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possibility of large-scale distress sales of gold in times of crisis may have a short-term negative impact on the price of gold |
and adversely affect an investment in the Shares. For example, the 2008 financial credit crisis resulted in significantly depressed |
prices of gold largely due to forced sales and deleveraging from institutional investors such as hedge funds and pension funds. |
Crises in the future may impair gold’s price performance which would, in turn, adversely affect an investment in the Shares. Several |
factors may have the effect of causing a decline in the prices of gold and a corresponding decline in the price of Shares. Among |
them: ● |
A significant increase in gold hedging activity by gold producers. Should there be an increase in the level of hedge activity |
of gold producing companies, it could cause a decline in world gold prices, adversely affecting the price of the Shares. ● |
A significant change in the attitude of speculators, investors and central banks towards gold. Should the speculative community |
take a negative view towards gold or central banking authorities determine to sell national gold reserves, either event could |
cause a decline in world gold prices, negatively impacting the price of the Shares. ● |
A widening of interest rate differentials between the cost of money and the cost of gold could negatively affect the price of |
gold which, in turn, could negatively affect the price of the Shares. ● |
A combination of rising money interest rates and a continuation of the current low cost of borrowing gold could improve the economics |
of selling gold forward. This could result in an increase in hedging by gold mining companies and short selling by speculative |
interests, which would negatively affect the price of gold. Under such circumstances, the price of the Shares would be similarly |
affected. The |
value of the Shares relates directly to the value of the gold held by the Trust and fluctuations in the price of gold could materially |
adversely affect an investment in the Shares. The |
Shares are designed to mirror as closely as possible the performance of the price of gold bullion, and the value of the Shares |
relates directly to the value of the gold held by the Trust, less the Trust’s liabilities (including estimated accrued but |
unpaid expenses). The price of gold has fluctuated widely over the past several years. Several factors may affect the price of |
gold, includin ● Global gold supply and demand, which is |
influenced by such factors as forward selling by gold producers, purchases made by gold producers to unwind gold hedge positions, |
central bank purchases and sales, and production and cost levels in major gold-producing countries such as China, Australia, Russia |
and the United States; ● Investors’ expectations with respect |
to the rate of inflation; ● Currency exchange rates; ● Interest rates; ● Investment and trading activities of hedge |
funds and commodity funds; and ● Global or regional political, economic |
or financial events and situations. ● A significant change in investor interest, |
including in response to online campaigns or other activities specifically targeting investments in gold. 25 In |
addition, investors should be aware that there is no assurance that gold will maintain its long-term value in terms of purchasing |
power in the future. In the event that the price of gold declines, the Sponsor expects the value of an investment in the Shares |
to decline proportionately. RISKS |
RELATED TO THE SHARES The |
sale of the Trust’s gold to pay expenses not assumed by the Sponsor at a time of low gold prices could adversely affect |
the value of the Shares. The |
Trustee sells gold held by the Trust to pay Trust expenses not assumed by the Sponsor on an as-needed basis irrespective of then-current |
gold prices. The Trust is not actively managed and no attempt will be made to buy or sell gold to protect against or to take advantage |
of fluctuations in the price of gold. Consequently, the Trust’s gold may be sold at a time when the gold price is low, resulting |
in a negative effect on the value of the Shares. The |
value of the Shares will be adversely affected if the Trust is required to indemnify the Sponsor or the Trustee under the Trust |
Agreement. Under |
the Trust Agreement, each of the Sponsor and the Trustee has a right to be indemnified from the Trust for any liability or expense |
it incurs without gross negligence, bad faith, willful misconduct, willful malfeasance or reckless disregard on its part. That |
means the Sponsor or the Trustee may require the assets of the Trust to be sold in order to cover losses or liability suffered |
by it. Any sale of that kind would reduce the NAV of the Trust and the value of the Shares. The |
Shares may trade at a price which is at, above or below the NAV per Share and any discount or premium in the trading price relative |
to the NAV per Share may widen as a result of non-concurrent trading hours between the NYSE Arca and London, Zurich and COMEX. The |
Shares may trade at, above or below the NAV per Share. The NAV per Share fluctuates with changes in the market value of the Trust’s |
assets. The trading price of the Shares fluctuates in accordance with changes in the NAV per Share as well as market supply and |
demand. The amount of the discount or premium in the trading price relative to the NAV per Share may be influenced by non-concurrent |
trading hours between the NYSE Arca and the major gold markets. While the Shares trade on the NYSE Arca until 4:00 p.m. New York |
time, liquidity in the market for gold is reduced after the close of the major world gold markets, including London, Zurich and |
the COMEX. As a result, during this time, trading spreads, and the resulting premium or discount on the Shares, may widen. A |
possible “short squeeze” due to a sudden increase in demand of Shares that largely exceeds supply may lead to price |
volatility in the Shares. Investors |
may purchase Shares to hedge existing gold exposure or to speculate on the price of gold. Speculation on the price of gold may |
involve long and short exposures. To the extent aggregate short exposure exceeds the number of Shares available for purchase (for |
example, in the event that large redemption requests by Authorized Participants dramatically affect Share liquidity), investors |
with short exposure may have to pay a premium to repurchase Shares for delivery to Share lenders. Those repurchases may in turn, |
dramatically increase the price of the Shares until additional Shares are created through the creation process. This is often |
referred to as a “short squeeze.” A short squeeze could lead to volatile price movements in Shares that are not directly |
correlated to the price of gold. Purchasing |
activity in the gold market associated with the purchase of Baskets from the Trust may cause a temporary increase in the price |
of gold. This increase may adversely affect an investment in the Shares. Purchasing |
activity associated with acquiring the gold required for deposit into the Trust in connection with the creation of Baskets may |
temporarily increase the market price of gold, which will result in higher prices for the Shares. Temporary increases in the market |
price of gold may also occur as a result of the purchasing activity of other market participants. Other gold market participants |
may attempt to benefit from an increase in the market price of gold that may result from increased purchasing activity of gold |
connected with the issuance of Baskets. Consequently, the market price of gold may decline immediately after Baskets |
are created. If the price of gold declines, the trading price of the Shares may also decline. 26 The |
Shares and their value could decrease if unanticipated operational or trading problems arise. There |
may be unanticipated problems or issues with respect to the mechanics of the Trust’s operations and the trading of the Shares |
that could have a material adverse effect on an investment in the Shares. In addition, although the Trust is not actively “managed” |
by traditional methods, to the extent that unanticipated operational or trading problems or issues arise, the Sponsor’s |
past experience and qualifications may not be suitable for solving these problems or issues. Discrepancies, |
disruptions or unreliability of the LBMA PM Gold Price could impact the value of the Trust’s gold and the market price of |
the Shares. The |
Trustee values the Trust’s gold pursuant to the LBMA PM Gold Price. In the event that the LBMA PM Gold Price proves to be |
an inaccurate benchmark, or the LBMA PM Gold Price varies materially from the prices determined by other mechanisms for valuing |
gold, the value of the Trust’s gold and the market price of the Shares could be adversely impacted. Any future developments |
in the LBMA PM Gold Price, to the extent it has a material impact on the LBMA PM Gold Price, could adversely impact the value |
of the Trust’s gold and the market price of the Shares. It is possible that electronic failures or other unanticipated events |
may occur that could result in delays in the announcement of, or the inability of the benchmark to produce, the LBMA PM Gold Price |
on any given date. Furthermore, any actual or perceived disruptions that result in the perception that the LBMA PM Gold Price |
is vulnerable to actual or attempted manipulation could adversely affect the behavior of market participants, which may have an |
effect on the price of gold. If the LBMA PM Gold Price is unreliable for any reason, the price of gold and the market price for |
the Shares may decline or be subject to greater volatility. If |
the process of creation and redemption of Baskets encounters any unanticipated difficulties, the possibility for arbitrage transactions |
intended to keep the price of the Shares closely linked to the price of gold may not exist and, as a result, the price of the |
Shares may fall. If |
the processes of creation and redemption of Shares (which depend on timely transfers of gold to and by the Custodian) encounter |
any unanticipated difficulties, potential market participants who would otherwise be willing to purchase or redeem Baskets to |
take advantage of any arbitrage opportunity arising from discrepancies between the price of the Shares and the price of the underlying |
gold may not take the risk that, as a result of those difficulties, they may not be able to realize the profit they expect. If |
this is the case, the liquidity of Shares may decline and the price of the Shares may fluctuate independently of the price of |
gold and may fall. Additionally, redemptions could be suspended for any period during which (1) the NYSE Arca is closed (other |
than customary weekend or holiday closings) or trading on the NYSE Arca is suspended or restricted, or (2) an emergency exists |
as a result of which delivery, disposal or evaluation of the gold is not reasonably practicable. The |
liquidity of the Shares may be affected by the withdrawal from participation of one or more Authorized Participants. In |
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