abrdn Gold ETF Trust Your 2024 Annual Review

This report offers investors a comprehensive look at the abrdn Gold ETF Trust's performance and operations for the fiscal year ending December 31, 2024. The Trust provides direct exposure to physical gold, aiming to mirror the price movements of gold bullion, less its operating expenses.

1. Trust Overview & Performance Highlights (Fiscal Year 2024)

The abrdn Gold ETF Trust has a simple mission: to hold physical gold bullion, allowing investors to gain exposure to gold prices through easily tradable shares. Unlike a traditional company, the Trust does not generate revenue from sales or services; its value directly reflects its gold holdings.

• Asset Growth: The Trust's total gold holdings (its assets under management) grew substantially, increasing from approximately $3.76 billion at the end of 2023 to $7.33 billion by the end of 2024.
• Investor Interest: This growth also reflected increased investor demand, with the number of shares outstanding rising from 150.7 million at the end of 2023 to 178.6 million by the end of 2024.
• Gold Price Impact: Strong gold prices in 2024 primarily drove this significant asset growth. The average LBMA Gold Price per ounce increased notably, rising from $1,941/oz in 2023 to $2,386/oz in 2024, directly increasing the Trust's value.
• Net Asset Value (NAV) Performance: The Trust's Net Asset Value (NAV) per share closely tracked the price of gold, aligning with its objective. Investors should review the annual total return of both the NAV and the market price of shares, along with the Trust's tracking error, to assess its effectiveness after expenses.

2. How the Trust Operates & Its Costs

The Trust operates with a focus on simplicity and transparency:

• Physical Gold Holdings: The Trust holds only physical gold bullion in allocated, segregated accounts. JPMorgan Chase Bank, N.A. serves as the primary custodian, storing the gold in London vaults.
• No Cash or Debt: The Trust does not hold significant cash reserves (beyond minimal operational needs) and carries no debt.
• Expense Ratio: The Trust covers its expenses, such as custody fees, administrative costs, and marketing, by periodically selling a small amount of gold from its holdings. This means the amount of gold backing each share slightly decreases over time. The expense ratio, representing these annual operating costs as a percentage of assets, is a critical factor for investors. While the summary highlights it as "cost-effective," investors should consult the Trust's prospectus for the exact expense ratio to understand the ongoing cost of holding the ETF.

3. Key Advantages for Investors

The abrdn Gold ETF Trust offers several key advantages for investors seeking gold exposure:

• Direct Gold Exposure: It offers direct investment in physical gold, avoiding the complexities and risks of gold derivatives or futures contracts.
• Accessibility & Liquidity: Investors can easily buy and sell shares through standard brokerage accounts on the NYSE Arca exchange, providing greater liquidity than physical gold bars or coins.
• Cost-Effectiveness: The ETF's expense ratio is generally lower than the costs of directly buying, storing, insuring, and selling physical gold bullion.
• Transparency: The Trust reports its gold holdings daily and calculates and publishes its NAV regularly, offering clear insight into its underlying value.
• Minimal Credit Risk: Because it holds actual physical gold, the Trust minimizes credit risk from financial institutions or counterparty defaults, a common concern with other gold products.

4. Understanding the Risks

While the Trust offers a straightforward way to invest in gold, investors should be aware of several key risks:

• Gold Price Volatility: The primary risk is the natural volatility of gold prices. Your investment's value will fluctuate directly with gold's market price, influenced by global economic conditions, interest rates, currency movements, and geopolitical events.
• Custody Risk:
  • Unallocated Gold Risk: During transactions, a small portion of the Trust's gold may temporarily reside in "unallocated accounts." Here, the gold is not segregated from the Custodian's other assets, creating a limited, temporary credit risk if the Custodian faces financial difficulties. However, the vast majority of the Trust's gold remains in allocated, segregated accounts.
  • Physical Loss/Theft: Despite high security, a remote risk of loss, damage, or theft of physical gold bullion in the custodian's vaults always exists.
• Tracking Error Risk: While the Trust aims to track the price of gold, minor discrepancies can arise from operational expenses, market trading dynamics (premium/discount to NAV), and other factors, resulting in a "tracking error."
• Liquidity Risk of Shares: While generally liquid, periods of low trading volume for ETF shares could impact an investor's ability to buy or sell at their desired price.
• Regulatory & Tax Risks: Changes in government regulations affecting gold, commodities, or ETFs, as well as changes in tax laws, could negatively impact the Trust or its investors. For U.S. investors, the IRS often taxes gains from the sale of shares in physical gold ETFs at the higher "collectibles" rate, not the lower long-term capital gains rate.

5. Market Context & Future Outlook

Several significant trends in the gold market influenced the Trust's performance in 2024:

• Strong Central Bank Demand: Central banks remained major gold buyers, with their demand reaching 23.6% of total gold demand in 2023 (up from 6.9% in 2020), a trend continuing into 2024.
• Gold as a Currency: With its substantial existing above-ground stock, gold often behaves more like a currency than a typical industrial commodity.
• Stable Mine Production: Global gold mine production rose modestly by about 1.41% per year over the last decade, indicating stable supply.
• Jewelry Demand: Jewelry manufacturing remained a significant demand driver, accounting for nearly 44% of total gold demand in 2023.
• ETF Flow Dynamics: While the broader category of gold ETFs experienced net outflows on average from 2021 to 2023, the abrdn Gold ETF Trust saw substantial inflows and asset growth in 2024. This suggests the Trust gained market share through its competitive expense ratio, specific investor preferences, or effective marketing strategies.

The Trust has no fixed termination date, meaning it operates indefinitely. While the Trust itself does not provide forward-looking statements or predictions, its future performance will primarily depend on global economic stability, inflation expectations, interest rate policies, geopolitical developments, and overall investor sentiment towards gold as a safe-haven asset or store of value.

Conclusion

The abrdn Gold ETF Trust experienced robust growth in 2024, largely due to strong gold prices and increased investor interest. It continues to offer retail investors a transparent, cost-effective, and accessible way to gain exposure to physical gold bullion. As with any investment, understanding the associated risks, especially gold price volatility and the Trust's expense ratio, is crucial for informed investment decisions.