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trading advisor in connection with the Shares. The Trust has no fixed termination date. The Sponsor of the registrant maintains an Internet website |
at www.abrdn.com/us/etf through which the registrant’s annual reports on Form 10-K, quarterly reports on Form 10-Q, and amendments |
to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, or the |
Exchange Act, are made available free of charge as soon as reasonably practicable after they have been filed or furnished to the |
Securities and Exchange Commission (the “SEC”). Additional information regarding the Trust may also be found on the |
SEC’s EDGAR database at www.sec.gov. Trust Objective The investment objective of the Trust is for the Shares to reflect |
the performance of the price of physical gold bullion, less the Trust’s expenses. The Shares are intended to constitute |
a simple and cost-effective means of making an investment similar to an investment in physical gold. An investment in physical gold |
requires expensive and sometimes complicated arrangements in connection with the assay, transportation, warehousing and insurance |
of the metal. Traditionally, such expense and complications have resulted in investments in physical gold being efficient |
only in amounts beyond the reach of many investors. 2 The Shares are intended to provide institutional and retail |
investors with a simple and cost-efficient means, with minimal credit risk, of gaining investment benefits similar to those of |
holding gold bullion. The Shares offer an investment tha • Easily Accessible and Relatively Cost Effective . |
Investors can access the gold bullion 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 gold bullion by using the Shares |
instead of using the traditional means of purchasing, trading and holding gold bullion and for many investors, transaction costs related |
to the Shares will be lower than those associated with the purchase, storage and insurance of physical gold bullion. • Exchange Traded and Transparent. The Shares trade on |
the NYSE Arca, providing investors with an efficient means to implement various investment strategies. The Shares are eligible |
for margin accounts and are backed by the assets of the Trust and the Trust does not hold or employ any derivative securities. |
Furthermore, the value of the Trust’s holdings are reported on the Trust’s website daily. • Minimal Credit Risk . The Shares represent an interest |
in physical gold owned by the Trust (other than an amount held in unallocated form which is not sufficient to make up a whole bar |
of which is held temporarily to effect a creation or redemption of Shares). Physical gold of the Trust in the Custodian’s |
possession is not subject to borrowing arrangements with third parties. Other than the gold temporarily being held in an unallocated gold |
account with the Custodian, the physical gold of the Trust is not subject to counterparty or credit risks. See “Risk |
Factors—Gold held in the Trust’s unallocated gold account and any Authorized Participant’s unallocated gold |
account is not segregated from the Custodian’s assets...” This contrasts with most other financial products that |
gain exposure to gold through the use of derivatives that are subject to counterparty and credit risks. Investing in the Shares does not insulate the investor from |
certain risks, including price volatility. See “Risk Factors.” Overview of the Gold Industry In this annual report, the term “ounces” refers |
to fine troy ounces. Market Participants The participants in the world gold market may be classified |
in the following secto the mining and producer sector, the banking sector, the official sector, the investment sector, and the |
manufacturing sector. A brief description of each follows. Mining and Producer Sector This group includes mining companies that specialize in gold |
and silver production, mining companies that produce gold as a by-product of other production (such as a copper or silver producer), |
scrap merchants and recyclers. Banking Sector Gold bullion banks provide a variety of services to the gold |
market and its participants, thereby facilitating interactions between other parties. Services provided by the gold bullion banking |
community include traditional banking products as well as mine financing, physical gold purchases and sales, hedging and risk management, |
inventory management for industrial users and consumers, and gold deposit and loan instruments. 3 The Official Sector The official sector encompasses the activities of the various |
central banking operations of gold-holding countries. According to statistics published by the World Gold Council in the World Gold Council Gold Survey 2021, central banks |
are estimated to hold approximately 35,000 tonnes (when used in this annual report “tonne” refers to one metric tonne, |
which is equivalent to 1,000 kilograms or 32,151 troy ounces) of gold reserves, or approximately 20% of existing above-ground stocks. |
From 2009 to 2019, the European Central Bank and other central banks of Europe operated under a series of four Central Bank Gold |
Agreements (“CBGA”). The CBGA limited the amount of gold that these banks were allowed to sell for the duration of each |
agreement, helping to stabilize the gold market. The CBGA had the desired effect, and the gold market has become more balanced, |
eliminating the need for a formal agreement going forward. The Investment Sector This sector includes the investment and trading activities of |
both professional and private investors and speculators. These participants range from large hedge and mutual funds to day-traders |
on futures exchanges, and retail-level coin collectors. The Manufacturing Sector The fabrication and manufacturing sector represents all the |
commercial and industrial users of gold for whom gold is a daily part of their business. The jewelry industry is a large user of |
gold. Other industrial users of gold include the electronics and dental industries. World Gold Supply and Demand 2011-2020 (in tonnes) The following table sets forth a summary of the world gold supply |
and demand for the period from 2011 to 2020 and is based on information reported by the World Gold Council. (tonnes) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Supply Mine production 2,868 2,882 3,076 3,180 3,222 3,251 3,247 3,332 3,530 3,473 Scrap 1,698 1,700 1,303 1,159 1,180 1,306 1,210 1,178 1,281 1,302 Net Hedging Supply 18 (40 ) (39 ) 108 21 32 (41 ) 8 (0.7 ) (52 ) Total Supply 4,584 4,542 4,340 4,447 4,423 4,589 4,416 4,518 4,810 4,723 Demand Jewelry Fabrication 2,099 2,066 2,726 2,559 2,464 1,953 2,214 2,129 2,122 1,327 Industrial Fabrication 470 432 428 411 376 366 380 391 326 302 Electronics 342 310 306 297 267 264 277 288 262 248 Dental & Medical 43 39 36 34 32 30 29 29 13.9 11.9 Other Industrial 85 84 85 80 76 71 73 74 49.8 42 Net Official Sector 457 544 409 466 443 269 366 536 668 255 Retail Investment 1,617 1,407 1,871 1,162 1,160 1,043 1,028 1,097 871 899 Bars 1,248 1,057 1,444 886 875 786 780 800 579.6 537 Coins 369 350 426 276 284 257 248 297 292 292 Physical Demand 4,643 4,449 5,434 4,598 4,443 3,631 3,988 4,153 3,987 2,783 Physical Surplus/(Deficit) -59 93 -1,094 -151 -20 958 428 365 823 1,940 ETF Inventory Build 189 279 (879 ) (155 ) (117 ) 539 177 59 398 873 Exchange Inventory Build (6 ) (10 ) (98 ) 1 (48 ) 86 — (21 ) — — Net Balance (242 ) (176 ) (117 ) 3 145 333 251 327 425 193 Sour World Gold Council Gold Survey 2021 The following are some of the main characteristics of the gold |
market illustrated by the tab One factor which separates gold from other precious metals is |
that there are large above-ground stocks which can be quickly mobilized. As a result of gold’s liquidity, gold often acts |
more like a currency than a commodity. Over the past ten years, (new) mine production of gold has experienced |
a modest rise of an average of 2.40% per annum. Of the three sources of supply, mine production accounts for 73.5% in 2020. Recycled |
gold volumes have ranged from 1,069 tonnes to 1,637 tonnes over the past 10 years. On the demand side, jewelry is clearly the greatest source of |
demand. Industrial demand has fluctuated between 8% and 14% of total demand over the past 10 years. Exchange traded product |
inventory build had seen strong growth through 2012, followed by outflows in 2013, 2014 and 2015 as the price of gold fell by a |
cumulative 30% between 2013 and 2015. Exchange traded product inventory build has been positive each year from 2016 to 2020. During |
the 2013 price crash, retail coin and bar demand rose to a 10-year high as retail investors, especially from China, were enticed |
by the falling prices. Retail coin and bar demand has since tapered off. Investor inflows into ETFs returned in 2016 amid heightened |
market uncertainty and continued to see 873 tonnes of inflows in 2020. Historical Chart of the Price of Gold The price of gold is volatile and fluctuations are expected |
to have a direct impact on the value of the Shares. However, movements in the price of gold in the past are not a reliable indicator |
of future movements. Movements may be influenced by various factors, including announcements from central banks regarding a country’s |
reserve gold holdings, agreements among central banks, political uncertainties around the world, and economic concerns. 4 The following chart illustrates the movements in the price of |
an ounce of gold in U.S. Dollars from December 31, 2011 to December 31, 2021: T he gold price tends to rise during |
periods of low real interest rates and high monetary expansion, as they are often associated with currency debasement and systemic |
financial failures. The gold price peaked at US$1,950.01 per ounce in January 2021 as the uncertainties regarding the pandemic |
drove prices higher. 2021 proved to be a volatile year for gold as major market events and continued pandemic uncertainty, coupled |
with new variants, allowed gold to remain in the investment picture during the year. Additionally, the trends of 3 years of investor |
outflows in global ETFs and net negative investor sentiment in gold futures positioning reversed in 2016 and continued through |
2021. Continued low real interest rates, tepid economic growth, and concerns regarding the recovery of the pandemic were key tailwinds |
for gold that sparked a return of investor interest. Operation of the Gold Bullion Market The global trade in gold consists of Over-the-Counter (“OTC”) |
transactions in spot, forwards, and options and other derivatives, together with exchange-traded futures and options. Global Over-The-Counter Market The |
OTC market trades on a 24-hour per day continuous basis and accounts for most global gold trading. Market makers, as well as others in the OTC market, trade with |
each other and with their clients on a principal-to-principal basis. All risks and issues of credit are between the parties directly |
involved in the transaction. Market makers include the market-making members of the London Bullion Market Association (“LBMA”), |
the trade association that acts as the coordinator for activities conducted on behalf of its members and other participants in |
the London bullion market. The twelve market-making members of the LBMA BNP Paribas SA, Citibank N.A., Credit Suisse AG Zurich, |
HSBC, Goldman Sachs International, ICBC Standard Bank Plc, JPMorgan Chase Bank, Merrill Lynch International, |
Morgan Stanley & Co. International Plc, Standard Chartered Bank, Toronto-Dominion Bank and UBS AG. The main centers of the OTC market are London, Zurich and New |
York. Mining companies, central banks, manufacturers of jewelry and industrial products, together with investors and speculators, |
tend to transact their business through one of these market centers. Centers such as Dubai and several cities in the Far East |
also transact substantial OTC market business, typically involving jewelry and small gold bars (1 kilogram or less) and will hedge |
their exposure by selling into one of these main OTC centers. Bullion dealers have offices around the world and most of the world’s |
major bullion dealers are either members or associate members of the LBMA. 5 In the OTC market, the standard size of gold trades between |
market makers ranges between 5,000 and 10,000 ounces. Bid-offer spreads are typically 50 US cents per ounce. Certain dealers are |
willing to offer clients competitive prices for much larger volumes, including trades over 100,000 ounces, although this will vary |
according to the dealer, the client and market conditions, as transaction costs in the OTC market are negotiable between the parties |
and therefore vary widely. Cost indicators can be obtained from various information service providers as well as dealers. Liquidity in the OTC market can vary from time to time during |
the course of the 24-hour trading day. Fluctuations in liquidity are reflected in adjustments to dealing spreads—the differential |
between a dealer’s “buy” and “sell” prices. The period of greatest liquidity in the gold market generally |
occurs at the time of day when trading in the European time zones overlaps with trading in the United States, which is when OTC |
market trading in London, New York and other centers coincides with futures and options trading on the Commodity Exchange, Inc. |
(“COMEX”), a designated contract market within the CME Group. This period lasts for approximately four hours each New |
York business day morning. The London Gold Bullion Market Although the market for physical gold is distributed globally, |
most OTC market trades are cleared through London. In addition to coordinating market activities, the LBMA acts as the principal |
point of contact between the market and its regulators. A primary function of the LBMA is its involvement in the promotion of refining |
standards by maintenance of the “Good Delivery List,” which is a list of LBMA accredited refiners of gold. The LBMA |
also coordinates market clearing and vaulting, promotes good trading practices and develops standard documentation. The terms “loco London” gold and “loco Zurich” |
gold refer to gold physically held in London and Zurich, respectively, that meets the specifications for weight, dimensions, fineness |
(or purity), identifying marks (including the assay stamp of a LBMA acceptable refiner) and appearance set forth in “The |
Good Delivery Rules for Gold and Silver Bars” published by the LBMA. Gold bars meeting these requirements are described in |