XML 34 R14.htm IDEA: XBRL DOCUMENT v2.4.0.6
Significant accounting policies (Policies)
 6 Months Ended
Mar. 31, 2012
Organization and Significant Accounting Policies [Abstract]  
Valuation of Gold

2.1.     Valuation of Gold

Gold is held by HSBC Bank USA, N.A. (the “Custodian”), on behalf of the Trust, and is valued, for financial statement purposes, at the lower of cost or market. The cost of gold is determined according to the average cost method and the market value is based on the price of gold set by the London gold fix (“London Fix”) used to determine the Net Asset Value (“NAV”) of the Trust. Realized gains and losses on sales of gold, or gold distributed for the redemption of Shares, are calculated on a trade date basis using average cost.

The table below summarizes the impact of unrealized gains or losses on the Trust’s gold holdings as of March 31, 2012 and September 30, 2011:

 

                 
(Amounts in 000’s of US$)   Mar-31,
2012		     Sep-30,
2011		  

Investment in gold - average cost

   $ 46,663,999     $ 42,736,696  

Unrealized gain on investment in gold

     22,107,220       21,948,152  
   

 

 

    

 

 

  

Investment in gold - market value

   $ 68,771,219     $ 64,684,848  
   

 

 

    

 

 

  

The Trust recognizes the diminution in value of the investment in gold which arises from market declines on an interim basis. Increases in the value of the investment in gold through market price recoveries in later interim periods of the same fiscal year are recognized in the later interim period. Increases in value recognized on an interim basis may not exceed the previously recognized diminution in value.

Gold receivable

2.2.     Gold receivable

Gold receivable represents the quantity of gold covered by contractually binding orders for the creation of Shares where the gold has not yet been transferred to the Trust’s account. Generally, ownership of the gold is transferred within three business days of the trade date.

 

                 
(Amounts in 000’s of US$)   Mar-31,
2012		     Sep-30,
2011		  

Gold receivable

   $ —       $ —    
Gold Payable

2.3     Gold Payable

Gold payable represents the quantity of gold covered by contractually binding orders for the redemption of Shares where the gold has not yet been transferred out of the Trust’s account. Generally, ownership of the gold is transferred within three business days of the trade date.

 

                 
(Amounts in 000’s of US$)     Mar-31,  
2012		     Sep-30,
2011		  

Gold payable

   $ —       $ 520,297  
Creations and Redemptions of Shares

2.4.     Creations and Redemptions of Shares

The Trust creates and redeems Shares from time to time, but only in one or more Baskets (a Basket equals a block of 100,000 Shares). The Trust issues Shares in Baskets to certain authorized participants (“Authorized Participants”) on an ongoing basis. The creation and redemption of Baskets is only made in exchange for the delivery to the Trust or the distribution by the Trust of the amount of gold and any cash represented by the Baskets being created or redeemed, the amount of which will be based on the combined net asset value of 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.

As the Shares of the Trust are redeemable in Baskets at the option of the Authorized Participants, the Trust has classified the Shares as Redeemable Shares on the Statement of Financial Condition. The Trust records the redemption value, which represents its maximum obligation, as Redeemable Shares with the difference from cost as an offsetting amount to Shareholders’ Equity. Changes in the Shares for the six months ended March 31, 2012 and for the year ended September 30, 2011, are as follows:

 

                 
(All amounts are in 000’s)   Six Months  Ended
Mar-31,
2011		     Year Ended
Sep-30,
2011		  

Number of Redeemable Shares:

                

Opening Balance

     406,800       429,200  

Creations

     41,400       115,600  

Redemptions

     (22,500 )      (138,000 ) 
   

 

 

    

 

 

  

Closing Balance

     425,700       406,800  
   

 

 

    

 

 

  
Revenue Recognition Policy

2.5.     Revenue Recognition Policy

BNY Mellon Asset Servicing, a division of The Bank of New York Mellon (the “Trustee”), will, at the direction of the Sponsor or in its own discretion, sell the Trust’s gold as necessary to pay the Trust’s expenses. When selling gold to pay expenses, the Trustee will endeavor to sell the smallest amount of gold needed to pay expenses in order to minimize the Trust’s holdings of assets other than gold. Unless otherwise directed by the Sponsor, when selling gold, the Trustee will endeavor to sell at the price established by the London Fix at 3 p.m. London time (“London PM Fix”). The Trustee will place orders with dealers (which may include the Custodian) through which the Trustee expects to receive the most favorable price and execution of orders. The Custodian may be the purchaser of such gold only if the sale transaction is made at the next London gold price fix (either AM or PM) following the sale order. A gain or loss is recognized based on the difference between the selling price and the average cost of the gold sold.

Income Taxes

2.6.     Income Taxes

The Trust is classified as a “grantor trust” for US federal income tax purposes. As a result, the Trust itself will not be subject to US federal income tax. Instead, the Trust’s income and expenses will “flow through” to the Shareholders, and the Trustee will report the Trust’s proceeds, income, deductions, gains, and losses to the Internal Revenue Service on that basis. The Sponsor of the Trust 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 March 31, 2012 or September 30, 2011.