SPDR Gold MiniShares Trust (GLDM) 2024 Annual Report Review

Introduction

The SPDR Gold MiniShares Trust (GLDM) is a series of the World Gold Trust, designed to reflect the performance of the price of gold bullion, less the Trust's expenses. The Trust's shares are traded on the NYSE Arca and provide investors with indirect access to the gold bullion market. This review will delve into the key aspects of GLDM's 2024 annual report, focusing on its business structure, financial performance, risk factors, and overall investment potential.

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Business Structure

GLDM is a passive investment vehicle that holds gold bullion. The Trust was formed as a Delaware statutory trust and is sponsored by WGC USA Asset Management Company, LLC. The Trust's investment objective is to reflect the performance of gold bullion, less expenses. The shares are traded on the NYSE Arca and the Mexican Stock Exchange, providing both institutional and retail investors with access to the gold market.

The Trust's gold is held by ICBC Standard Bank Plc and JPMorgan Chase Bank, N.A., both of which are responsible for the safekeeping of the gold bullion. The gold is stored in allocated accounts, ensuring that each bar is specifically identified and held for the Trust.

Financial Performance

Income and Expenses

For the fiscal year ended September 30, 2024, GLDM reported a net income of $2,423,086, a significant increase from the previous year's net income of $546,285. This increase was primarily driven by a substantial gain in the value of gold holdings, reflecting the rise in gold prices over the year.

The Trust's only recurring expense is the Sponsor's fee, which amounted to $7,034 for the year. This fee is calculated as 0.10% of the Trust's net asset value (NAV) and is payable monthly in arrears.

Gold Holdings

As of September 30, 2024, GLDM held 3,483,344.7 ounces of gold, valued at $9,161,023,000. This represents an increase from the previous year's holdings of 3,089,983.5 ounces, valued at $5,779,814,000. The increase in gold holdings and their value reflects both the creation of new shares and the appreciation in gold prices.

Cash Flow

GLDM reported no net cash flow from operations for the year, as cash received from gold sales was used to pay expenses. The Trust endeavors to sell only the amount of gold needed to cover expenses, maintaining a zero cash balance at the end of each reporting period.

Risk Factors

Market Risks

The value of GLDM's shares is directly tied to the price of gold, which can be volatile. Factors such as global gold supply and demand, inflation expectations, and geopolitical events can significantly impact gold prices. The Trust does not actively manage its gold holdings to mitigate these risks, which could lead to fluctuations in the value of the shares.

Custodial Risks

GLDM relies on its custodians for the safekeeping of its gold. Any failure by the custodians to exercise due care could result in a loss to the Trust. Additionally, gold held in unallocated accounts is not segregated from the custodian's assets, posing a risk in the event of the custodian's insolvency.

Tax Considerations

GLDM is classified as a "grantor trust" for U.S. federal income tax purposes, meaning its income and expenses flow through to shareholders. Shareholders may be subject to taxes on gains from gold sales, even if the proceeds are used to pay the Trust's expenses.

Conclusion

The SPDR Gold MiniShares Trust offers investors a cost-effective way to gain exposure to the gold market. The Trust's performance in 2024 was strong, driven by rising gold prices and increased gold holdings. However, potential investors should be aware of the inherent risks associated with investing in gold, including market volatility and custodial risks.

Overall, GLDM presents a solid investment opportunity for those looking to diversify their portfolios with gold. The Trust's passive structure and low expense ratio make it an attractive option for both institutional and retail investors. However, investors should carefully consider their risk tolerance and investment objectives before investing in GLDM.