2 - Summary of Significant Accounting Policies

A.	Basis of Accounting

The following is a summary of significant accounting policies consistently followed by the Trust in the preparation of its financial statements in conformity with U.S. GAAP. The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates and these differences could be material.

B.	Gold Bullion

JPMorgan Chase Bank N.A., London branch (the “Custodian”), is responsible for the safekeeping of gold bullion owned by the Trust.

For financial statement purposes, the gold bullion held by the Trust is valued at the lower of cost or market, using the average cost method. Should the market value of the gold bullion held be lower than its average cost during the interim periods, an adjustment (“market value reserve”) to cost may be recorded by the Trust to reflect market value. At the end of the Trust’s fiscal year, management will make a determination on whether the reserve is recovered or whether the cost basis of gold should be written down. Gain or loss on sales of gold bullion is calculated on a trade date basis. Fair value of the gold bullion is based on the price of gold fixed in the afternoon of each working day (London time) by the London Gold Market Fixing Ltd. (“London PM Fix”). If there is no announced London PM Fix on a business day, the Trustee is authorized to use the most recently announced price fixed by the London Gold Market Fixing Ltd. in the morning (London time) of the day the valuation takes place (such price, the “London AM Fix”).

The following table summarizes activity in gold bullion for the three months ended June 30, 2013 (all balances in 000’s):


	Ounces			Average Cost			Fair Value			Realized Gain (Loss)
Beginning balance		6,821.0		$	9,190,784		$	10,901,704		$	—
Gold contributed		—			—			—			—
Gold distributed		(1,060.7	)		(1,429,134	)		(1,483,453	)		54,319
Gold sold		(4.1	)		(5,627	)		(6,195	)		568
Adjustment for realized gain		—			—			54,887			—
Adjustment for unrealized loss on gold bullion		—			—			(2,605,548	)		—
Market value reserve		—			(894,628	)		—			—

Ending balance		5,756.2		$	6,861,395		$	6,861,395		$	54,887

The following table summarizes activity in gold bullion for the six months ended June 30, 2013 (all balances in 000’s):


	Ounces			Average Cost			Fair Value			Realized Gain (Loss)
Beginning balance		6,999.9		$	9,315,055		$	11,647,783		$	—
Gold contributed		415.6			672,521			672,521			—
Gold distributed		(1,650.8	)		(2,220,107	)		(2,425,068	)		204,961
Gold sold		(8.5	)		(11,446	)		(13,384	)		1,938
Adjustment for realized gain		—			—			206,899			—
Adjustment for unrealized loss on gold bullion		—			—			(3,227,356	)		—
Market value reserve		—			(894,628	)		—			—

Ending balance		5,756.2		$	6,861,395		$	6,861,395		$	206,899

C.	Redeemable Capital Shares

Shares of the Trust are classified as “redeemable” for balance sheet purposes, since they are subject to redemption. Trust Shares are issued and redeemed continuously in aggregations of 50,000 Shares in exchange for gold bullion rather than cash. Individual investors cannot purchase or redeem Shares in direct transactions with the Trust. The Trust only transacts with registered broker-dealers that are eligible to settle securities transactions through the book-entry facilities of the Depository Trust Company and that have entered into a contractual arrangement with the Trust and the Sponsor governing, among other matters, the creation and redemption of Shares (such broker-dealers, the “Authorized Participants”). Holders of Shares of the Trust may redeem their Shares at any time acting through an Authorized Participant and in the prescribed aggregations of 50,000 Shares; provided, that redemptions of Shares may be suspended during any period while regular trading on NYSE Arca, Inc. (“NYSE Arca”) is suspended or restricted, or in which an emergency exists as a result of which delivery, disposal or evaluation of gold is not reasonably practicable.

The per Share amount of gold exchanged for a purchase or redemption is calculated daily by the Trustee, using the London PM Fix to calculate the gold amount in respect of any liabilities for which covering gold sales have not yet been made, and represents the per Share amount of gold held by the Trust, after giving effect to its liabilities, sales to cover expenses and liabilities and any losses that may have occurred. If there is no announced London PM Fix on a business day, the Trustee is authorized to use the most recently announced London AM Fix.

When gold is exchanged in settlement of a redemption, it is considered a sale of gold for financial statement purposes.

Due to the expected continuing sales and redemption of capital stock and the three-day period for Share settlement, the Trust reflects capital Shares sold as a receivable, rather than as contra equity. Shares redeemed are reflected as a contra asset on the trade date. Outstanding Trust Shares are reflected at redemption value, which is the net asset value per Share at the period ended date. Adjustments to redemption value are reflected in shareholders’ equity.

Net asset value is computed by deducting all accrued fees, expenses and other liabilities of the Trust, including the Sponsor’s fees, from the fair value of the gold bullion held by the Trust.

Activity in redeemable capital Shares was as follows (all balances in 000’s):


	Three Months Ended June 30, 2013						Six Months Ended June 30, 2013
	Shares			Amount			Shares			Amount
Beginning balance		701,600		$	10,899,390			719,550		$	11,645,298
Shares issued		—			—			42,750			672,521
Shares redeemed		(109,150	)		(1,483,453	)		(169,850	)		(2,425,068	)
Redemption value adjustment		—			(2,556,187	)		—			(3,033,001	)

Ending balance		592,450		$	6,859,750			592,450		$	6,859,750

D.	Federal Income Taxes

The Trust is treated as a “grantor trust” for federal income tax purposes and, therefore, no provision for federal income taxes is required. Any interest, expenses, gains and losses are “passed through” to the holders of Shares of the Trust.

The Sponsor has reviewed the tax positions as of June 30, 2013 and has determined that no provision for income tax is required in the Trust’s financial statements.

E.	Recent Accounting Standard

In June 2013, the Financial Accounting Standards Board issued Accounting Standards Update 2013-08, Amendments to the Scope, Measurement, and Disclosure Requirements (“ASU 2013-08”). ASU 2013-08 provides guidance to assess whether an entity is an investment company, and gives additional measurement and disclosure requirements for an investment company. ASU 2013-08 is effective for the Trust for fiscal years beginning after December 15, 2013, and interim periods within those fiscal years. Management is evaluating the impact of this guidance on the Trust’s financial statements.