abrdn Platinum ETF Trust 10-K

Item 7. 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 to the financial statements included with this report. The discussion and analysis that follows may contain statements that relate to future events or future performance. In some cases, such forward-looking statements can be identified by terminology such as “may,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or the negative of these terms or other comparable terminology. We remind readers that forward-looking statements are merely predictions and therefore inherently subject to uncertainties and other factors and involve known and unknown risks that could cause the actual results, performance, levels of activity, or our achievements, or industry results, to be materially different from any future results, performance, levels of activity, or our achievements expressed or implied by such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Trust undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Introduction. The Aberdeen Standard Platinum ETF Trust (the “Trust”) is a trust formed under the laws of the State of New York. The Trust does not have any officers, directors, or employees, and is administered by The Bank of New York Mellon (the “Trustee”) acting as trustee pursuant to the Depositary Trust Agreement (the “Trust Agreement”) between the Trustee and Aberdeen Standard Investments EFTs Sponsor LLC, the sponsor of the Trust (the “Sponsor”). The Trust issues shares (“Shares”) representing fractional undivided beneficial interests in its net assets. The assets of the Trust consist of platinum bullion held by a custodian as an agent of the Trust and responsible only to the Trustee. The Trust is a passive investment vehicle and the objective of the Trust is for the value of each Share to approximately reflect, at any given time, the price of the platinum bullion owned by the Trust, less the Trust’s liabilities (anticipated to be principally for accrued operating expenses), divided by the number of outstanding Shares. The Trust does not engage in any activities designed to obtain a profit from, or ameliorate losses caused by, changes in the price of platinum. The Trust issues and redeems Shares only in exchange for platinum, only in aggregations of 50,000 Shares or integral multiples thereof (each, a “Basket”), and only in transactions with registered broker-dealers (or other securities market participants not required to register as broker-dealers such as banks or other financial institutions) who (1) are participants in the DTC and (2) have previously entered into an agreement with the Trust governing the terms and conditions of such issuance (such dealers, the “Authorized Participants”). As of the date of this annual report the Authorized Participants that have signed an Authorized Participant Agreement with the Trust are Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, HSBC Securities (USA) Inc., J.P. Morgan Securities Inc., Merrill Lynch Professional Clearing Corp., Mizuho Securities USA LLC, Morgan Stanley & Co. Inc., Scotia Capital (USA) Inc., UBS Securities LLC and Virtu Financial BD, LLC. Shares of the Trust trade on the NYSE Arca under the symbol “PPLT.” Investing in the Shares does not insulate the investor from certain risks, including price volatility. The following table illustrates the movement in the NAV of the Shares against the corresponding platinum price (per 1/10 of an oz. of platinum) since inception: NAV per Share vs. 1/10 th Platinum Price from December 30, 2009 (the Date of Inception) to December 31, 2020 The divergence of the NAV per Share from the platinum price over time reflects the cumulative effect of the Trust expenses that arise if an investment had been held since inception. 31 Critical Accounting Policy The financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements relies on estimates and assumption that impact the Trust’s financial position and results of operations. These estimates and assumptions affect the Trust’s application of accounting policies. Below we describe the valuation of platinum bullion, a critical accounting policy that we believe is important to the understanding of our results of operations and financial position. In addition, please refer to Note 2 to the Financial Statements for further discussion of our accounting policies. Valuation of Platinum Platinum is held by JPMorgan Chase Bank, N.A. (the “Custodian”) on behalf of the Trust, at its London, England vaulting premises. Platinum may also be held by UBS AG, or any other firm selected by the Custodian to hold the Trust’s platinum in the Trust’s allocated account in the firm’s Zurich vault premises and whose appointment has been approved by the Sponsor, at its Zurich, Switzerland vaulting premises. Platinum is recorded at fair value. The cost of platinum is determined according to the average cost method and the fair value is based on the LME PM Fix. Realized gains and losses on transfers of platinum, or platinum distributed for the redemption of Shares, are calculated on a trade date as the difference between the fair value and cost of platinum transferred. December 31, 2020 December 31, 2019 December 31, 2018 (Amounts in 000's of US$) Investment in platinum - cost $ 1,181,607 $ 758,352 $ 675,473 Unrealized gain/(loss) on investment in platinum 148,665 (45,270 ) (178,755 ) Investment in platinum - fair value $ 1,330,272 $ 713,082 $ 496,718 Inspection of Platinum Under the Custody Agreements, the Trustee, the Sponsor and the Sponsor’s auditors and inspectors may, only up to twice a year, visit the premises of the Custodian and the Zurich Sub-Custodian for the purpose of examining the Trust’s platinum and certain related records maintained by the Custodian. Under the Allocated Account Agreement, the Custodian agreed to procure similar inspection rights from the Zurich Sub-Custodian. Visits by auditors and inspectors to the Zurich Sub-Custodian's facilities will be arranged through the Custodian. Other than with respect to the Zurich Sub-Custodian, the Trustee and the Sponsor have no right to visit the premises of any sub-custodian for the purposes of examining the Trust’s platinum or any records maintained by the sub-custodian, and no sub-custodian is obligated to cooperate in any review the Trustee or the Sponsor may wish to conduct of the facilities, procedures, records or creditworthiness of such sub-custodian. The Sponsor has exercised its right to visit the Custodian and the Zurich Sub-Custodian, in order to examine the platinum and the records maintained by them. Inspections were conducted by Inspectorate International Limited, a leading commodity inspection and testing company retained by the Sponsor, as of August 14, 2020. Due to unprecedented social lock-down policies implemented in the UK and Switzerland to help prevent the spread of COVID-19, neither the Sponsor, nor Inspectorate, were able to perform a physical inspection of the Trust's platinum at December 31, 2020. In lieu of a physical inspection, the Sponsor performed alternative procedures to verify the platinum held by the Trust at December 31, 2020. These procedures included confirmation of the platinum bar list and total ounces of platinum held by the Custodian at December 31, 2020, and an independent recalculation of ounces of platinum for each creation or redemption transaction from August 14, 2020, the date of the last physical inspection, through December 31, 2020. The Sponsor and Inspectorate also virtually inspected a selection of platinum bars held by the Custodian on behalf of the Trust, verifying the weight of the bars and that the serial numbers of the bars selected matched the records of the Trust. Liquidity The Trust is not aware of any trends, demands, conditions, events or uncertainties that are reasonably likely to result in material changes to its liquidity needs. In exchange for the Sponsor’s Fee, the Sponsor has agreed to assume most of the expenses incurred by the Trust. As a result, the only expense of the Trust during the period covered by this report was the Sponsor’s Fee. The Trust’s only source of liquidity is its transfers and sales of platinum. 32 The Trustee will, at the direction of the Sponsor or in its own discretion, sell the Trust’s platinum as necessary to pay the Trust’s expenses not otherwise assumed by the Sponsor. The Trustee will not sell platinum to pay the Sponsor’s Fee but will pay the Sponsor’s Fee through in-kind transfers of platinum to the Sponsor. At December 31, 2020 and 2019, the Trust did not have any cash balances. Review of Financial Results Financial Highlights Year Ended December 31, 2020 Year Ended December 31, 2019 Year Ended December 31, 2018 (Amounts in 000's of US$) Total gain/(loss) on platinum $ 180,104 $ 117,791 $ (68,970 ) Net change in assets from operations $ 174,917 $ 114,086 $ (72,021 ) Net cash provided by operating activities $ — $ — $ — The year ended December 31, 2020 The net asset value (“NAV”) of the Trust is obtained by subtracting the Trust’s expenses and liabilities on any day from the value of the platinum owned by the Trust on that day; the NAV per Share is obtained by dividing the NAV of the Trust on a given day by the number of Shares outstanding on that day. The Trust’s NAV increased from $712,718,535 at December 31, 2019 to $1,329,606,858 at December 31, 2020, an 86.55% increase for the year. The increase in the Trust’s NAV resulted primarily from an increase in outstanding Shares, which rose from 7,950,000 at December 31, 2019 to 13,300,000 at December 31, 2020, a result of 7,050,000 Shares (141 Baskets) being created and 1,700,000 Shares (34 Baskets) being redeemed during the year. There was an increase in the price per ounce of platinum, which rose 12.18% from $952.00 at December 31, 2019 to $1,068.00 at December 31, 2020. The NAV per Share increased 11.51% from $89.65 at December 31, 2019 to $99.97 at December 31, 2020. The Trust’s NAV per Share rose slightly less than the price per ounce of platinum on a percentage basis due to Sponsor’s Fee, which was $5,187,040 for the year, or 0.60% of the Trust’s ANAV. The NAV per Share of $99.97 at December 30, 2020 was the highest during the year, compared with a low of $55.77 at March 19, 2020. The increase in net assets from operations for the year ended December 31, 2020 was $174,917,272, resulting from a change in unrealized gain on investment in platinum of $193,935,305, offset by a realized loss of $522,106 on the transfer of platinum to pay expenses, a realized loss of $13,308,887 on platinum distributed for the redemption of Shares, and the Sponsor’s Fees of $5,187,040. Other than the Sponsor’s Fee, the Trust had no expenses during the year ended December 31, 2020. The year ended December 31, 2019 The Trust’s NAV increased from $496,468,881 at December 31, 2018 to $712,718,535 at December 31, 2019, a 43.56% increase for the year. The increase in the Trust’s NAV resulted primarily from an increase in the price per ounce of platinum, which rose 19.90% from $794.00 at December 31, 2018 to $952.00 at December 31, 2019. There was an increase in outstanding Shares, which rose from 6,600,000 at December 31, 2018 to 7,950,000 at December 31, 2019, a result of 2,500,000 Shares (50 Baskets) being created and 1,150,000 Shares (23 Baskets) being redeemed during the year. 33 The NAV per Share increased 19.18% from $75.22 at December 31, 2018 to $89.65 at December 31, 2019. The Trust’s NAV per Share rose slightly less than the price per ounce of platinum on a percentage basis due to Sponsor’s Fee, which was $3,705,285 for the year, or 0.60% of the Trust’s ANAV. The NAV per Share of $92.18 at September 4, 2019 was the highest during the year, compared with a low of $74.03 at February 14, 2019. The increase in net assets from operations for the year ended December 31, 2019 was $114,085,989, resulting from a change in unrealized gain on investment in platinum of $133,484,194, offset by a realized loss of $770,511 on the transfer of platinum to pay expenses, a realized loss of $14,922,409 on platinum distributed for the redemption of Shares, and the Sponsor’s Fees of $3,705,285. Other than the Sponsor’s Fee, the Trust had no expenses during the year ended December 31, 2019. The year ended December 31, 2018 The Trust’s NAV decreased from $565,458,736 at December 31, 2017 to $496,468,881 at December 31, 2018, a 12.20% decrease for the year. The decrease in the Trust’s NAV resulted primarily from a decrease in the price per ounce of platinum, which fell 14.35% from $927.00 at December 31, 2017 to $794.00 at December 31, 2018. There was an increase in outstanding Shares, which rose from 6,400,000 at December 31, 2017 to 6,600,000 at December 31, 2018, a result of 1,800,000 Shares (36 Baskets) being created and 1,600,000 Shares (32 Baskets) being redeemed during the year. The NAV per Share decreased 14.87% from $88.36 at December 31, 2017 to $75.22 at December 31, 2018. The Trust’s NAV per Share fell slightly more than the price per ounce of platinum on a percentage basis due to Sponsor’s Fee, which was $3,050,913 for the year, or 0.60% of the Trust’s ANAV. The NAV per Share of $97.18 at January 25, 2018 was the highest during the year, compared with a low of $73.28 at September 4, 2018. The decrease in net assets from operations for the year ended December 31, 2018 was $72,021,333, resulting from a change in unrealized loss on investment in platinum of $31,772,206, a realized loss of $868,864 on the transfer of platinum to pay expenses, a realized loss of $36,329,350 on platinum distributed for the redemption of Shares, and the Sponsor’s Fees of $3,050,913. Other than the Sponsor’s Fee, the Trust had no expenses during the year ended December 31, 2018. Off-Balance Sheet Arrangements The Trust is not a party to any off-balance sheet arrangements.