# Goldman Sachs Physical Gold ETF: Form 10-Q for the period ended Sep 30, 2020

- Company: [Goldman Sachs Physical Gold ETF](/companies/aaau.md) (CIK 1708646)
- Form: 10-Q
- Filed: 2020-11-06
- Accepted by EDGAR: Nov 6, 2020, 16:13 ET
- Period: 2020-09-30
- Accession: 0001213900-20-035580
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1708646/000121390020035580/f10q0920_perthmintl.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1708646/000121390020035580/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2020-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Net income | 3 months, 2020-07-01 to 2020-09-30 | $22.8m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2020-01-01 to 2020-09-30 | $57.3m | us-gaap:NetIncomeLoss |
| Basic EPS | 3 months, 2020-07-01 to 2020-09-30 | $0.93 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2020-01-01 to 2020-09-30 | $3.19 | us-gaap:EarningsPerShareBasic |
| Total assets | at 2020-09-30 | $487.4m | us-gaap:Assets |
| Total liabilities | at 2020-09-30 | $73.0k | us-gaap:Liabilities |

## Management's discussion and analysis

As filed, 16,684 characters.

*This information should be read in conjunction with the financial statements and notes included in Item 1 of Part I of the Trust’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2020 (this “Form 10-Q”). This Form 10-Q 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. All statements (other than statements of historical fact) included in this Form 10-Q that address activities, events or developments that may occur in the future, including such matters as future gold prices, gold sales, costs, objectives, changes in commodity prices and market conditions (for gold and the shares), the Trust’s operations (including the effects thereon related to the coronavirus (“COVID-19”) pandemic), the Sponsors’ plans and references to the Trust’s future success and other similar matters are forward-looking statements. Words such as “could,” “would,” “may,” “expect,” “intend,” “estimate,” “predict,” and variations on such words or negatives thereof, and similar expressions that reflect our current views with respect to future events and Trust 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. Forward-looking statements involve risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed therein. We express our estimates, expectations, beliefs, and projections in good faith and believe them to have a reasonable basis. However, we make no assurances that management’s estimates, expectations, beliefs, or projections will be achieved or accomplished. These forward-looking statements are based on assumptions about many important factors that could cause actual results to differ materially from those in the forward-looking statements. Such factors are discussed in: Part I, Item 1A. Risk Factors of the Trust’s Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 Form 10-K”); Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of the 2019 Form 10-K; Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Form 10-Q; Part II, Item 1A. Risk Factors of this Form 10-Q, and other parts of this Form 10-Q. We do not intend to update any forward-looking statements even if new information becomes available or other events occur in the future, except as required by the federal securities laws.*

### Organization and Trust Overview

Perth Mint Physical Gold ETF (the “Trust”) was formed pursuant to the Depository Trust Agreement (the “Trust Agreement”) on July 26, 2018 under New York State law. The Trust issues Perth Mint Physical Gold ETF Shares (the “shares”), which represent units of fractional undivided beneficial interest in the Trust. The Trust’s primary objective is to provide investors with an opportunity to invest in gold through the shares the Trust issues and have the gold securely stored by Gold Corporation (the “Custodial Sponsor”). An additional objective of the Trust 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 Custodial Sponsor and Exchange Traded Concepts, LLC (the “Administrative Sponsor” and, together with the Custodial Sponsor, the “Sponsors”) are the Trust’s sponsors. Gold Corporation also serves as the custodian of the Trust’s gold bullion. References to the “Custodian” throughout this Form 10-Q refer to Gold Corporation in its capacity as Custodian of the Trust’s gold bullion instead of its capacity as Custodial Sponsor. The Bank of New York Mellon is the trustee of the Trust (the “Trustee”).

Gold Corporation, trading as the Perth Mint, is a Western Australian Government-owned statutory body corporate established under the Gold Corporation Act 1987 (Western Australia) (the “Gold Corporation Act”). Under Section 22 of the Gold Corporation Act, the payment of the cash equivalent of gold due, payable and deliverable by the Custodial Sponsor (including gold held by the Custodial Sponsor for the benefit of the Trust) is guaranteed by the Treasurer of Western Australia, in the name and on behalf of the Crown in right of the State of Western Australia (the “Government Guarantee”). The Government Guarantee is subject to the claims-paying ability of the Government of Western Australia.

Physical gold that the Trust holds includes London Bars (as defined in the Trust Agreement) and other gold products having a gold purity of at least 99.5% (including but not limited to coins, cast bars and minted bars). The Custodial Sponsor’s policy is to hold 100% of the gold held on behalf of the Trust in physical gold. The Trust issues shares in blocks of at least 25,000 shares called “Baskets” in exchange for gold from certain registered broker-dealers or other securities market participants (the “Authorized Participants”), which is then allocated as physical gold and safely stored by the Custodian. When the Trust was launched, a Basket was the equivalent of 50,000 shares. On June 1, 2019, the Trust revised the definition of a Basket pursuant to the Depository Trust Agreement to consist of at least 25,000 shares. The Trust issues and redeems Baskets on an ongoing basis at net asset value (“NAV” or “Net Asset Value”) to and from Authorized Participants who have entered into a contract with the Administrative Sponsor and the Trustee. Investors may request to take delivery of physical gold in exchange for their shares, at their option, by submitting their shares to the Custodial Sponsor in exchange for physical gold.

The Trust’s only ordinary recurring fee is the fee paid to the Custodial Sponsor, which accrues daily at an annualized rate equal to 0.18% of the daily NAV of the Trust, payable in gold monthly in arrears (the “Custodial Sponsor Fee”). In exchange for the Custodial Sponsor Fee, the Custodial Sponsor has agreed to assume and be responsible for the payment of most of the expenses incurred by the Trust, up to a maximum amount equal to the greater of $500,000 per annum and the amount that is equal to 0.15% of the average total value of the gold held by the Trust, as determined by the Trustee on each business day, plus the value of all other assets of the Trust (other than any amount credited to the Trust’s reserve account), including cash, if any.

The Trust’s shares trade on the NYSE Arca Marketplace (the “NYSE Arca”) under the symbol “AAAU.” The market price of the shares may be different from the NAV per share.

### Goldman Sachs Transaction

On September 29, 2020, the Sponsors entered into an agreement to transfer their respective roles to Goldman Sachs Asset Management, L.P. (the “Goldman Sachs Transaction”). Upon closing of the Goldman Sachs Transaction, Goldman Sachs Asset Management, L.P. will serve as the new sponsor of the Trust, which will combine the roles of the Custodial Sponsor and the Administrative Sponsor.

At the closing of the Goldman Sachs Transaction, Gold Corporation will resign as the Custodian of the Trust’s gold bullion (in its role as Custodian of the Trust) and a new third-party custodian will be appointed, at which point the payment of the cash equivalent of gold due, payable and deliverable on behalf of the Trust will no longer be guaranteed under the Government Guarantee. It is also expected that, immediately after the closing of the Goldman Sachs Transaction, investors will no longer be able to take delivery of the physical gold bullion in exchange for the shares such investors own. It is also anticipated that the Trust will be renamed at the closing of the Goldman Sachs Transaction to Goldman Sachs Physical Gold ETF.

### Valuation of Gold and Computation of Net Asset Value

The Trustee determines the NAV of the Trust on each day that the NYSE Arca is open for regular trading, as promptly as practical after 4:00 p.m. New York time. The NAV of the Trust is the aggregate value of gold and other assets, if any, of the Trust (other than any amounts credited to the Trust’s reserve account, if any) and cash, if any, less liabilities of the Trust, which include estimated accrued but unpaid fees, expenses and other liabilities. In determining the Trust’s NAV, the Trustee values the gold held by the Trust based on the afternoon London gold price per troy ounce of gold for delivery in London through a member of the London Bullion Market Association (“LBMA”) authorized to effect such delivery, as calculated and administered by independent service provider(s) and published by the LBMA on its website or by its successor that publicly displays prices (the “LBMA PM Gold Price”), or, if such day’s afternoon price is not available, the morning LBMA Gold Price (the “LBMA AM Gold Price”). If no LBMA Gold Price is available for the day, the Trustee will value the Trust’s gold based on the most recently announced LBMA PM Gold Price or LBMA AM Gold Price. If the Custodial Sponsor determines that such price is inappropriate to use, it shall identify an alternate basis for evaluation to be employed by the Trustee. The Custodial Sponsor may instruct the Trustee to use a different publicly available price, which the Custodial Sponsor determines to fairly represent the commercial value of the Trust’s gold.

### Results of Operations

### Three and Nine Months Ended September 30, 2020 and 2019

For the three months ended September 30, 2020, 5,800,000 shares (232 Baskets) were created in exchange for 65,518.2 ounces of gold, and 99.7 ounces of gold were sold to pay expenses. For the nine months ended September 30, 2020, 15,225,000 shares (609 Baskets) were created in exchange for 151,754.8 ounces of gold, and 219.6 ounces of gold were sold to pay expenses. The Trust’s NAV per share ended the period at $18.80 compared to $17.62 at June 30, 2020 and $15.19 at December 31, 2019. The increase in NAV per share was due to a higher price of gold of $1,886.90 at period end, which represented an increase of 6.72% from $1,768.10 at June 30, 2020 and an increase of 23.89% from $1,523.00 at December 31, 2019.

For the three months ended September 30, 2019, 1,650,000 shares (66 Baskets) were created in exchange for 16,470 ounces of gold, and 43.4 ounces of gold were sold to pay expenses. For the nine months ended September 30, 2019, 4,150,000 shares (166 Baskets) were created in exchange for 41,441 ounces of gold, and 112.8 ounces of gold were sold to pay expenses. The Trust’s NAV per share ended the period at $14.82, compared to $14.07 at June 30, 2019 and $12.81 at December 31, 2018. The increase in NAV per share was due to a higher price of gold of $1,485.30 at period end, which represented an increase of 5.42% from $1,409.00 at June 30, 2019, and 15.89% from $1,281.65 at December 31, 2018.

At September 30, 2020, the Custodial Sponsor held 258,295.7 ounces of gold on behalf of the Trust in its vault, with a market value of $487,378,111 (cost: $402,056,316) based on the LBMA PM Gold Price at period end.

At September 30, 2019, the Custodial Sponsor held 110,790.5 ounces of gold on behalf of the Trust in its vault, with a market value of $164,557,189 (cost: $141,430,618) based on the LBMA PM Gold Price at period end.

The change in net assets from operations for the three months ended September 30, 2020 was $22,793,340, which was due to (i) the Custodial Sponsor Fee of $(212,831) and (ii) a net realized and unrealized gain of $23,006,171 from operations, which in turn resulted from a net realized loss on gold transferred to pay expenses of $(786) and a net change in unrealized appreciation/depreciation on investments in gold bullion of $24,031,732. Other than the Custodial Sponsor Fee, the Trust had no expenses during the three months ended September 30, 2020.

The change in net assets from operations for the three months ended September 30, 2019 was $6,980,329, which was due to (i) the Custodial Sponsor Fee of $(68,564) and (ii) a net realized and unrealized gain of $7,048,893 from operations, which in turn resulted from a net realized loss on gold transferred to pay expenses of $(108) and a net change in unrealized appreciation/depreciation on investments in gold bullion of $7,049,001. Other than the Custodial Sponsor Fee, the Trust had no expenses during the three months ended September 30, 2019.

The change in net assets from operations for the nine months ended September 30, 2020 was $57,254,507, which was due to (i) the Custodial Sponsor Fee of $(432,632) and (ii) a net realized and unrealized gain of $57,687,139 from operations, which in turn resulted from a net realized gain on gold distributed for redemptions of $105,511, a net realized loss on gold transferred to pay expenses of $(2,478) and a net change in unrealized appreciation/depreciation on investments in gold bullion of $57,795,128. Other than the Custodial Sponsor Fee, the Trust had no expenses during the nine months ended September 30, 2020.

The change in net assets from operations for the nine months ended September 30, 2019 was $18,038,196, which was due to (i) the Custodial Sponsor Fee of $(164,694) and (ii) a net realized and unrealized gain of $18,202,890 from operations, which in turn resulted from a net realized gain on gold transferred to pay expenses of $831 and a net change in unrealized appreciation/depreciation on investments in gold bullion of $18,202,059. Other than the Custodial Sponsor Fee, the Trust had no expenses during the nine months ended September 30, 2019.

### Liquidity and Capital Resources

The Trust is not aware of any trends, demands, commitments, events or uncertainties that are reasonably likely to result in material changes to its liquidity needs. The Trust’s only ordinary recurring fee is the Custodial Sponsor Fee, which accrues daily at an annualized rate equal to 0.18% of the daily NAV of the Trust, and is payable in gold monthly in arrears. The Custodial Sponsor Fee was the only ordinary expense of the Trust during the period covered by this Form 10-Q.

The Trustee will, when directed by the Custodial Sponsor, and, in the absence of such direction may, in its discretion, sell gold in such quantity and at such times as may be necessary to permit payment in cash of the Trust’s extraordinary expenses not assumed by the Custodial Sponsor. At September 30, 2020 and 2019, the Trust did not have any cash balances.

### Off-Balance Sheet Arrangement

As of September 30, 2020, the Trust did not have any off-balance sheet arrangements.

### 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, it is important for investors to understand and follow movements in the price of gold. Past movements in the gold price are not indicators of future movements.

The following chart shows movements in the price of gold based on the LBMA PM Gold Price in U.S. dollars per ounce over the period from July 26, 2018 (the first date the Trust’s shares began trading on the NYSE Arca) to September 30, 2020.

The average, high, low and end-of-period gold prices for the period from October 1, 2019 through September 30, 2020, based on the LBMA PM Gold Price were:

| Period | Average | High | Date | Low | Date | End of period | Last business day(1) |
| --- | ---: | ---: | --- | ---: | --- | ---: | --- |
| October 1, 2019 to December 31, 2019 | $1,480.96 | $1,517.10 | Oct. 3, 2019 | $1,452.05 | Nov. 12, 2019 | $1,514.75 | Dec. 30, 2019(2) |
| January 1, 2020 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 |
| April 1, 2020 to June 30, 2020 | $1,711.13 | $1,771.60 | June 29, 2020 | $1,576.55 | Apr. 1, 2020 | $1,768.10 | June 30, 2020 |
| July 1, 2020 to September 30, 2020 | $1,908.56 | $2,067.15 | Aug. 6, 2020 | $1,771.05 | July 1, 2020 | $1,886.90 | Sept. 30, 2020 |

(1) The end of period gold price is the LBMA PM Gold Price on the last business day of the period. This is in accordance with the Trust Agreement and the basis used for calculating the NAV of the Trust.

(2) The last business day of the period was December 31, 2019; however, no LBMA PM Gold Price was recorded. Last LBMA PM Gold Price for the period was recorded on December 30, 2019.

## Market risk

As filed, 350 characters.

The Trust is a passive investment vehicle. It is not actively managed. The Trust’s primary objective is to provide investors with an opportunity to invest in gold through the shares the Trust issues and have the gold securely stored by the Custodial Sponsor. Accordingly, fluctuations in the price of gold will affect the value of the Trust’s shares.

## Controls and procedures

As filed, 1,560 characters.

#### Disclosure Controls and Procedures

The duly authorized officers of the Administrative Sponsor, performing functions equivalent to those a principal executive officer and principal financial officer of the Trust would perform if the Trust had any officers, have evaluated the effectiveness of the Trust’s disclosure controls and procedures, and have concluded that the disclosure controls and procedures of the Trust were effective as of the end of the period covered by this report. Such disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in the reports that the Trust files or submits under the Securities Exchange Act of 1934, as amended, are recorded, processed, summarized and reported, within the time period specified in the applicable rules and forms, and that such information is accumulated and communicated to the duly authorized officers of the Administrative Sponsor performing functions equivalent to those a principal executive officer and principal financial officer of the Trust would perform if the Trust had any officers, and to the Audit Committee of the Administrative Sponsor, as appropriate, to allow timely decisions regarding required disclosure.

#### Internal Control over Financial Reporting

There has been no change in the internal control over financial reporting that occurred during the three months ended September 30, 2020 that has materially affected, or is reasonably likely to materially affect, the Trust’s internal control over financial reporting.

## Risk factors

As filed, 4,412 characters.

The operations of the Trust are subject to numerous risks and uncertainties. As a result, the risks and uncertainties discussed in Part I, Item 1A. Risk Factors in the Trust’s 2019 Form 10-K should be carefully considered. There have been no material changes in the assessment of the Trust’s risk factors from those set forth in the Trust’s 2019 Form 10-K, except as stated below.

**The effects of a global public health crisis, including the ongoing COVID-19 pandemic, could adversely affect the Sponsors and their service providers, as well as the value of our shares and the price of gold.**

Pandemics and other global public health crises may cause a curtailment of business activities that may potentially affect the ability of the Sponsors and their service providers to operate. The COVID-19 pandemic or a similar public health threat could adversely affect the Trust by causing operating delays and disruptions, market disruption and shutdowns (including as a result of government regulation and prevention measures). For instance, the suspension of operations of mines, refineries and vaults that extract, produce or store gold, restrictions on travel that delay or prevent the transportation of gold, and an increase in demand for gold may disrupt supply chains for gold, which could cause secondary market spreads to widen and compromise our ability to settle transactions on time. Any inability of the Trust to issue or redeem our shares or the Custodian or any sub-custodian to receive or deliver gold as a result of the outbreak will negatively affect the Trust’s operations. In addition, market disruptions and other volatility related to global public health crises can significantly affect the price of gold and, consequently, the value of our shares.

The duration of the COVID-19 outbreak and its effects cannot be determined with certainty. A prolonged outbreak could result in an increase of the costs of the Trust, affect liquidity in the market for gold as well as the correlation between the price of our shares and the net asset value of the Trust, any of which could adversely affect the value of our shares. In addition, the outbreak could also impair the information technology and other operational systems upon which the Trust’s service providers, including the Sponsors, the Trustee and the Custodian, rely, and could otherwise disrupt the ability of employees of the Trust’s service providers to perform essential tasks on behalf of the Trust. Governmental and quasi-governmental authorities and regulators throughout the world have in the past responded to major economic disruptions with a variety of fiscal and monetary policy changes, including, but not limited to, direct capital infusions into companies, new monetary programs and lower interest rates. An unexpected or quick reversal of these policies, or the ineffectiveness of these policies, is likely to increase volatility in the market for gold, which could adversely affect the price of our shares.

Further, the outbreak could interfere with or prevent the operation of the electronic auction hosted by IBA to determine the LBMA Gold Price, which the Trustee uses to value the gold held by the Trust and calculate the Net Asset Value of the Trust. The outbreak could also cause the closure of futures exchanges, which could eliminate the ability of Authorized Participants to hedge purchases of Baskets, increasing trading costs of our shares and resulting in a sustained premium or discount in our shares. Each of these outcomes would negatively impact the Trust.

**If the Goldman Sachs Transaction is completed, the Trust will no longer have the protections of the Government Guarantee, which would affect the Trust’s ability to satisfy a claim.**

At the closing of the Goldman Sachs Transaction, Gold Corporation will resign as the Custodian of the Trust’s gold bullion (in its role as Custodian of the Trust) and a new third-party custodian will be appointed, at which point the payment of the cash equivalent of gold due, payable and deliverable on behalf of the Trust will no longer be subject to the Government Guarantee. As such, the Trust would not be able to file a claim to recover any loss from the government of Western Australia from any failure by the Trust’s new custodian to exercise in due care in the safekeeping of the Trust’s gold, which would affect the Trust’s ability to satisfy a claim.

Filed Nov 6, 2020.
Source: SEC EDGAR, the filing index for accession 0001213900-20-035580. Last ingested by Listed: Nov 6, 2026, 18:32 ET. No prices; not investment advice.