| Significant Accounting Policies | 2. Significant
Accounting Policies The
preparation of financial statements in accordance with U.S. GAAP requires those responsible for preparing financial statements
to make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the Trust.
2.1. Basis
of Accounting The
Sponsor has determined that the Trust falls within the scope of Financial Accounting Standards Board (“FASB”) Accounting
Standards Codification (“ASC”) 946, Financial Services—Investment Companies
2.2. Valuation
of Palladium The
Trust follows the provisions of ASC 820, Fair Value Measurement The
Trust’s palladium is held by JPMorgan Chase Bank, N.A. (the “Custodian”), on behalf of the Trust, at its London,
England vaulting premises. The Trust’s palladium may also be held by UBS AG, or any other firm selected by the Custodian to hold
the Trust’s palladium in the Trust’s allocated account in the firm’s vault premises on a segregated basis
and whose appointment has been approved by the Sponsor. At December 31, 2023, approximately 8.04 The
Trust’s palladium is recorded at fair value. The cost of palladium is determined according to the average cost method and the
fair value is based on the afternoon session of the twice daily fix of an ounce of palladium administered by the London Metal
Exchange (“LME”) (the “LME PM Fix”). Realized gains and losses on transfers of palladium, or palladium
distributed for the redemption of Shares, are calculated on a trade date basis as the difference between the fair value and average cost
of palladium transferred. The
LME is responsible for the administration of the electronic palladium price fixing system (“LMEbullion”) that
replicates electronically the manual London palladium fix processes previously employed by the London Platinum and Palladium Fixing
Company Ltd (“LPPFCL”), as well as providing electronic market clearing processes for palladium bullion transactions
at the fixed prices established by the LME pricing mechanism. LMEbullion, like the previous London palladium fix processes, establishes
and publishes fixed prices for troy ounces of palladium twice each London trading day during fixing sessions beginning at 9:45
a.m. London time (the “LME AM Fix”) and 2:00 p.m. London time (the “LME PM Fix”). Once
the value of palladium has been determined, the net asset value (the “NAV”) is computed by the Trustee
by deducting all accrued fees, expenses and other liabilities of the Trust, including the remuneration due to the Sponsor (the
“Sponsor’s Fee”), from the fair value of the palladium and all other assets held by the Trust. The
Trust recognizes changes in fair value of the investment in palladium as changes in unrealized gains or losses on investment
in palladium through the Statement of Operations. The
per Share amount of palladium exchanged for a purchase or redemption is calculated daily by the Trustee using the LME PM
Fix to calculate the palladium amount in respect of any liabilities for which covering palladium sales have not yet
been made, and represents the per Share amount of palladium held by the Trust, after giving effect to its liabilities, to
cover expenses and liabilities and any losses that may have occurred. Fair
Value Hierarchy ASC
820 establishes a hierarchy that prioritizes inputs to valuation techniques used to measure fair value. The three levels of inputs
are as follows: – Level
1. Unadjusted quoted prices in active markets for identical assets or liabilities that the Trust has the ability to access. – Level
2. Observable inputs other than quoted prices included in level 1 that are observable for the asset or liability either directly
or indirectly. These inputs may include quoted prices for the identical instrument on
an inactive market, prices for similar instruments and similar data. – Level
3. Unobservable inputs for the asset or liability to the extent that relevant observable inputs are not available, representing
the Trust’s own assumptions about the assumptions that a market participant would use in valuing the asset or liability,
and that would be based on the best information available. To
the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination
of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for
instruments categorized in level 3. The
inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes,
the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the
lowest level input that is significant to the fair value measurement in its entirety. The
Trust’s investment in palladium is classified as a level 1 asset, as its value is calculated using unadjusted
quoted prices from primary market sources. The
categorization of the Trust’s assets is as shown below:
(Amounts in 000’s of US$) December 31, 2023 December 31, 2022
Level 1
Investment in palladium $ 219,421 $ 295,638 There were no transfers between levels during the years ended December 31, 2023 and 2022.
2.3. Palladium
Receivable and Payable Palladium receivable
or payable represents the quantity of palladium covered by contractually binding orders for the creation or redemption of
Shares respectively, where the palladium has not yet been transferred to or from the Trust’s account. Generally, ownership
of palladium is transferred within two business days of the trade date. At December 31, 2023, the Trust had no no
2.4. Creations
and Redemptions of Shares The
Trust expects to create and redeem Shares from time to time, but only in one or more Baskets (a Basket equals a block of 25,000 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 palladium represented by the Baskets being created or redeemed, the amount of which is based on the combined
NAV 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. Authorized
Participants may, on any business day, place an order with the Trustee to create or redeem one or more Baskets. The typical settlement
period for Shares is two business days. In the event of a trade date at period end, where a settlement is pending, a respective
account receivable and/or payable will be recorded. When palladium is exchanged in settlement of a redemption, it is considered
a sale of palladium for financial statement purposes. The
amount of palladium represented by the Baskets created or redeemed can only be settled to the nearest 1/1000th of an ounce.
As a result, the value attributed to the creation or redemption of Shares may differ from the value of palladium to
be delivered or distributed by the Trust. In order to ensure that the correct amount of palladium is available at all times
to back the Shares, the Sponsor accepts an adjustment to its Sponsor’s Fee in the event of any shortfall or excess on each transaction.
For each transaction, this amount is not more than 1/1000th of an ounce of palladium. As
the Shares of the Trust are subject to redemption at the option of Authorized Participants, the Trust has classified the outstanding
Shares as Net Assets. Changes in the number of Shares outstanding are presented in the Statement of Changes in Net Assets.
2.5. Income
Taxes The
Trust is classified as a “grantor trust” for U.S. federal income tax purposes. As a result, the Trust itself will
not be subject to U.S. 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 has evaluated whether or not there are uncertain tax positions that require financial statement recognition and has determined
that no
2.6. Investment
in Palladium Changes
in ounces of palladium and their respective values for the years ended December 31, 2023 and 2022 are set
out below:
Year Ended Year Ended
(Amounts in 000’s of US$, except for ounces data)
Ounces of palladium
Opening balance 166,556.4 181,531.1
Creations 53,072.5 58,004.8
Redemptions (25,394.5 ) (71,914.8 )
Transfers of palladium to pay expenses (1,082.2 ) (1,064.7 )
Closing balance 193,152.2 166,556.4
Investment in palladium
Opening balance $ 295,638 $ 358,161
Creations 73,610 145,623
Redemptions (38,410 ) (147,622 )
Realized (loss) / gain on palladium distributed for the redemption of Shares (10,746 ) 3,889
Transfers of palladium to pay expenses (1,499 ) (2,270 )
Realized gain on palladium transferred to pay expenses (579 ) 155
Change in unrealized (loss) on investment in palladium (98,593 ) (62,298 )
Closing balance $ 219,421 $ 295,638
2.7. Expenses
/ Realized Gains / Losses The primary expense of the Trust is the Sponsor’s
Fee, which is paid by the Trust through in-kind transfers of palladium to the Sponsor. The Trust will transfer palladium to
the Sponsor to pay the Sponsor’s Fee that accrues daily at an annualized rate equal to 0.60 The
Sponsor has agreed to assume administrative and marketing expenses incurred by the Trust, including the Trustee’s monthly
fee and out of pocket expenses, the Custodian’s fee and the reimbursement of the Custodian’s expenses, exchange listing
fees, United States Securities and Exchange Commission (the “SEC”) registration fees, printing and mailing costs,
audit fees and up to $ 100,000 For
the year’s ended December 31, 2023, 2022 and 2021, the Sponsor’s Fee was $ 1,464,063 2,226,662 2,447,225 At December
31, 2023 and at December 31, 2022, the fees payable to the Sponsor were $ 111,606 146,803 With
respect to expenses not otherwise assumed by the Sponsor, the Trustee will, at the direction of the Sponsor or in its own discretion,
sell the Trust’s palladium as necessary to pay these expenses. When selling palladium to pay expenses, the Trustee
will endeavor to sell the smallest amounts of palladium needed to pay these expenses in order to minimize the Trust’s
holdings of assets other than palladium. Other than the Sponsor’s Fee, the Trust had no Unless
otherwise directed by the Sponsor, when selling palladium the Trustee will endeavor to sell at the price established by the
LME 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 palladium only if the
sale transaction is made at the next LME PM Fix or such other publicly available price that the Sponsor deems fair, in each case
as set following the sale order. A gain or loss is recognized based on the difference between the selling price and the average
cost of the palladium sold. Neither the Trustee nor the Sponsor is liable for depreciation or loss incurred by reason of
any sale. Realized
gains and losses result from the transfer of palladium for Share redemptions and / or to pay expenses and are recognized
on a trade date basis as the difference between the fair value and average cost of palladium transferred.
2.8. Subsequent
Events In
accordance with the provisions set forth in FASB ASC 855-10, Subsequent Events |
