SPDR® Gold Trust, or the Trust, is an investment trust, formed on November
12, 2004 under New York law pursuant to a trust indenture, or the Trust Indenture.
The Trust holds gold and from time to time issues SPDR® Gold Shares, or
Shares, in Baskets in exchange for deposits of gold and distributes gold in
connection with redemptions of Baskets. A Basket equals a block of 100,000 Shares.
The investment objective of the Trust is for the Shares to reflect the performance
of the price of gold bullion, less the Trust’s expenses. World Gold Trust
Services, LLC, or WGTS, is the sponsor of the Trust, or the Sponsor. BNY Mellon
Asset Servicing, a division of The Bank of New York Mellon, or BNYM, is the
trustee of the Trust, or the Trustee. State Street Global Markets, LLC, or SSGM,
is the marketing agent of the Trust, or the Marketing Agent. HSBC Bank plc,
or HSBC, is the custodian of the Trust, or the Custodian.
The Shares are intended to offer investors an opportunity to participate in
the gold market through an investment in securities. Historically, the logistics
of buying, storing and insuring gold have constituted a barrier to entry for
some institutional and retail investors. The ownership of the Shares is intended
to overcome these barriers to entry. The logistics of storing and insuring gold
are dealt with by the Custodian, and the related expenses are built into the
price of the Shares. Therefore, the investor does not have any additional tasks
or costs over and above those associated with investing in any other publicly
traded security.
The Shares are intended to provide institutional and retail investors with a
simple and cost-efficient means of gaining investment benefits similar to those
of holding allocated gold bullion. The Shares offer an investment that is:
Easily Accessible. Investors can access the gold market through a traditional
brokerage account. The Sponsor believes that investors will be able to more
effectively implement strategic and tactical asset allocation strategies that
use gold by using the Shares instead of using the traditional means of purchasing,
trading and holding gold.
Relatively Cost Efficient. The Sponsor believes that, for many investors,
transaction costs related to the Shares will be lower than those associated
with the purchase, storage and insurance of allocated gold.
Exchange Traded. The Shares trade on NYSE Arca, Inc., or NYSE Arca, providing
investors with an efficient means to buy, sell, or sell short in order to implement
a variety of investment strategies. The Shares are eligible for margin accounts.
The Shares are also listed on the Mexican Stock Exchange (Bolsa Mexicana de
Valores), the Singapore Exchange Securities Trading Limited, the Stock Exchange
of Hong Kong Limited and the Tokyo Stock Exchange.
Backed by Gold Held by the Custodian on Behalf of the Trust. The Shares are
backed by the assets of the Trust and the Trust does not hold or employ any
derivative securities. Further, the Trust’s holdings and their value based
on current market prices are reported on the Trust’s website each business
day. The Trustee’s arrangements with the Custodian provide that at the
end of each business day there can be in the Trust account maintained by the
Custodian no gold in an unallocated form. Accordingly, the Trust’s gold
holdings are identified on the Custodian’s books as the property of the
Trust and held in London.
The Shares represent units of fractional undivided beneficial interest in and
ownership of the Trust. The Trust is not managed like a corporation or an active
investment vehicle. The gold held by the Trust will only be sold: (1) on an
as-needed basis to pay Trust expenses, (2) in the event the Trust terminates
and liquidates its assets, or (3) as otherwise required by law or regulation.
The sale of gold by the Trust is a taxable event to shareholders of the Trust,
or Shareholders. See “United States Federal Tax Consequences—Taxation
of U.S. Shareholders.”
The Trust is not registered as an investment company under the Investment Company
Act of 1940 and is not required to register under such act. The Trust will not
hold or trade in commodity futures contracts regulated by the Commodity Exchange
Act of 1936, or the CEA, as administered by the Commodity Futures Trading Commission,
or the CFTC. The Trust is not a commodity pool for purposes of the CEA, and
none of the Sponsor, the Trustee or the Marketing Agent is subject to regulation
as a commodity pool operator or a commodity trading advisor in connection with
the Shares.
The Trust creates and redeems Shares from time to time, but only in Baskets.
The number of outstanding Shares changes from time to time as a result of the
creation and redemption of Baskets. The creation and redemption of Baskets requires
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
total amount of gold and any cash required for the creation of Baskets is based
on the combined net asset value, or NAV, of the number of Baskets being created
or redeemed. The number of ounces of gold required to create a Basket or to
be delivered upon the redemption of a Basket will continue to gradually decrease
over time. This is because the Shares comprising a Basket will represent a decreasing
amount of gold due to the sale of the Trust’s gold to pay the Trust’s
expenses.
Baskets may be created or redeemed only by Authorized Participants. An Authorized
Participant is a person who (1) is a registered broker-dealer or other securities
market participant such as a bank or other financial institution which is not
required to register as a broker-dealer to engage in securities transactions,
(2) is a participant in the Depository Trust Company system, or DTC, (3) has
entered into an agreement with the Sponsor and the Trustee which provides the
procedures for the creation and redemption of Baskets and for the delivery of
the gold and any cash required for such creations and redemptions, or a Participant
Agreement, and (4) has established an unallocated gold account with the Custodian,
or an Authorized Participant Unallocated Account. Authorized Participants pay
a transaction fee of $2,000 for each order to create or redeem Baskets. Authorized
Participants may sell to other investors all or part of the Shares included
in the Baskets they purchase from the Trust.
