| Significant Accounting Policies | 2. Significant Accounting Policies The preparation of financial
statements in accordance with accounting principles generally accepted in the United States of America (“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 Trust is an investment company for financial
reporting purposes in accordance with GAAP and is not registered as an investment company under the 1940 Act nor is it required
to register under such act. VAULTED GOLD BULLION TRUST January 31, 2021 (Unaudited)
2.2. Valuation
of Gold The Gold is held for the
benefit of holders of the Receipts in a custodial account operated by Bank of Montreal at the Royal Canadian Mint (the “Mint”)
and is valued, for financial statement purposes, at fair value. Fair value is determined by the London Bullion Market Association
(“LBMA”) (PM) Gold Price, which is set using the afternoon session of the ICE Benchmark Administration (“IBA”)
equilibrium auction. The Trust follows GAAP
guidance for determining fair value and GAAP requires disclosure regarding the inputs to valuation techniques used to measure fair
value. Fair value is defined 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. The Trust records its
investment in gold at fair value and recognizes changes in fair value of the investment in gold as changes in unrealized gains
or losses on investment in gold through the Statement of Operations. Realized gains and losses on the redemption of Receipts, are
calculated as the difference between the fair value and cost of gold redeemed. Realized gains and losses are recorded using the
specific identification method for cost relief. VAULTED GOLD BULLION TRUST January 31, 2021 (Unaudited)
2.2. Valuation of Gold (continued) Valuation Techniques and Significant Inputs A valuation hierarchy
exists 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 in an active market that are observable for the asset or liability either directly or indirectly. These inputs may include quoted prices for the identical instrument in 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. The Trust classifies its
investment in gold as Level 1 of the fair value hierarchy. There were no re-allocations or transfers between levels during the
period. VAULTED GOLD BULLION TRUST January 31, 2021 (Unaudited)
2.3. Issuance and Redemption of Receipts The Trust issues Receipts
on a continuous basis pursuant to the Depositary Trust Agreement. Authorized capital is unlimited. There were 979 Receipts issued
and outstanding on January 31, 2021 (979 Receipts issued and outstanding on October 31, 2020). Holders of Receipts will
receive no distributions. Subject to certain exceptions,
holders of Receipts have the option to redeem their Receipts for physical gold (to be delivered directly to them by the service
carrier) subject to payment of a withdrawal and delivery fee to the Initial Depositor, or exchange their Receipts for cash. Changes
in the Receipts for the three months ended January 31, 2021 and January 31, 2020 are set out below:
Three Months Three Months
(Amounts in US$ except for Receipt and per Receipt data)
Number of Receipts Transactions
Opening balance 979 153,386
Receipts issued - 10
Receipts issuable - -
Receipts redeemed - (1 )
Closing balance 979 153,395
Amount of Receipts (at cost)
Opening balance $ 1,584,421 $ 203,584,099
Issuances - 14,542
Receipts issuable - -
Redemptions - (1,343 )
Closing balance $ 1,584,421 $ 203,597,298
Net Asset Value per Receipt at period end $ 1,863.80 $ 1,584.20 VAULTED GOLD BULLION TRUST January 31, 2021 (Unaudited)
2.4. Income Taxes The Trust is classified
as a “grantor trust” for U.S. federal income tax purposes. As a result, the Trust itself is not subject to U.S. federal
income tax. The Trustee has evaluated
whether there are uncertain tax positions that require financial statement recognition and has determined that no reserves for
uncertain tax positions are required as of January 31, 2021 and October 31, 2020.
2.5 Investment in Gold Changes in ounces of the
Trust’s investment in gold and the respective values for the three months ended January 31, 2021 and January 31, 2020 are
set out below:
(Amounts in US$ except for ounces data) Three Months Ended Three Months Ended
Ounces of gold
Opening balance 979 153,386
Purchases - 10
Redemptions - (1 )
Closing balance 979 153,395
Investment in gold
Opening balance $ 1,842,331 $ 231,758,577
Net change in unrealized gain (loss) on (17,671 ) 11,236,583
Net realized gain on redemption of - 134
Purchases - 14,542
Redemptions - (1,447 )
Closing balance $ 1,824,660 $ 243,008,359 VAULTED GOLD BULLION TRUST January 31, 2021 (Unaudited)
2.6. Fees and Expenses The expenses of the
Trust are borne by the Initial Depositor. The expenses of the
Trust are expected to include, but are not limited to, the following: • any expenses or liabilities
of the Trust; • any taxes and other governmental
charges that may fall on the Trust or its property; and • fees and expenses of the
Trustee and any indemnification of the Trustee. Additionally, the Trustee’s
and Mint’s fees are paid by the Initial Depositor and are not separate expenses of the Trust.
2.7. Related Party Transactions On May 11, 2017, the Trust
entered into the Depositary Trust Agreement with The Bank of New York Mellon, BNY Trust of Delaware, Bank of Montreal and BMO Capital
Markets Corp. On July 11, 2018, the Trust entered into the Second Amended and Restated Distribution Agreement with Bank of Montreal
and BMO Capital Markets Corp (the “Distribution Agreement”). Bank of Montreal acts
as the Initial Depositor of the Trust and holds gold that it transfers to the Trust from time to time in connection with the sale
by the Trust of Receipts. Pursuant to the Depositary Trust Agreement and the Distribution Agreement, the offering price for each
Receipt consists of the spot price at the time of sale to an investor for one troy ounce of gold, plus: (1) in the case of a Class
A Gold Deposit Receipt, a deposit fee of 2.00%, payable to Bank of Montreal, plus plus Bank of Montreal charges
holders of Receipts a withdrawal and delivery fee if physical delivery of the gold is requested (the “Withdrawal and Delivery
Fee”). Bank of Montreal additionally reserves the right to charge the holders of Receipts a custody fee, not to exceed 0.50%
per annum of the daily average closing price of gold represented by the Receipts, as calculated by the Initial Depositor, acting
in good faith (the “Custody Fee”). Bank of Montreal did not charge any Custody Fee during the three months ended January
31, 2021 or for the fiscal year ended October 31, 2020. None of the Deposit Fee, Withdrawal and Delivery Fee or Custody Fee is
paid by the Trust to Bank of Montreal. Pursuant to the terms
of the Distribution Agreement, BMO Capital Markets Corp., one of Bank of Montreal’s affiliates, acts as the Underwriter of
the continuous offerings of Receipts and as the calculation agent responsible for calculating the spot price at which Receipts
are offered to the public. BMO Financial Group (“BMO”)
held no Receipts as at January 31, 2021 and October 31, 2020. |
