SPDR GOLD TRUST 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations This information should be read in conjunction with the financial statements and notes included in Item 1 of Part I of this Quarterly Report. The discussion and analysis which follows may contain trend analysis and other forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, which reflect our current views with respect to future events and financial results. Words such as “anticipate,” “expect,” “intend,” “plan,” “believe,” “seek,” “outlook” and “estimate” as well as similar words and phrases signify forward-looking statements. SPDR ® Gold Trust’s forward-looking statements are not guarantees of future results and conditions and important factors, risks and uncertainties may cause our actual results to differ materially from those expressed in our forward-looking statements. Trust Overview SPDR ® Gold Trust (the “Trust”) is an investment trust that was formed on November 12, 2004 (the “Date of Inception”). The Trust issues baskets of Shares (“Baskets”) in exchange for deposits of gold and distributes gold in connection with the redemption of Baskets. The investment objective of the Trust is for the Shares to reflect the performance of the price of gold bullion, less the expenses of the Trust’s operations. The Shares are designed to provide investors with a cost effective and convenient way to invest in gold. Gold is held by HSBC Bank plc (the “Custodian”) on behalf of the Trust. As of the date of this quarterly report, Credit Suisse Securities (USA) LLC, Goldman, Sachs & Co., Goldman Sachs Execution & Clearing, L.P., HSBC Securities (USA) Inc., J.P. Morgan Securities LLC, Merrill Lynch Professional Clearing Corp., Morgan Stanley & Co. LLC, RBC Capital Markets LLC, UBS Securities LLC and Virtu Americas LLC are the only Authorized Participants. An updated list of Authorized Participants can be obtained from the Trustee or the Sponsor. Investing in the Shares does not insulate the investor from certain risks, including price volatility. The following chart illustrates the movement in the price of the Shares and NAV of the Shares against the corresponding gold price (per 1/10 of an oz. of gold) since the day the Shares first began trading on the NYSE and subsequent transfer to NYSE Arca: Share price & NAV v. gold price – November 18, 2004 to December 31, 2021 The divergence of the price of the Shares and NAV of the Shares from the gold price over time reflects the cumulative effect of the Trust expenses that arise if an investment had been held since inception. 12 Table of Contents Critical Accounting Policy Valuation of Gold, Definition of NAV The Trustee values the gold held by the Trust and determines the NAV of the Trust as of the LBMA Gold Price PM on each day that the NYSE Arca is open for regular trading, at the earlier of the LBMA Gold Price PM for the day or 12:00 PM New York time. If no LBMA Gold Price PM is announced on a particular evaluation day or if the LBMA Gold Price PM has not been announced by 12:00 PM New York time on a particular evaluation day, the next most recent LBMA Gold Price (AM or PM) is used in the determination of the NAV of the Trust, unless the Trustee, in consultation with the Sponsor, determines that such price is inappropriate to use as the basis for such determination. In the event the Trustee and the Sponsor determine that such price is not an appropriate basis for valuation of the Trust’s gold, they will identify an alternative basis for such valuation to be employed by the Trustee. While we believe that the LBMA Gold Price is an appropriate indicator of the value of gold, there are other indicators that are available that could be different than the LBMA Gold Price. The use of such an alternative indicator could result in materially different fair value pricing of the gold in the Trust which could result in different market adjustments or redemption value adjustments of our outstanding redeemable Shares. Once the value of the gold has been determined, the Trustee subtracts all estimated accrued fees, expenses and other liabilities of the Trust from the total value of the gold and all other assets of the Trust (other than any amounts credited to the Trust’s reserve account, if established). The resulting figure is the NAV of the Trust. The Trustee determines the NAV per Share by dividing the NAV of the Trust by the number of Shares outstanding as of the close of trading on NYSE Arca. Inspectorate International Limited (“Inspectorate”) conducts two counts each year of the gold bullion held on behalf of the Trust at the vaults of the Custodian. A complete bar count is conducted once per year and coincides with the Trust’s financial year end at September 30 th . On October 5, 2021, Inspectorate concluded the annual full count of the Trust’s gold bullion held by the Custodian. The second count is a random sample count and is conducted at a date which falls within the same financial year and was conducted most recently on April 16, 2021. The results can be found on www.spdrgoldshares.com . The Sponsor generally visits the vaults of the Custodian twice a year as part of its due diligence procedures. Results of Operations In the three months ended December 31, 2021, an additional 9,600,000 Shares (96 Baskets) were created in exchange for 897,188.8 ounces of gold, 14,200,000 Shares (142 Baskets) were redeemed in exchange for 1,327,131.5 ounces of gold, and 31,886.1 ounces of gold were sold to pay expenses. At December 31, 2021, the amount of gold owned by the Trust and held by the Custodian in its vault was 31,368,572 ounces, 100% of which is allocated gold in the form of London Good Delivery gold bars with a market value of $57,093,938,097 based on the LBMA Gold Price AM on December 31, 2021 (cost—$48,753,564,928). At September 30, 2021, the amount of gold owned by the Trust and held by the Custodian in its vault was 31,830,401 ounces, 100% of which is allocated gold in the form of London Good Delivery gold bars with a market value of $55,474,022,504 based on the LBMA Gold Price PM on September 30, 2021 (cost—$49,227,343,846). Cash Resources and Liquidity At December 31, 2021, the Trust did not have any cash balances. When selling gold to pay expenses, the Trustee endeavors to sell the exact amount of gold needed to pay expenses in order to minimize the Trust’s holdings of assets other than gold. As a consequence, we expect that the Trust will not record any net cash flow from its operations and that its cash balance will be zero at the end of each reporting period. 13 Table of Contents Analysis of Movements in the Price of Gold As movements in the price of gold are expected to directly affect the price of the Trust’s Shares, investors should understand what the recent movements in the price of gold have been. Investors, however, should also be aware that past movements in the gold price are not indicators of future movements. This section identifies recent trends in the movements of the gold price. The following chart provides historical background on the price of gold. The chart illustrates movements in the price of gold in US dollars per ounce over the period from January 1, 2017 to December 31, 2021 and is based on the LBMA Gold Price PM when available. Daily Gold Price – January 1, 2017 – December 31, 2021 LBMA Gold Price PM USD The average, high, low and end-of-period gold prices for the three and twelve-month periods over the prior three years and for the period from the Date of Inception through December 31, 2021, based on the LBMA Gold Price PM when available from March 20, 2015 and previously the London Fix, were: Period Average High Date Low Date End of period Last business day (1) Three months to March 31, 2019 $ 1,303.79 $ 1,343.75 Feb 20, 2019 $ 1,279.55 Jan 21, 2019 $ 1,295.40 Mar 29, 2019 Three months to June 30, 2019 $ 1,309.39 $ 1,431.40 Jun 25, 2019 $ 1,269.50 Apr 23, 2019 $ 1,409.00 Jun 28, 2019 Three months to September 30, 2019 $ 1,472.47 $ 1,546.10 Sep 4, 2019 $ 1,388.65 Jul 5, 2019 $ 1,485.30 Sep 30, 2019 Three months to December 31, 2019 $ 1,480.96 $ 1,517.10 Oct 3, 2019 $ 1,452.05 Nov 12, 2019 $ 1,523.00 Dec 31, 2019 (2) Three months to March 31, 2020 $ 1,582.80 $ 1,683.65 Mar 6, 2020 $ 1,474.25 Mar 19, 2020 $ 1,608.95 Mar 31, 2020 Three months to June 30, 2020 $ 1,711.13 $ 1,771.60 Jun 29, 2020 $ 1,576.55 Apr 1, 2020 $ 1,768.10 Jun 30, 2020 Three months to September 30, 2020 $ 1,908.56 $ 2,067.15 Aug 6, 2020 $ 1,771.05 July 1, 2020 $ 1,886.90 Sep 30, 2020 Three months to December 31, 2020 $ 1,874.23 $ 1,940.80 Nov 6, 2020 $ 1,762.55 Nov 30, 2020 $ 1,891.10 Dec 31, 2020 (2) Three months to March 31, 2021 $ 1,794.01 $ 1,943.20 Jan 4, 2021 $ 1,683.95 Mar 30, 2021 $ 1,691.05 Mar 31, 2021 Three months to June 30, 2021 $ 1,816.48 $ 1,902.75 Jun 2, 2021 $ 1,726.05 Apr 1, 2021 $ 1,763.15 Jun 30, 2021 Three months to September 30, 2021 $ 1,789.52 $ 1,829.30 Jul 29, 2021 $ 1,723.35 Aug 10, 2021 $ 1,742.80 Sep 30, 2021 Three months to December 31, 2021 $ 1,795.25 $ 1,864.90 Nov 17, 2021 $ 1,753.20 Oct 5, 2021 $ 1,820.10 Dec 31, 2021 (2) Twelve months ended December 31, 2019 $ 1,392.60 $ 1,546.10 Sep 4, 2019 $ 1,269.50 Apr 23, 2019 $ 1,523.00 Dec 31, 2019 (2) Twelve months ended December 31, 2020 $ 1,769.50 $ 2,067.15 Aug 6, 2020 $ 1,474.25 Mar 19, 202 $ 1,891.10 Dec 31, 2020 (2) Twelve months ended December 31, 2021 $ 1,798.61 $ 1,943.20 Jan 4, 2021 $ 1,683.95 Mar 30, 2021 $ 1,820.10 Dec 31, 2021 (2) November 12, 2004 to December 31, 2021 $ 1,207.76 $ 2,067.15 Aug 6, 2020 $ 411.10 Feb 8, 2005 $ 1,820.10 Dec 31, 2021 (2) 14 Table of Contents (1) The end of period gold price is the LBMA Gold Price PM on the last business day of the period. This is in accordance with the Trust Indenture and the basis used for calculating the Net Asset Value of the Trust. (2) There was no LBMA Gold Price PM on the last business day of December 2021, 2020 or 2019. The LBMA Gold Price AM on the last business day of December 2021, 2020 and 2019 was $1,820.10, $1,891.10 and $1,523.00, respectively. The Net Asset Value of the Trust on December 31, 2021, 2020 and 2019 was calculated using the LBMA Gold Price AM, in accordance with the Trust Indenture.