| 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, and has concluded that for reporting purposes,
the Trust is classified as an Investment Company. 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. 2.2. Valuation
of Palladium The Trust
follows the provisions of ASC 820, Fair Value Measurement (“ASC 820”). ASC 820 provides guidance for determining fair
value and requires increased disclosure regarding the inputs to valuation techniques used to measure fair value. ASC 820 defines
fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. Effective
May 23, 2024, the Trustee, at the direction of the Sponsor, entered into an Allocated Account Agreement and Unallocated Account
Agreement with ICBC Standard Bank Plc ("ICBC"), providing for the custody of the Trust's palladium. Prior to May 23, 2024, JPMorgan
Chase Bank N.A. ("JPMorgan") served as custodian of the Trust's palladium, and will continue to provide custody services
until all of the Trust's palladium is transferred to ICBC. At June 30, 2024, approximately 96.23% 3.77% none 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 “LBMA Palladium Price PM”). 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” LBMA Palladium Price AM”) and 2:00 p.m. London time (the “LBMA Palladium Price PM”). 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 LBMA Palladium Price
PM 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$) June
30, 2024 December
31, 2023
Level 1
Investment in palladium $ 284,119 $ 219,421 There were no transfers between
levels during the six months ended June 30, 2024 or the year ended December 31, 2023. 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 June 30, 2024, 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 (effective June 18, 2024, a Basket equals
a block of 12,500 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. Effective May 28,
2024, the standard settlement period for Shares is one business day. Prior to May 28, 2024, the settlement period for Shares was 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 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 three and six months ended June 30, 2024 and 2023
are set out below:
Three Months Ended June 30, 2024 Three
Months Ended June 30, 2023
(Amounts in 000’s of US$, except for ounces data)
Ounces of palladium
Opening balance 220,414.3 184,792.5
Creations 96,315.4 4,613.3
Redemptions (24,063.4 ) (4,616.1 )
Transfers of palladium to pay expenses (362.4 ) (279.4 )
Closing balance 292,303.9 184,510.3
Investment in palladium
Opening balance $ 224,161 $ 275,341
Three Months Ended June 30, 2024 Three
Months Ended June 30, 2023
Creations 94,979 6,507
Redemptions (23,846 ) (7,515 )
Realized (loss) on palladium distributed for the redemption of Shares (11,584 ) (1,352 )
Transfers of palladium to pay expenses (362 ) (411 )
Realized gain on palladium transferred to pay expenses (213 ) (125 )
Change in unrealized gain / (loss) on investment in palladium 984 (41,069 )
Closing balance $ 284,119 $ 231,376
Six Months Ended June 30, 2024 Six Months Ended June 30, 2023
(Amounts in 000’s of US$, except for ounces data)
Ounces of palladium
Opening balance 193,152.2 166,556.4
Creations 139,958.8 39,271.0
Redemptions (40,135.8 ) (20,785.8 )
Transfers of palladium to pay expenses (671.3 ) (531.3 )
Closing balance 292,303.9 184,510.3
Investment in palladium
Opening balance $ 219,421 $ 295,638
Creations 136,465 59,238
Redemptions (39,469 ) (32,479 )
Realized (loss) on palladium distributed for the redemption of Shares (23,303 ) (7,885 )
Transfers of palladium to pay expenses (676 ) (834 )
Realized gain / (loss) on palladium transferred to pay expenses (441 ) (198 )
Change in unrealized (loss) on investment in palladium (7,878 ) (82,104 )
Closing balance $ 284,119 $ 231,376 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 three
months ended June 30, 2024 and 2023, the Sponsor’s Fee was $ 396,037 381,658 711,329 801,153 At June
30, 2024 and at December 31, 2023, the fees payable to the Sponsor were $ 146,869 111,606 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 LBMA Palladium
Price PM. 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 LBMA Palladium Price PM 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 |
