| 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 Bullion The
Trust follows the provisions of ASC 820, Fair Value Measurement Bullion
is held by JPMorgan Chase Bank, N.A. (the “Custodian”), on behalf of the Trust, at its London, England vaulting
premises on a segregated basis. The allocated Bullion may also be held by UBS AG, or any other firm selected
by the Custodian to hold the Trust’s Bullion 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 June 30, 2020, approximately 99.9 1.33 %
of the Trust’s platinum and 1.35 %
of the Trust’s palladium was held by one or more sub-custodians. At June 30, 2020 no gold was held by a sub-custodian. The
Trust’s Bullion is recorded, per individual metal type, at fair value. The cost of Bullion is determined according to the
average cost method and the fair value is based on the relevant “London Metal Price” for each metal held by the Trust.
This is the applicable “London Bullion Market Association (“LBMA”) PM Gold Price” for the price of an
ounce of gold, the “LBMA Silver Price” for silver, and for platinum and palladium the applicable “London Metal
Exchange (“LME”) PM Price”. Realized
gains and losses on transfers of Bullion, or Bullion distributed for the redemption of Shares, are calculated on a trade date
basis as the difference between the fair value and average cost of Bullion transferred. The
LBMA PM Gold Price is set using the afternoon session of the ICE Benchmark Administration (“IBA”) equilibrium auction,
an electronic, tradable and auditable over-the-counter auction market with the ability to settle trades in US Dollars, Euros or
British Pounds for LBMA authorized participating gold bullion banks or market makers that establishes a reference gold price for
that day’s trading. The “London Metal Price” for gold held by the Trust is the LBMA PM Gold Price. The
IBA conducts an electronic, over-the-counter silver auction in London, England to establish a fixing price for an ounce of silver
once each trading day, which is disseminated by major market vendors (the “LBMA Silver Price”). The LBMA Silver Price
is established by the nine LBMA authorized bullion banks and market makers participating in the auction and disseminated by major
market vendors. Prior to October 2, 2017, the LBMA Silver Price auction was operated by CME Group Inc. and Thomson Reuters. The
“London Metal Price” for silver held by the Trust is the LBMA Silver Price. The
LME is responsible for the administration of the electronic platinum and palladium bullion price fixing system (“LMEbullion”)
as well as providing electronic market clearing processes for platinum and palladium bullion transactions at the fixed prices
established by the LME pricing mechanism. LMEbullion establishes and publishes fixed prices for troy ounces of platinum and 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”). The “London Metal Price” for platinum and palladium held by the Trust
is the LME PM Fix. Once
the value of Bullion 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 Bullion and all other assets held by the Trust. The
Trust recognizes changes in fair value of the investment in Bullion as changes in unrealized gains or losses on investment in
Bullion through the Statement of Operations. The
per Share amount of Bullion exchanged for a purchase or redemption is calculated daily by the Trustee, using the London Metal
Price for each metal held by the Trust to calculate the Bullion amount in respect of any liabilities for which covering Bullion
sales have not yet been made, and represents the per Share amount of Bullion 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
investment in Bullion is classified as a level 2 asset, as the Trust’s investment in Bullion is calculated using primary
market pricing sources supported by observable, verifiable inputs. The
categorization of the Trust’s assets is as shown below:
(Amounts
in 000’s of US$) June
30, 2020 December
31, 2019
Level
2
Investment
in Bullion $ 556,535 $ 491,706 There
were no transfers between levels during the six months ended June 30, 2020 or the year ended December 31, 2019.
2.3.
Bullion Receivable and Payable Bullion
receivable or payable represents the quantity of Bullion covered by contractually binding orders for the creation or redemption
of Shares respectively, where the Bullion has not yet been transferred to or from the Trust’s account. Generally, ownership
of Bullion is transferred within two business days of the trade date. At June 30, 2020, the Trust had no 7,619,507
of Bullion receivable for
the creation of shares and 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 50,000
Shares). The Trust issues
Shares in Baskets to Authorized Participants on an ongoing basis. Individual investors cannot purchase or redeem Shares in direct
transactions with the Trust. An Authorized Participant is a person who (1) is a registered broker-dealer or other securities market
participant such as a bank or other financial institution which is not required to register as a broker-dealer to engage in securities
transactions; (2) is a participant in The Depository Trust Company; (3) has entered into an Authorized Participant Agreement with
the Trustee and the Sponsor; and (4) has established an Authorized Participant Unallocated Account with the Trust’s Custodian
or other Bullion clearing bank. An Authorized Participant Agreement is an agreement entered into by each Authorized Participant,
the Sponsor and the Trustee which provides the procedures for the creation and redemption of Baskets and for the delivery of the
Bullion required for such creations and redemptions. An Authorized Participant Unallocated Account is an unallocated Bullion account,
either loco London or loco Zurich, established with the Custodian or a Bullion clearing bank by an Authorized Participant. 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 Bullion 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 Bullion is exchanged in settlement of a redemption, it is considered
a sale of Bullion for financial statement purposes. The
amount of Bullion 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 Bullion to be delivered or distributed
by the Trust. In order to ensure that the correct amount of Bullion is available at all times to back the Shares, the Sponsor
accepts an adjustment to its management fees 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 Bullion. 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 Bullion Changes
in ounces of Bullion and their respective values for the three and six months ended June 30, 2020 and 2019 are set out below :
Three
Months Ended June 30, 2020
(Amounts
in 000’s of US$, except for ounces data)
Ounces
of Bullion Gold Silver Platinum Palladium Total
Opening
balance 195,665.4 7,174,396.5 26,088.7 39,133.1 7,435,283.7
Creations 2,832.2 103,848.8 377.6 566.4 107,625.0
Redemptions (7,084.2 ) (259,753.0 ) (944.6 ) (1,416.8 ) (269,198.6 )
Transfers
of Bullion to pay expenses (292.3 ) (10,718.4 ) (38.9 ) (58.5 ) (11,108.1 )
Closing
balance 191,121.1 7,007,773.9 25,482.8 38,224.2 7,262,602.0
Investment
in Bullion
Opening
balance $ 314,816 $ 99,939 $ 18,966 $ 90,280 $ 524,001
Creations 4,844 1,700 302 1,079 7,925
Redemptions (11,861 ) (3,896 ) (712 ) (3,085 ) (19,554 )
Realized
gain / (loss) on Bullion distributed for the redemption of Shares 2,602 (577 ) (247 ) 1,551 3,329
Transfers
of Bullion to pay expenses (486 ) (161 ) (29 ) (125 ) (801 )
Realized
gain / (loss) on Bullion transferred to pay expenses 103 (23 ) (9 ) 58 129
Change
in unrealized gain / (loss) on investment in Bullion 27,903 28,072 2,472 (16,941 ) 41,506
Closing
balance $ 337,921 $ 125,054 $ 20,743 $ 72,817 $ 556,535
Three
Months Ended June 30, 2019
(Amounts
in 000’s of US$, except for ounces data)
Ounces
of Bullion Gold Silver Platinum Palladium Total
Opening
balance 156,908.1 5,753,293.5 20,920.9 31,381.3 5,962,503.8
Creations 5,699.8 208,994.8 760.0 1,140.0 216,594.6
Redemptions (2,848.1 ) (104,431.9 ) (379.8 ) (569.7 ) (108,229.5 )
Transfers
of Bullion to pay expenses (241.4 ) (8,850.6 ) (32.2 ) (48.3 ) (9,172.5 )
Closing
balance 159,518.4 5,849,005.8 21,268.9 31,903.3 6,061,696.4
Investment
in Bullion
Opening
balance $ 203,258 $ 86,875 $ 17,783 $ 43,620 $ 351,536
Creations 7,423 3,128 649 1,606 12,806
Redemptions (3,788 ) (1,541 ) (309 ) (793 ) (6,431 )
Realized
gain / (loss) on Bullion distributed for the redemption of Shares 271 (245 ) (89 ) 338 275
Transfers
of Bullion to pay expenses (312 ) (133 ) (27 ) (67 ) (539 )
Realized
gain / (loss) on Bullion transferred to pay expenses 14 (18 ) (6 ) 28 18
Change
in unrealized gain / (loss) on investment in Bullion 17,896 956 (603 ) 3,889 22,138
Closing
balance $ 224,762 $ 89,022 $ 17,398 $ 48,621 $ 379,803
Six
Months Ended June 30, 2020
(Amounts
in 000’s of US$, except for ounces data)
Ounces
of Bullion Gold Silver Platinum Palladium Total
Opening
balance 183,176.5 6,716,468.5 24,423.3 36,635.0 6,960,703.3
Creations 24,105.1 883,853.8 3,214.0 4,821.3 915,994.2
Redemptions (15,590.6 ) (571,654.6 ) (2,078.7 ) (3,118.1 ) (592,442.0 )
Transfers
of Bullion to pay expenses (569.9 ) (20,893.8 ) (75.8 ) (114.0 ) (21,653.5 )
Closing
balance 191,121.1 7,007,773.9 25,482.8 38,224.2 7,262,602.0
Investment
in Bullion
Opening
balance $ 277,466 $ 121,199 $ 23,251 $ 69,790 $ 491,706
Creations 39,000 15,549 2,940 11,521 69,010
Redemptions (24,805 ) (8,053 ) (1,498 ) (5,947 ) (40,303 )
Realized
gain / (loss) on Bullion distributed for the redemption of Shares 4,473 (1,789 ) (612 ) 2,608 4,680
Transfers
of Bullion to pay expenses (920 ) (333 ) (62 ) (259 ) (1,574 )
Realized
gain / (loss) on Bullion transferred to pay expenses 181 (27 ) (16 ) 141 279
Change
in unrealized gain / (loss) on investment in Bullion 42,526 (1,492 ) (3,260 ) (5,037 ) 32,737
Closing
balance $ 337,921 $ 125,054 $ 20,743 $ 72,817 $ 556,535
Six
Months Ended June 30, 2019
(Amounts
in 000’s of US$, except for ounces data)
Ounces
of Bullion Gold Silver Platinum Palladium Total
Opening
balance 162,854.5 5,971,327.0 21,713.7 32,570.6 6,188,465.8
Creations 8,554.2 313,655.1 1,140.6 1,710.8 325,060.7
Redemptions (11,407.4 ) (418,271.4 ) (1,521.0 ) (2,281.5 ) (433,481.3 )
Transfers
of Bullion to pay expenses (482.9 ) (17,704.9 ) (64.4 ) (96.6 ) (18,348.8 )
Closing
balance 159,518.4 5,849,005.8 21,268.9 31,903.3 6,061,696.4
Investment
in Bullion
Opening
balance $ 208,722 $ 92,347 $ 17,241 $ 41,137 $ 359,447
Creations 11,137 4,767 958 2,397 19,259
Redemptions (14,940 ) (6,383 ) (1,234 ) (3,313 ) (25,870 )
Realized
gain / (loss) on Bullion distributed for the redemption of Shares 866 (791 ) (362 ) 1,515 1,228
Transfers
of Bullion to pay expenses (625 ) (271 ) (53 ) (133 ) (1,082 )
Realized
gain / (loss) on Bullion transferred to pay expenses 29 (32 ) (14 ) 56 39
Change
in unrealized gain / (loss) on investment in Bullion 19,573 (615 ) 862 6,962 26,782
Closing
balance $ 224,762 $ 89,022 $ 17,398 $ 48,621 $ 379,803 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 Bullion to the
Sponsor. The
Trust will transfer Bullion to the Sponsor to pay the Sponsor’s Fee that accrues daily at an annualized rate equal to 0.60 %
of the adjusted net asset value (“ANAV”) of the Trust, paid monthly in arrears. 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, 2020 and 2019, the Sponsor’s Fee was $ 803,707
and $ 547,217 ,
respectively. For the six months ended June 30, 2020 and 2019, the Sponsor’s Fee was $ 1,599,371
and $ 1,086,993 ,
respectively. At
June 30, 2020 and at December 31, 2019, the fees payable to the Sponsor were $ 274,463
and $ 248,496 ,
respectively. 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 Bullion as necessary to pay these expenses. When selling Bullion to pay expenses, the Trustee will endeavor
to sell the smallest amounts of Bullion needed to pay these expenses in order to minimize the Trust’s holdings of assets
other than Bullion. Other than the Sponsor’s Fee, the Trust had no Unless
otherwise directed by the Sponsor, when selling Bullion the Trustee will endeavor to sell at the price established by the London
Metal Price for each metal held by the Trust. 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
Bullion only if the sale transaction is made at the London Metal Price for each metal held by the Trust used by the Trustee to
value the Trust’s Bullion. A gain or loss is recognized based on the difference between the selling price and the average
cost of the Bullion 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 Bullion 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 Bullion transferred. 2.8.
Subsequent Events In
accordance with the provisions set forth in FASB ASC 855-10, Subsequent Events |
