VanEck Merk Gold ETF 10-Q

Item 1. Financial Statements (Unaudited) VanEck Merk Gold Trust Statements of Assets and Liabilities April 30, 2023 January 31, 2023 (unaudited) Assets Investments in gold bullion (cost $ 607,824,450 and $ 572,123,322 , respectively) $ 712,154,680 $ 656,592,807 Capital shares receivable - 3,730,709 Total assets $ 712,154,680 $ 660,323,516 Liabilities Gold Bullion purchased payable - 3,730,707 Sponsor’s fee payable 15 9 Other payables - 2 Total liabilities 15 3,730,718 Net assets $ 712,154,665 $ 656,592,798 Net assets consists of: Paid-in-capital $ 606,918,290 $ 571,416,810 Accumulated earnings 105,236,375 85,175,988 $ 712,154,665 $ 656,592,798 Shares issued and outstanding (no par value) 37,075,156 35,203,259 Net asset value per share $ 19.21 $ 18.65 See notes to unaudited financial statements. 1 VanEck Merk Gold Trust Statements of Operations For the Three Months Ended April 30, 2023 For the Three Months Ended April 30, 2022 (unaudited) (unaudited) Expenses Sponsor’s fees $ 409,800 $ 396,568 Total expenses 409,800 396,568 Net investment loss ( 409,800 ) ( 396,568 ) Net realized and unrealized gain (loss) Net realized gain from gold bullion distributed for redemptions 609,442 54,381 Net change in unrealized appreciation (depreciation) on investment in gold bullion 19,860,745 36,734,729 Net realized and unrealized gain (loss) from operations 20,470,187 36,789,110 Net increase (decrease) in net assets resulting from operations $ 20,060,387 $ 36,392,542 See notes to unaudited financial statements. 2 VanEck Merk Gold Trust Statements of Changes in Net Assets For the Three Months Ended April 30, 2023 For the Three Months Ended April 30, 2022 (unaudited) (unaudited) Net assets, beginning of period $ 656,592,798 $ 586,245,772 Creations 39,381,222 54,431,583 Redemptions ( 3,879,742 ) ( 366,293 ) Net investment loss ( 409,800 ) ( 396,568 ) Net realized gain from gold bullion distributed for redemptions 609,442 54,381 Net change in unrealized appreciation (depreciation) on investment in gold bullion 19,860,745 36,734,729 Net assets, end of period $ 712,154,665 $ 676,703,604 See notes to unaudited financial statements. 3 VanEck Merk Gold Trust Financial Highlights Per Share Performance (for a share outstanding throughout each period) For the Three Months Ended April 30, 2023 For the Three Months Ended April 30, 2022 (unaudited) (unaudited) Net asset value per share, beginning of period $ 18.65 $ 17.45 Net investment loss (a) ( 0.01 ) ( 0.01 ) Net realized and unrealized gain (loss) on investment in gold bullion 0.57 1.12 Net change in net assets from operations 0.56 1.11 Net asset value per share, end of period $ 19.21 $ 18.56 Total return, at net asset value (b) 3.00 % 6.36 % Ratio to average net assets (c) Net investment loss ( 0.25 )% ( 0.25 )% Net expenses 0.25 % 0.25 % (a) Calculated using average shares outstanding (b) Not annualized (c) Annualized See notes to unaudited financial statements. 4 VanEck Merk Gold Trust Schedules of Investment April 30, 2023 (unaudited) Fine Ounces Cost Value % of Net Assets Gold bullion 359,211 $ 607,824,450 $ 712,154,680 100.00 % Total investments 359,211 $ 607,824,450 $ 712,154,680 100.00 % Liabilities in excess of other assets ( 15 ) ( 0.00 )%(a) Net assets $ 712,154,665 100.00 % January 31, 2023 Fine Ounces Cost Value % of Net Assets Gold bullion 341,282 $ 572,123,322 $ 656,592,807 100.00 % Total investments 341,282 $ 572,123,322 $ 656,592,807 100.00 % Liabilities in excess of other assets ( 9 ) ( 0.00 )%(a) Net assets $ 656,592,798 100.00 % (a) Amount is less than 0.005% See notes to unaudited financial statements. 5 VanEck Merk Gold Trust Notes to Unaudited Financial Statements 1. ORGANIZATION The VanEck Merk Gold Trust (the “Trust”; known as the Merk Gold Trust prior to October 26, 2015 and then as the Van Eck Merk Gold Trust prior to April 28, 2016) is an investment trust formed on May 6, 2014 under New York law pursuant to a depositary trust agreement. After consideration of Financial Accounting Standards Topic 946, Merk Investments LLC (the “Sponsor”) has concluded the Trust meets the fundamental characteristics of an investment company. In addition, while the Trust does not currently possess all of the typical characteristics of an investment company, it believes its activities are consistent with those of an investment company and will therefore apply the guidance in Financial Accounting Standards Topic 946, including disclosure of the financial support contractually required to be provided by an investment company to any of its investees. 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. Virtu Financial, also known as the Lead Market Maker, was the Initial Purchaser and contributed 1,000 Ounces of Gold in exchange for 100,000 shares on May 6, 2014. At contribution, the value of the gold deposited with the Trust was based on the price of an Ounce of Gold of $ 1,306.25 . The Initial Purchaser is not affiliated with the Sponsor or the Trustee. 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 “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 Trust is not actively managed. The fiscal year end of the Trust is January 31st. 2. SIGNIFICANT ACCOUNTING POLICIES In preparing financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”), management makes estimates and assumptions that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amount of revenue and expenses reported during the period. Actual results could differ from these estimates. The accompanying audited and unaudited financial statements were prepared in accordance with GAAP and with the instructions for the Form 10-Q and the rules and regulations of the United States Securities and Exchange Commission. In the opinion of the Trust’s management, all adjustments (which consists of normal recurring adjustments) necessary to present fairly the financial position and the results of operations, as presented, have been made. The following is a summary of significant accounting policies followed by the Trust. 2.1. Valuation of Gold Financial Accounting Standards Board Accounting Standards Codification 820, “Fair Value Measurements and Disclosures” (“ASC 820”), provides a single definition of fair value, a hierarchy for measuring fair value and expanded disclosures about fair value adjustments. Various inputs are used in determining the fair value of the Trust’s assets or liabilities. These inputs are categorized into three broad levels. Level 1 includes unadjusted prices in active markets for identical assets or liabilities. Level 2 includes other significant observable market based inputs (including prices for similar securities, interest rates, prepayment speed, and credit risk). Level 3 includes unobservable inputs, which may include management’s own assumptions in determining the fair value of investments. The Trust does not hold any derivative instruments, and its assets only consist of allocated gold bullion and gold receivable; representing gold covered by contractually binding orders for the creation of shares where the gold has not yet been transferred to the Trust’s account and, from time to time, cash, which is used to pay expenses. 6 VanEck Merk Gold Trust Notes to Unaudited Financial Statements (continued) The following table summarizes the inputs used as of April 30, 2023 in determining the Trust’s investments at fair value for purposes of ASC 820: Level 1 Level 2 Level 3 Investment in gold $ 712,154,680 $ — $ — Total $ 712,154,680 $ — $ — The following table summarizes the inputs used as of January 31, 2023 in determining the Trust’s investments at fair value for purposes of ASC 820: Level 1 Level 2 Level 3 Investment in gold $ 656,592,807 $ — $ — Total $ 656,592,807 $ — $ — London Gold Delivery Bars are held by JPMorgan Chase Bank, N.A. (the “Custodian”), on behalf of the Trust, at the London, United Kingdom vaulting premises. All gold is valued based on its Fine Ounce content, calculated by multiplying the weight of gold by its purity; the same methodology is applied independent of the type of gold held by the Trust; similarly, the value of up to 430 Fine Ounces of unallocated gold the Trust may hold is calculated by multiplying the number of Fine Ounces with the price of gold determined by the Trustee as follows. The Trustee determines the net asset value (the “NAV”) of the Trust on each day that NYSE Arca is open for regular trading, as promptly as practical after 4:00 PM New York time. The NAV of the Trust is the aggregate value of the Trust’s assets less its estimated accrued but unpaid liabilities (which include accrued expenses). The Trustee computes the NAV per Share by dividing the net assets of the Trust by the number of the shares outstanding on the date the computation is made. In determining the Trust’s NAV, the Trustee values the gold held by the Trust based on the afternoon session of the twice daily fix of the price of a Fine Ounce of gold which starts at 3:00 PM London, England time and is performed in London by the ICE Benchmark Administration as an independent third-party administrator (the “LBMA PM Gold Price”). The Trustee also determines the NAV per Share. If on a day when the Trust’s NAV is being calculated the LBMA PM Gold Price for that day is not available, the Trustee will value the gold held by the Trust based on that day’s morning session of the twice daily fix of the price of a Fine Ounce of gold, which starts at 10:30 AM London, England time and is performed in London by the ICE Benchmark Administration as an independent third-party administrator (the “LBMA AM Gold Price,” and together with the LBMA PM Gold Price, the “LBMA Gold Price”). If no fix is available for the day, the Trustee will value the Trust’s gold based on the most recently announced LBMA AM Gold Price or LBMA PM Gold Price. Prior to March 20, 2015, the Trustee utilized the daily fix of the price of a Fine Ounce of gold as performed by the five members of the London gold fix, which has now been replaced by the ICE Benchmark Administration as an independent third-party administrator. 2.2. Expenses The Trustee issues shares to pay the Sponsor’s fee; the Sponsor pays the Trust’s ordinary expenses. The NAV of the Trust is used to compute the Sponsor’s fee, and the Trustee subtracts from the NAV of the Trust the amount of accrued Sponsor’s fee. To the extent the Trust issues additional shares to pay the Sponsor’s fee or sells gold to cover expenses or liabilities, the amount of gold represented by each share will decrease. New deposits of gold, received in exchange for new shares issued by the Trust, would not reverse this trend. 2.3. Creations and Redemptions of Shares Shares are issued and redeemed by the Trust in blocks of 50,000 shares called “Baskets” in exchange for gold from certain registered broker-dealers or other securities market participants (“Authorized Participants”). Investors that are not Authorized Participants may also take delivery of physical gold in exchange for their shares (“Delivery Applicants”). 7 VanEck Merk Gold Trust Notes to Unaudited Financial Statements (continued) Authorized Participants The Trust issues and redeems Baskets 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. 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. Delivery Applicants In exchange for its shares and payment of a processing fee, a Delivery Applicant will be entitled to one or more bars or coins of physical gold having approximately the total Fine Ounces represented by the shares on the day on which the Delivery Applicant’s broker-dealer submits his or her shares to the Trust in exchange for physical gold. As it is unlikely that the total Fine Ounces of physical gold will exactly correspond to the Fine Ounces represented by a specific number of shares, a Delivery Applicant will likely receive some cash representing the net sale proceeds of any excess Fine Ounces (the “Cash Proceeds”). To minimize the Cash Proceeds of any exchange, the delivery application requires that the number of shares submitted closely correspond in Fine Ounces to the Fine Ounces of physical gold that is held or that is to be acquired by the Trust for which the delivery is sought. Share submissions are processed in the order approved. Changes in the shares for the three-month period ended April 30, 2023 are as follows: Shares Amount Shares, beginning of period at February 1, 2023 35,203,259 $ 571,416,810 Shares issued 2,071,897 39,381,222 Shares redeemed ( 200,000 ) ( 3,879,742 ) Shares, end of period at April 30, 2023 37,075,156 $ 606,918,290 Changes in the shares for the year ended January 31, 2023 are as follows: Shares Amount Shares, beginning of period at February 1, 2022 33,599,843 $ 532,684,047 Shares issued 7,638,953 137,482,147 Shares redeemed ( 6,035,537 ) ( 98,749,384 ) Shares, end of period at January 31, 2023 35,203,259 $ 571,416,810 8 VanEck Merk Gold Trust Notes to Unaudited Financial Statements (continued) 2.4. Income Taxes The Trust is treated as a “grantor trust” for U.S. federal tax purposes. As a result, the Trust itself is not subject to U.S. federal income tax. Instead, the Trust’s income and expenses “flow through” to the shareholders and the Trustee reports the Trust’s 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 April 30, 2023. 2.5. Revenue Recognition Policy A gain or loss is recognized based on the difference between the selling price and the average cost method of the gold sold on a trade date basis. 3. INVESTMENT IN GOLD The following represents the changes in Ounces of gold and the respective fair value at April 30, 2023: Ounces Fair Value Beginning balance as of February 1, 2023 341,282 $ 656,592,807 Gold bullion contributed 19,867 38,971,432 Gold bullion distributed ( 1,938 ) ( 3,879,746 ) Realized gain (loss) from gold distributed from in-kind - 609,442 Change in unrealized appreciation (depreciation) - 19,860,745 Ending balance as of April 30, 2023 359,211 $ 712,154,680 The following represents the changes in Ounces of gold and the respective fair value at January 31, 2023: Ounces Fair Value Beginning balance as of February 1, 2022 326,554 $ 586,245,778 Gold bullion contributed 73,293 135,924,342 Gold bullion distributed ( 58,565 ) ( 98,749,370 ) Realized gain (loss) from gold distributed from in-kind - 1,178,406 Change in unrealized appreciation (depreciation) - 31,993,651 Ending balance as of January 31, 2023 341,282 $ 656,592,807 4. RELATED PARTIES—SPONSOR, TRUSTEE, CUSTODIAN AND MARKETING FEES Fees paid are to the Sponsor as compensation for services performed under the Trust Agreement. Effective July 24, 2020, the Sponsor’s fee is payable at an annualized rate of 0.25% of the Trust’s NAV, accrued on a daily basis computed on the prior Business Day’s NAV and paid monthly in arrears. Prior to July 24, 2020, the Sponsor’s fee accrued at an annualized rate of 0.40% of the Trust’s NAV. The Sponsor has agreed to assume the following administrative and marketing expenses incurred by the Trust: the Trustee’s monthly fee and out-of-pocket expenses; the Custodian’s fee; the marketing support fees and expenses (including the fees and expenses of Foreside Fund Services, LLC); expenses reimbursable under the Custody Agreement; the precious metals dealer’s fees and expenses reimbursable under its agreement with the Sponsor; exchange listing fees; Securities and Exchange Commission (the “SEC”) registration fees; printing and mailing costs; maintenance expenses for the Trust’s website; audit fees; and up to $ 100,000 per annum in legal expenses. 9 VanEck Merk Gold Trust Notes to Unaudited Financial Statements (continued) Affiliates of the Trustee, as well as affiliates of the Custodian may from time to time act as Authorized Participants to purchase or sell gold or shares for their own account, as agent for their customers and for accounts over which they exercise investment discretion. On October 22, 2015, the Sponsor, for the benefit of the Trust, entered into a Marketing Agent Agreement (as amended to date, the “Marketing Agreement”) with Van Eck Securities Corporation (“VanEck” or “Marketing Agent”). Pursuant to the Marketing Agreement, VanEck provides assistance in the marketing of the shares. The obligations created by the Marketing Agreement are obligations of the Sponsor of the Trust and any fees payable under the Marketing Agreement to VanEck are payable from the Sponsor’s fee (as calculated and defined in the Trust Agreement). The Trust will not incur additional financial or other performance obligations pursuant to the Marketing Agreement. 5. CONCENTRATION OF RISK 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 adverse effect on the Trust’s financial position and results of operations. 6. UNCERTAINTY REGARDING THE EFFECT OF COVID-19 The price of the Shares could be adversely affected by the effects of COVID-19 COVID-19 has not had a significant impact on the Trust. There have been some signs of increased demand for physical gold as well as some supply constraints for certain coins at times during the pandemic. As a result, precious metals dealers have increased coin and bar premiums at times. The Sponsor regularly updates available coins and Processing Fees on merkgold.com/fees. 7. INDEMNIFICATION Under the Trust’s organizational documents, each of the Trustee (and its directors, employees and agents) and the Sponsor (and its members, managers, directors, officers, employees, affiliates) is indemnified against any liability, cost or expense it incurs without gross negligence, bad faith or willful misconduct on its part and without reckless disregard on its part of its obligations and duties under the Trust’s organizational documents. 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. However, based on industry experience, management believes the risk of loss is remote. 8. SUBSEQUENT EVENTS The pricing index the Sponsor uses in relation to the Shares issued by the Trust intends to change to the Solactive Gold Spot Index (the “Solactive Index”) in lieu of the LBMA Gold Price. The change is expected to become effective July 11, 2023 or as soon as practicable thereafter (“Index Change Date”). Following the Index Change Date, the Trustee will value the gold held by the Trust based on the Solactive Index. Solactive AG (“Solactive”) will own, calculate, and disseminate the Solactive Index. The Solactive Index is a U.S. Dollar denominated index that aims to provide a price fixing for the gold spot price quoted as U.S. Dollars per Troy Ounce (“XAU”) and determined for the close of trading on the New York Stock Exchange (“NYSE”). The Solactive Index calculates gold bullion fixing prices by taking Time Weighted Average Prices (“TWAP”) of XAU trading prices provided via ICE Data Services (“IDS”) data feed. Specifically, the Solactive Index uses a TWAP calculation to determine an average price that is time-weighted, using price values of actual transactions (“Trade Ticks”) for two specified time periods around the scheduled close of trading on the NYSE (generally, 4:00 PM Eastern Time). The TWAP is derived for (1) the period ahead of the fixing (“Time Period 1”), which consists of the five minutes before the close of trading, and (2) the period directly after the fixing (“Time Period 2”), which consists of the six seconds after the close of trading. The TWAPs for Time Period 1 and Time Period 2 are then aggregated, with 90 % weighting given to Time Period 1 and 10 % weighting given to Time Period 2, to calculate the Solactive Index. The TWAPs for Time Period 1 and Time Period 2 are then added together to establish the Solactive Index price. 10 VanEck Merk Gold Trust Notes to Unaudited Financial Statements (continued) For any calculation day t , the Solactive Index ( Index t ), is determined in accordance with the following formula: The Solactive Index is calculated and published by Solactive no later than 30 minutes following the close of trading on the NYSE, disseminated to major financial data providers, and made publicly available via the Trust’s website. The Solactive Index calculation is based on XAU market data from IDS, which is a major provider of financial market data. The data is available through IDS’s data streaming service, which covers 2,700 spot rates and over 7,500 forwards and non-deliverable forwards, with an average of over 130 million updates per day for spot. IDS compiles data from over 100 sources, including market makers, execution venues, banks and brokers from across the globe, and every updating Trade Tick of spot streaming data is available via IDS’s Integrated Data Viewer service in a file-based format. It is unlikely that, on any given trading day for the Shares, there would be no Trade Ticks recorded for XAU in either Time Period 1 or Time Period 2, such that the Solactive Index calculation could not be performed on such day. Trade Ticks representing XAU are the closing prices for specific gold bullion transactions posted in a 24-hour, global, over-the-counter gold bullion market, which is not subject to trading suspensions, trading halts, or market closures. However, in the unlikely event that IDS is unable to publish pricing information for XAU, for whatever reason, during either Time Period 1 or Time Period 2 on a given trading day, the last available Solactive Index calculation will be used in accordance with Solactive’s published and publicly available disruption policy. If the Sponsor determines that such price is inappropriate to use, it shall identify an alternate basis for evaluation to be employed by the Trustee. The Sponsor may instruct the Trustee to use a different publicly available price which the Sponsor determines to fairly represent the commercial value of the Trust’s gold. The Sponsor has given 60 day notice of the Index Change Date by formally notifying the Trustee and issuing a press release and filing a Current Report on Form 8-K. Management has evaluated the events and transactions that have occurred through the date the financial statements were issued and, except as set forth above, noted no items requiring adjustment of the financial statements or additional disclosures. * * * This report is submitted for the general information of the shareholders. It is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus, which includes information regarding the Trust’s risks, objectives, fees and expenses and other information. 11