Note 2 - Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2014

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

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. Investment Company Status

In June 2013, the FASB issued Accounting Standards Update 2013-08, Investment Companies – Amendments to the Scope, Measurement, and Disclosure Requirements (“ASU 2013-08”). ASU 2013-08 is an update to Topic 946 that 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 interim and annual periods beginning after December 15, 2013 and is required to be applied prospectively. Assessment of the Trust’s status as an investment company under ASU 2013-08 determined that the Trust meets all of the fundamental characteristics of an investment company for accounting purposes. As a result, effective January 1, 2014, the Trust qualifies as an investment company solely for accounting purposes pursuant to the accounting and reporting guidance under Topic 946, but is not registered, and is not required to be registered, under the Investment Company Act.

As a result of the prospective application at ASU 2013-08, certain disclosures required by Topic 946 are only presented for periods beginning

January 1, 2014. Financial statements and disclosures for periods prior to January 1, 2014 will continue to be presented in their previously reported form, however certain captions have been changed. The primary changes to the financial statements resulting from the adoption of ASU 2013-08 and application of Topic 946 include:

● reporting of gold bullion at fair value on the Balance Sheet, which was previously reported at the lower of cost or market;

● recognition of the change in unrealized appreciation or depreciation on investment in gold bullion is reported on the Income Statement, which was previously reported as an “Adjustment of redeemable capital Shares to redemption value” on the Statement of Changes in Shareholders’ Equity (Deficit);

● Shares of the Trust are classified as “Shareholders’ equity,” representing the net asset value on the Balance Sheet, which was previously classified as “Redeemable capital Shares.” An adjustment was recorded at January 1, 2014 to reclassify the balance of redeemable capital Shares at December 31, 2013 into shareholders’ equity as follows (all balances in 000’s):

	Balance at December 31, 2013		ASU 2013-08 Transition Adjustment			Balance at January 1, 2014
Redeemable capital Shares	$	6,271,029	$	(6,271,029	)	$	—
Shareholders’ equity		—		6,271,029			6,271,029

● the addition of a Schedule of Investments and a Financial Highlights note to the financial statements.

ASU 2013-08 prescribes that an entity that qualifies as an investment company as a result of an assessment of its status shall account for the effect of the change in status prospectively from the date of the change in status and shall recognize any impact as a cumulative effect adjustment to the net asset value at the beginning of the period. No cumulative effect adjustment to net asset value was required to be recorded as a result of adopting ASU 2013-08 because the fair value of gold bullion held by the Trust equaled the cost of gold bullion held by the Trust at December 31, 2013 and therefore there was no accumulated shareholders’ equity (deficit).

C. Gold Bullion

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

Beginning January 1, 2014, the gold bullion held by the Trust is valued at fair value. Prior to January 1, 2014, the gold bullion held by the Trust was valued at the lower of cost or market, using the average cost method. In applying the lower of cost or market valuation, if the fair value of the gold bullion held was lower than its average cost during the interim periods, an adjustment (“market value reserve”) to cost was recorded by the Trust to reflect fair value. If the fair value of the gold bullion held increased subsequent to the market value reserve being recorded, a “market value recovery” was recorded during an interim period in the same fiscal year that the market value reserve had been recorded by the Trust. The market value recovery recorded at an interim period could not exceed the previously recognized market value reserve. At the end of the Trust’s fiscal year, management made a determination as to whether the reserve was recovered or whether the cost basis of gold bullion was written down. The market value reserve, market value recovery and inventory write down each were reported as a component of “Adjustment to gold bullion inventory.”

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”).

Gain or loss on sales of gold bullion is calculated on a trade date basis using the average cost method.

The following table summarizes activity in gold bullion for the three months ended September 30, 2014 (all balances in 000’s):

	Ounces			Average Cost			Fair Value			Realized Gain (Loss)
Beginning balance		5,297.3		$	6,387,552		$	6,965,884		$	—
Gold bullion contributed		69.8			91,225			91,225			—
Gold bullion distributed		(141.4	)		(170,668	)		(176,498	)		5,830
Gold bullion sold		(3.4	)		(4,028	)		(4,321	)		293
Net realized gain on gold bullion		—			—			6,123			—
Net change in unrealized appreciation/depreciation on investment in gold bullion		—			—			(529,525	)		—
Ending balance		5,222.3		$	6,304,081		$	6,352,888		$	6,123

The following table summarizes activity in gold bullion for the nine months ended September 30, 2014 (all balances in 000’s):

	Ounces			Average Cost			Fair Value			Realized Gain (Loss)
Beginning balance		5,220.5		$	6,272,422		$	6,272,422		$	—
Gold bullion contributed		298.6			389,402			389,402			—
Gold bullion distributed		(286.8	)		(345,740	)		(360,752	)		15,012
Gold bullion sold		(10.0	)		(12,003	)		(12,752	)		749
Net realized gain on gold bullion		—			—			15,761			—
Net change in unrealized appreciation/depreciation on investment in gold bullion		—			—			48,807			—
Ending balance		5,222.3		$	6,304,081		$	6,352,888		$	15,761

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

	Ounces			Average Cost			Fair Value			Realized Gain (Loss)
Beginning balance		5,756.2		$	6,861,395		$	6,861,395		$	—
Gold contributed		135.9			175,446			175,446			—
Gold distributed		(176.7	)		(237,938	)		(227,490	)		(10,448	)
Gold sold		(3.7	)		(4,958	)		(4,846	)		(112	)
Adjustment to gold bullion inventory(a)		—			782,673			—			—
Adjustment for realized loss		—			—			(10,560	)		—
Adjustment for unrealized gain on gold bullion		—			—			782,673			—
Ending balance		5,711.7		$	7,576,618		$	7,576,618		$	(10,560	)

The following table summarizes activity in gold bullion for the nine months ended September 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		551.5			847,967			847,967			—
Gold distributed		(1,827.5	)		(2,458,045	)		(2,652,558	)		194,513
Gold sold		(12.2	)		(16,404	)		(18,230	)		1,826
Adjustment to gold bullion inventory(b)		—			(111,955	)		—			—
Adjustment for realized gain		—			—			196,339			—
Adjustment for unrealized loss on gold bullion		—			—			(2,444,683	)		—
Ending balance		5,711.7		$	7,576,618		$	7,576,618		$	196,339

(a)     Previously reported as "market value recovery."

(b)     Net value of amounts previously reported as “market value reserve” and “market value recovery.”

D. Calculation of Net Asset Value

On each business day, as soon as practicable after 4:00 p.m. (New York time), the net asset value of the Trust is obtained by subtracting all accrued fees, expenses and other liabilities of the Trust from the fair value of the gold held by the Trust and other assets of the Trust. The result is the net asset value of the Trust. The Trustee computes the net asset value per Share by dividing the net asset value of the Trust by the number of Shares outstanding on the date the computation is made.

E. Offering of the Shares

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 bullion is exchanged in settlement of a redemption, it is considered a sale of gold bullion for accounting purposes.

As noted in Note 2B above, beginning January 1, 2014, Shares of the Trust are classified as shareholders’ equity. The Trust reflects Shares issued and Shares redeemed within shareholders’ equity on trade date.

Share activity was as follows (all balances in 000’s):

	Nine Months Ended September 30, 2014
	Shares			Amount
Shares issued		30,800		$	389,402
Shares redeemed		(29,600	)		(360,752	)
Net increase		1,200		$	28,650

Prior to January 1, 2014, Shares of the Trust were classified as “redeemable” for balance sheet purposes. Due to the expected continuing sales and redemption of capital stock and the three-day period for Share settlement, the Trust reflected redeemable capital Shares sold as a receivable, rather than as contra equity. Shares redeemed were reflected as a contra asset on the trade date. Outstanding Trust Shares were reflected at redemption value, which was the net asset value per Share at the period end date. Adjustments to redemption value were reflected in shareholders’ equity (deficit).

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

	Year Ended December 31, 2013
	Shares			Amount
Beginning balance		719,550		$	11,645,298
Shares issued		63,250			928,370
Shares redeemed		(244,800	)		(3,341,845	)
Redemption value adjustment		—			(2,960,794	)
Ending balance		538,000		$	6,271,029

F. 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 September 30, 2014 and has determined that no provision for income tax is required in the Trust’s financial statements.