the ICE Benchmark Administration equilibrium auction, an electronic, tradable and auditable over-the-counter auction market with the ability to participate in US Dollars, Euros or British Pounds for LBMA authorized participating gold bullion banks or market makers that establishes a reference gold price for that day’s trading. The per Share amount of gold exchanged for a purchase or redemption is calculated daily by the Trustee, using the LBMA PM Gold Price to calculate the gold amount in respect of any liabilities for which covering gold sales have not yet been made, and represents the per Share amount of gold held by the Trust, after giving effect to its liabilities, to cover expenses and liabilities and any losses that may have occurred. ASC 820 establishes a hierarchy that prioritizes inputs to valuation techniques used to measure fair value. The three levels of inputs are as follows: Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities that the Trust has the ability to access. Level 2: Observable inputs other than quoted prices included in level 1 that are observable for the asset or liability either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments and similar data. Level 3: Unobservable inputs for the asset or liability to the extent that relevant observable inputs are not available, representing the Trust’s own assumptions about the assumptions that a market participant would use in valuing the asset or liability, and that would be based on the best information available. 8 The following table summarizes the Trust’s investments at fair value: Schedule of Trust’s Investments at Fair Value (Amounts in 000’s of US$) September 30, 2024 Level 1 Level 2 Level 3 Investment in Gold $ 879,231 $ – $ – Total $ 879,231 $ – $ – The following table summarizes the Trust’s investments at fair value: (Amounts in 000’s of US$) June 30, 2024 Level 1 Level 2 Level 3 Investment in Gold $ 791,131 $ – $ – Total $ 791,131 $ – $ – There were no transfers between Level 1 and other Levels for the period ended September 30, 2024 and year ended June 30, 2024. 2.2. Expenses, realized gains and losses The Trust’s only ordinary recurring fee is expected to be the fee paid to the Sponsor, which will accrue daily at an annualized rate equal to 0.1749 % of the adjusted daily net asset value of the Trust, paid monthly in arrears. The Sponsor has agreed to assume administrative and marketing expenses incurred by the Trust, including the Trustee’s monthly fee and out of pocket expenses, the Custodian’s fee and the reimbursement of the Custodian’s expenses, exchange listing fees, United States Securities and Exchange Commission (the “SEC”) registration fees, printing and mailing costs, audit fees and certain legal expenses. As of period ended September 30, 2024, the fees payable to the Sponsor were $ 123,374 . As of the year ended June 30, 2024, the fees payable to the Sponsor were $ 137,175 . With respect to expenses not otherwise assumed by the Sponsor, the Trustee will, at the direction of the Sponsor or in its own discretion, sell the Trust’s gold as necessary to pay these expenses. When selling gold to pay expenses, the Trustee will endeavor to sell the smallest amounts of gold needed to pay these expenses in order to minimize the Trust’s holdings of assets other than gold. Other than the Sponsor’s Fee, the Trust had no expenses during the three months ended September 30, 2024 and 2023. Unless otherwise directed by the Sponsor, when selling gold the Trustee will endeavor to sell at the price established by the LBMA PM Gold Price. The Trustee will place orders with dealers (which may include the Custodian) through which the Trustee expects to receive the most favorable price and execution of orders. The Custodian may be the purchaser of such gold only if the sale transaction is made at the next LBMA PM Gold Price or such other publicly available price that the Sponsor deems fair, in each case as set following the sale order. A gain or loss is recognized based on the difference between the selling price and the cost of the gold sold. Neither the Trustee nor the Sponsor is liable for depreciation or loss incurred by reason of any sale. Realized gains and losses result from the transfer of gold for Share redemptions and / or to pay expenses and are recognized on a trade date basis as the difference between the fair value and cost of gold transferred. Gain or loss on sales of gold bullion is calculated on a trade date basis using the average cost method. 2.3. Gold Receivable and Payable Gold receivable or payable represents the quantity of gold covered by contractually binding orders for the creation or redemption of Shares respectively, where the gold has not yet been transferred to or from the Trust’s account. Generally, ownership of the gold is transferred within two business days of the trade date. 2.4. Creations and Redemptions of Shares The Trust issues and redeems in one or more blocks of 50,000 Shares (a block of 50,000 Shares is called a “Basket”) only to Authorized Participants. The creation and redemption of Baskets will only be made in exchange for the delivery to the Trust or the distribution by the Trust of the amount of gold represented by the Baskets being created or redeemed, the amount of which will be based on the combined Fine Ounces represented by the number of shares included in the Baskets being created or redeemed determined on the day the order to create or redeem Baskets is properly received. Orders to create and redeem Baskets may be placed only by Authorized Participants. An Authorized Participant must: (1) be a registered broker-dealer or other securities market participant, such as a bank or other financial institution, which, but for an exclusion from registration, would be required to register as a broker-dealer to engage in securities transactions, (2) be a participant in DTC, and (3) must have an agreement with the Custodian establishing an unallocated account in London or have an existing unallocated account meeting the standards described herein. To become an Authorized Participant, a person must enter into an Authorized Participant Agreement with the Sponsor and the Trustee. The Authorized Participant Agreement provides the procedures for the creation and redemption of Baskets and for the delivery of the gold required for such creations and redemptions. The Authorized Participant Agreement and the related procedures attached thereto may be amended by the Trustee and the Sponsor, without the consent of any investor or Authorized Participant. A transaction fee of $ 500 will be assessed on all creation and redemption transactions. Multiple Baskets may be created on the same day, provided each Basket meets the requirements described below and that the Custodian is able to allocate gold to the Trust Allocated Account such that the Trust Unallocated Account holds no more than 430 Fine Ounces of gold at the close of a business day. 9 Authorized Participants who make deposits with the Trust in exchange for Baskets will receive no fees, commissions or other form of compensation or inducement of any kind from either the Sponsor or the Trust, and no such person has any obligation or responsibility to the Sponsor or the Trust to effect any sale or resale of shares. 2.5. Income Taxes The Trust is classified as a “grantor trust” for United States federal income tax purposes. As a result, the Trust itself will not be subject to United States federal income tax. Instead, the Trust’s income and expenses will “flow through” to the Shareholders, and the Trustee will report the Trust’s proceeds, income, gains, losses and deductions to the Internal Revenue Service on that basis. The Sponsor has evaluated whether or not there are uncertain tax positions that require financial statement recognition and has determined that no reserves for uncertain tax positions are required as of September 30, 2024 and June 30, 2024. The Sponsor evaluates tax positions taken or expected to be taken in the course of preparing the Trust’s tax returns to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax positions not deemed to meet that threshold would be recorded as an expense in the current year. The Trust is required to analyze all open tax years. Open tax years are those years that are open for examination by the relevant income taxing authority. As of September 30, 2024, the 2024, 2023, 2022 and 2021 tax years remain open for examination. 3. Investment in Gold Changes in ounces of gold and their respective values for the period ended September 30, 2024. Schedule of Investment in Gold Amounts in 000’s of US$, except for ounces data Ounces Fair Value Opening balance as of June 30, 2024 339,410.178 791,131 Gold bullion contributed 2,963.142 7,280 Gold bullion distributed ( 8,058.607 ) ( 13,159 ) Change in unrealized appreciation (depreciation) – 93,979 Ending balance as of September 30, 2024 334,314.713 879,231 Changes in ounces of gold and their respective values for the year ended June 30, 2024. Amounts in 000’s of US$, except for ounces data Ounces Fair Value Opening balance as of June 30, 2023 489,449.928 935,950 Gold bullion contributed 18,782.084 41,587 Gold bullion distributed ( 168,821.834 ) ( 274,487 ) Change in unrealized appreciation (depreciation) – 88,081 Ending balance as of June 30, 2024 339,410.178 791,131 4. Related parties – Sponsor and Trustee A fee is paid to the Sponsor as compensation for services performed under the Trust Agreement. In exchange for the Sponsor’s fee, the Sponsor has agreed to assume the following administrative and marketing expenses incurred by the Trust: the Trustee’s fee and out-of-pocket expenses, the custodian’s fee and reimbursement of the custodian expenses, NYSE Arca listing fees, SEC registration fees, printing and mailing costs, audit fees and expenses, and up to $ 100,000 per annum in legal fees and expenses. The Sponsor’s fee is payable at an annualized rate of 0.1749 % of the Trust’s Net Asset Value, accrued on a daily basis computed on the prior Business Day’s Net Asset Value and paid monthly in arrears. The Sponsor, from time to time, may temporarily waive all or a portion of the Sponsor’s Fee at its discretion for a stated period of time. Presently, the Sponsor does not intend to waive any part of its fee. Affiliates of the Trustee may from time-to-time act as Authorized Participants or purchase or sell gold or Shares for their own account, as agent for their customers and for accounts over which they exercise investment discretion. 5. Concentration of risk In accordance with Statement of Position No. 94-6, Disclosure of Certain Significant Risks and Uncertainties, the Trust’s sole business activity is the investment in gold bullion. Several factors could affect the price of gold: (i) global gold supply and demand, which is influenced by such factors as forward selling by gold producers, purchases made by gold producers to unwind gold hedge positions, central bank purchases and sales, and production and cost levels in major gold-producing countries; (ii) investors’ expectations with respect to the rate of inflation; (iii) currency exchange rates; (iv) interest rates; (v) investment and trading activities of hedge funds and commodity funds; and (vi) global or regional political, economic or financial events and situations. In addition, 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 Sponsor expects the value of an investment in the Shares to decline proportionately. Each of these events could have a material effect on the Trust’s financial position and results of operations. 6. Indemnification Under the Trust’s organizational documents, each of the Trustee (and its directors, officers, employees, shareholders, agents and affiliates) and the Sponsor (and its members, managers, directors, officers, employees, agents and affiliates) is indemnified against any liability, loss or expense it incurs without (i) gross negligence, bad faith, willful misconduct or willful misfeasance on its part in connection with the performance of its obligations under the Trust Agreement or any such other agreement or any actions taken in accordance with the provisions of the Trust Agreement or any such other agreement and (ii) reckless disregard on its part of its obligations and duties under the Trust Agreement or any such other agreement. Such indemnity shall also include payment from the Trust of the reasonable costs and expenses incurred by the indemnified party in investigating or defending itself against any such loss, liability or expense or any claim therefore. In addition, the Sponsor may, in its sole discretion, undertake any action that it may deem necessary or desirable in respect of the Trust Agreement and in such event, the reasonable legal expenses and costs and other disbursements of any such actions shall be expenses and costs of the Trust and the Sponsor shall be entitled to reimbursement by the Trust. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. 7. Subsequent events 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. 10