World 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. This Quarterly Report, including the exhibits hereto and the information incorporated by reference herein, contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such forward-looking statements involve risks and uncertainties. Except for historical information, statements about future gold prices, gold bullion sales, foreign currencies (including the Reference Currencies), foreign currency exchange rates, costs, plans, or objectives are forward-looking statements based on our estimates, beliefs, assumptions and projections. Words such as “could,” “would,” “may,” “expect,” “project,” “intend,” “plan,” “believe,” “seek,” “estimate,” and “predict,” and variations on such words, and similar expressions that reflect our current views with respect to future events and fund performance, are intended to identify such forward-looking statements. These forward-looking statements are only predictions, subject to risks and uncertainties that are difficult to predict and many of which are outside of our control, and actual results could differ materially from those discussed. Important factors that we believe could affect performance and cause results to differ materially from our expectations are described in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Annual Report on Form 10-K for the fiscal year ended September 30, 2021, as updated from time to time in World Gold Trust’s Securities and Exchange Commission filings. Trust Overview The World Gold Trust (the “Trust”) was formed as a Delaware statutory trust on August 27, 2014. The Trust consists of multiple series (each, a “Fund” and collectively, the “Funds”). Each Fund issues common units of beneficial interest that represent units of fractional undivided beneficial interest in and ownership of such Fund. The term of the Trust and each Fund is perpetual (unless terminated earlier in certain circumstances). The Trust was organized in separate series as a Delaware statutory trust rather than as separate statutory trusts to achieve certain administrative and other efficiencies. The Trust is sponsored by WGC USA Asset Management Company, LLC (the “Sponsor”). The Trust established six separate series, of which only SPDR ® Gold MiniShares SM Trust (“GLDM”) is operational as of December 31, 2021. GLDM commenced operations on June 26, 2018. GLDM’s investment objective is for its shares (the “Shares”) to reflect the performance of the price of gold, less its expenses. Gold is held by ICBC Standard Bank Plc (the “Custodian”) on behalf of GLDM. As of the date of this quarterly report, Goldman, Sachs & Co., J.P. Morgan Securities LLC, Merrill Lynch Professional Clearing Corp., Morgan Stanley & Co. LLC, UBS Securities LLC and Virtu Americas LLC are the only Authorized Participants. An updated list of Authorized Participants can be obtained from the Sponsor. 17 Table of Contents Investing in the Shares does not insulate the investor from risks, including price volatility. The following chart illustrates the movement in the market price of the Shares and NAV of the Shares against the corresponding gold price (per 1/100 of an oz. of gold) since the day the Shares first began trading on the NYSE Arca: Share price & NAV v. gold price - June 26, 2018 to December 31, 2021 Critical Accounting Policy Valuation of Gold, Definition of NAV GLDM values the investment in gold bullion at fair value. BNY Mellon Asset Servicing, a division of The Bank of New York Mellon (the “Administrator”), will value any gold bullion held by GLDM on the basis of the price of an ounce of gold as determined by the ICE Benchmark Administration Limited (the “IBA”). In determining the NAV, the Administrator will value the gold bullion held by GLDM on the basis of the price of an ounce of gold determined by the IBA 3:00 PM auction process (the “LBMA Gold Price PM”). The Administrator will calculate the NAV on each day the NYSE Arca is open for regular trading, at the earlier LBMA Gold Price PM for the day or 12:00 PM New York time. If no LBMA Gold Price (AM or PM) is made 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 will be used in the determination of the NAV, unless the Sponsor determines that such price is inappropriate to use as the basis for such determination. Gold held by GLDM is reported at fair value on the Statement of Financial Condition. Once the value of the gold has been determined, the Administrator subtracts all estimated accrued fees, expenses and other liabilities of GLDM from the total value of the gold and all other assets of GLDM. The resulting figure is the NAV. The NAV is used to compute the Sponsor’s fee. The Administrator determines the NAV per Share by dividing the NAV of GLDM by the number of Shares outstanding as of the close of trading on NYSE Arca. 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 4, 2021, Inspectorate concluded the annual full count of the Trust’s gold bullion held by the Custodian. On October 4, 2021, Inspectorate concluded reconciliation procedures from September 17, 2021 through September 30, 2021. 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 May 14, 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. 18 Table of Contents Results of Operations In the three months ended December 31, 2021, 3,800,000 Shares (38 Creation Units) were created in exchange for 37,765.4 ounces of gold, 16,200,000 Shares (162 Creation Units) were redeemed in exchange for 161,039.2 ounces of gold and 1,107.9 ounces of gold were sold to pay Sponsor fees. For accounting purposes, GLDM reflects creations and redemptions on the date of receipt of a notification of a creation but does not issue Shares until the requisite amount of gold is received. Upon a redemption, GLDM delivers gold upon receipt of Shares. These creations were completed in the normal course of business. At December 31, 2021, the amount of gold owned by GLDM and held by the Custodian in its vault was 2,393,251.2 ounces, 100% of which is allocated gold in the form of London Good Delivery gold bars with a market value of $4,355,956,547 based on the LBMA Gold Price AM on December 31, 2021 (cost — $4,032,594,479). Subcustodians did not hold any gold in their vaults on behalf of GLDM. As at September 30, 2021, the amount of gold owned by GLDM and held by the custodian in its vault was 2,517,632.7 ounces, 100% of which is allocated gold in the form of London Good Delivery gold bars with a market value of $4,387,730,778 based on the LBMA Gold Price PM on September 30, 2021 (cost — $4,237,695,934). Subcustodians did not hold any gold in their vaults on behalf of GLDM. Cash Resources and Liquidity At December 31, 2021, GLDM did not have any cash balances. When selling gold to pay expenses, GLDM endeavors to sell the exact amount of gold needed to pay expenses in order to minimize GLDM’s holdings of assets other than gold or any gold receivable. As a consequence, we expect that GLDM 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. Analysis of Movements in the Price of Gold As movements in the price of gold are expected to directly affect the price of the Shares, it is important to understand the recent movements in the price of gold. However, past movements in the price of gold are not indicators of future movements. The following chart shows movements in the price of gold based on the LBMA Gold Price PM in U.S. dollars per ounce over the period from June 26, 2018 (the first date the Shares began trading on the NYSE Arca) to December 31, 2021. Daily Gold Price - June 26, 2018 to December 31, 2021 LBMA Gold Price PM USD 19 Table of Contents 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 June 26, 2018 (the first date the Shares began trading on the NYSE Arca) through December 31, 2021, based on the LBMA Gold Price PM, 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) June 26, 2018 to December 31, 2021 $ 1,590.07 $ 2,067.15 Aug 6, 2020 $ 1,178.40 Aug 17, 2018 $ 1,820.10 Dec 31, 2021 (2) (1) The end of period gold price is the LBMA Gold Price PM on the last business day of the period. (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 GLDM on December 31, 2021, 2020 and 2019 was calculated using the LBMA Gold Price AM. Item 3. Quantitative and Qualitative Disclosures About Market Risk GLDM is a passive investment vehicle. Fluctuations in the value of gold bullion will affect the value of Shares which are designed to reflect the performance of the price of gold bullion, less GLDM’s expenses.