## PHYS (Sprott Physical Gold Trust) — filings-driven deep dive (with “choose-your-path” navigation) **Executive takeaway:** PHYS is a closed-end mutual fund trust that aims to hold **substantially all assets in physical gold bullion** (long-term, unencumbered, fully allocated) and **does not speculate** on short-term gold moves. ["invest and hold substantially all"](0001999371-25-002923|6) ["unencumbered, fully allocated"](0001999371-25-002923|6) The investor experience is governed less by “portfolio management” and more by **(i) NAV mechanics, (ii) custody/verification, (iii) issuance/redemption plumbing, and (iv) fee drag vs spot gold**. ["CALCULATION OF NET ASSET VALUE"](0001999371-25-002923|6) ["Custodian for the Trust’s Physical Gold Bullion"](0001999371-25-002923|6) ["REDEMPTION OF UNITS"](0001999371-25-002923|6) ["yield long-term gains only"](0001999371-25-002923|6) --- ### Quick navigation (reply with the section number if you want me to expand further on that one) 1) What PHYS is (structure + objective) 2) What backs PHYS (gold, cash, where it sits) 3) NAV: how it’s calculated (and why it matters) 4) Issuance & redemptions: the “mechanics” that drive premiums/discounts 5) Fees & expense drag (including the expense cap) 6) Financial snapshot tables (assets, NAV/unit, expenses, bullion roll-forward) 7) Risk map (custody, gold price, liquidity, tax, operational) 8) Due diligence checklist (what to monitor) --- ## 1) What PHYS is (and what it is not) PHYS is described in its audited financial statements as a **“closed-end mutual fund trust”** organized under Ontario law, with Sprott Asset Management LP as the **Manager**. ["closed-end mutual fund trust"](0001999371-24-003926|7) ["Sprott Asset Management LP (the “Manager”)"](0001999371-24-003926|7) Its stated purpose is essentially “gold exposure without physical hassles”: it aims to hold physical bullion and provide an exchange-traded alternative to direct bullion ownership. ["invest and hold substantially all"](0001999371-24-003926|7) ["exchange-traded investment alternative"](0001999371-24-003926|7) It also explicitly frames itself as **not a tactical trading vehicle**: it “will not speculate” with regard to short-term changes in gold prices. ["does not speculate"](0001999371-25-002923|6) --- ## 2) What backs PHYS: portfolio composition + custody rails ### Portfolio composition (from audited disclosures) As of **December 31, 2023**, the Trust’s “Summary of Investment Portfolio” shows essentially two line items: gold and a small cash sleeve. ["Portfolio Allocation"](0001999371-24-003926|7) | Portfolio line | % of NAV | |---|---:| | Gold | 99.6% ["Gold 99.6"](0001999371-24-003926|7) | | Cash | 0.4% ["Cash 0.4"](0001999371-24-003926|7) | This is not a diversified portfolio by design—your outcome is dominated by **spot gold ± fees ± trading discount/premium**. ["primarily invested at all times"](0001999371-25-002923|6) ### Custody model (two “custody buckets”) PHYS’ disclosures split custody into: - **Physical gold bullion custodian: the Royal Canadian Mint**. ["Mint acts as custodian"](0001999371-25-002923|6) - **Non-bullion assets custodian: RBC Investor Services** (for “assets other than physical gold bullion”). ["RBC Investor Services acts as the custodian"](0001999371-25-002923|6) This separation matters because: - your **core asset risk** (the bullion) is concentrated with the Mint, and - “everything else” (cash, receivables/payables) sits with RBC Investor Services. ["assets other than physical gold bullion"](0001999371-25-002923|6) --- ## 3) NAV mechanics: the “heart” of a bullion trust PHYS’ annual information form (AIF) lays out a very explicit NAV chain of responsibility: - **Manager is responsible** for NAV calculation, and may consult the Mint/custodians. ["responsibility of the Manager"](0001999371-25-002923|6) - The Manager appointed **RBC Investor Services as valuation agent**. ["appointed RBC Investor Services as valuation agent"](0001999371-25-002923|6) - NAV is calculated as of **4:00 p.m., Toronto time, each business day**. ["4:00 p.m., Toronto time"](0001999371-25-002923|6) ### Gold pricing input (important detail) PHYS states it uses Bloomberg’s gold spot quote: **GOLDS COMDTY (USD)**. ["GOLDS COMDTY (USD)"](0001999371-25-002923|6) ### What NAV mathematically is (per the AIF) NAV = fair market value of assets minus fair value of liabilities (excluding liabilities represented by outstanding units). ["deducting… liabilities"](0001999371-25-002923|6) ### Why this matters to investors Two separate “prices” can exist simultaneously: 1) **NAV per unit** (internal valuation), and 2) **market price** (what you pay/receive on NYSE Arca/TSX). This spread shows up in the audited financial statements: during **FY2023**, PHYS’ units traded on NYSE Arca at an **average discount to NAV of ~1.6%**. ["average discount to net asset value of approximately 1.6%"](0001999371-24-003926|7) --- ## 4) Issuance & redemptions: the plumbing that shapes premiums/discounts PHYS permits monthly redemption for **physical gold** or **cash**, subject to suspension rights. ["redeemed… for physical gold bullion or cash"](0001999371-25-002923|6) ### Redemption for physical gold (key constraints) - Paid at **100% of NAV** of redeemed units on the last NYSE Arca trading day of the month. ["100% of the NAV"](0001999371-25-002923|6) - Minimum size: at least the value of **one “Good Delivery bar”** (350–430 troy ounces). ["Good Delivery bar… 350 and 430 troy ounces"](0001999371-25-002923|6) - Redemption request timing: must be received by **4:00 p.m., Toronto time, on the 15th** of the month (or next business day). ["received… no later than 4:00 p.m."](0001999371-25-002923|6) - Practical limitation: redemption can be constrained by the bar sizes held at the time. ["limited by the sizes"](0001999371-25-002923|6) ### Redemption for cash (structural “haircut”) Cash redemptions are at **95% of the lesser of**: - the month’s last-five-days VWAP (NYSE Arca; TSX fallback), and - month-end NAV (4:00 p.m. Toronto time, last NYSE Arca trading day). ["95% of the lesser of"](0001999371-25-002923|6) This haircut is *structural* and is one reason the trust warns cash redemption generally yields less than selling in the market (if selling is possible). ["will generally yield a lesser amount"](0001999371-25-002923|6) --- ## 5) Fees & expense drag (including the “expense cap”) PHYS’ AIF provides a clean fee architecture: ### Manager fee Management fee is **0.35% per year** (charged monthly: 1/12 of 0.35% of net assets), plus applicable Canadian taxes, accrued daily and paid monthly in arrears. ["1/12 of 0.35%"](0001999371-25-002923|6) ### Expense cap (important governance feature) The Manager contractually agreed that if monthly total expenses **including** the management fee exceed **1/12 of 0.65%** of net assets, the management fee is reduced (up to the gross management fee earned that month). ["expenses… exceed… 1/12 of 0.65%"](0001999371-25-002923|6) ### What the *actual* expense experience looked like (FY2023) From audited financial statements (USD, thousands), total expenses and their components are disclosed. ["Expenses"](0001999371-24-003926|7) | Expense line (USD ‘000) | FY2023 | FY2022 | |---|---:|---:| | Management fees | 21,463 ["Management fees… 21,463"](0001999371-24-003926|7) | 19,274 ["19,274"](0001999371-24-003926|7) | | Bullion storage fees | 1,577 ["Bullion storage fees… 1,577"](0001999371-24-003926|7) | 1,451 ["1,451"](0001999371-24-003926|7) | | Sales tax | 1,365 ["Sales tax… 1,365"](0001999371-24-003926|7) | 1,193 ["1,193"](0001999371-24-003926|7) | | **Total expenses** | 25,179 ["25,179"](0001999371-24-003926|7) | 22,825 ["22,825"](0001999371-24-003926|7) | And the audited “Ratios and Supplemental Data” shows **Management Expense Ratio (MER) = 0.41%** for 2023 and 2022. ["Management expense ratio… 0.41%"](0001999371-24-003926|7) Interpretation: The headline management fee is 0.35%, but “all-in” recurring costs show up closer to the ~0.4% level (at least in these years), before considering any market discount/premium effects. ["Management Fee… 0.35%"](0001999371-25-002923|6) ["MER… 0.41%"](0001999371-24-003926|7) --- ## 6) Financial snapshot tables (assets, NAV, bullion movements) ### Balance sheet snapshot (Dec 31, 2023 vs 2022; USD ‘000) | Line item | Dec 31, 2023 | Dec 31, 2022 | |---|---:|---:| | Cash | 25,484 ["Cash 25,484"](0001999371-24-003926|7) | 294 ["294"](0001999371-24-003926|7) | | Gold bullion | 6,506,367 ["Gold bullion… 6,506,367"](0001999371-24-003926|7) | 5,745,945 ["5,745,945"](0001999371-24-003926|7) | | **Total equity (NAV)** | 6,531,725 ["Total equity… 6,531,725"](0001999371-24-003926|7) | 5,746,095 ["5,746,095"](0001999371-24-003926|7) | | **Equity per unit** | 16.28 ["Total equity per Unit… 16.28"](0001999371-24-003926|7) | 14.46 ["14.46"](0001999371-24-003926|7) | ### Per-unit “bridge” view (multi-year, from audited highlights) This table is useful because a bullion trust has no operating revenue—changes are largely **gold price – expenses**. ["Total revenue —"](0001999371-24-003926|7) | Per-unit item | 2023 | 2022 | |---|---:|---:| | Net assets (beginning of year) | 14.46 ["Net assets, beginning… 14.46"](0001999371-24-003926|7) | 14.59 ["14.59"](0001999371-24-003926|7) | | Total expenses | (0.06) ["Total expenses (0.06)"](0001999371-24-003926|7) | (0.06) ["(0.06"](0001999371-24-003926|7) | | Unrealized gains (losses) | 1.78 ["Unrealized… 1.78"](0001999371-24-003926|7) | (0.15) ["(0.15"](0001999371-24-003926|7) | | **Net assets (end of year)** | **16.28** ["Net assets at December 31… 16.28"](0001999371-24-003926|7) | **14.46** ["14.46"](0001999371-24-003926|7) | ### Bullion roll-forward (fair value basis; USD ‘000) This is one of the most “tell me what actually happened” tables in the audited notes. ["reconciliation of bullion holdings"](0001999371-24-003926|7) | Bullion movement | FY2023 | FY2022 | |---|---:|---:| | Beginning balance | 5,745,945 ["Balance at beginning… 5,745,945"](0001999371-24-003926|7) | 5,001,081 ["5,001,081"](0001999371-24-003926|7) | | Purchases | 198,628 ["Purchases… 198,628"](0001999371-24-003926|7) | 806,723 ["806,723"](0001999371-24-003926|7) | | Sales | (9,779) ["Sales (9,779"](0001999371-24-003926|7) | (2,177) ["(2,177"](0001999371-24-003926|7) | | Redemptions for physical bullion | (176,502) ["Redemptions… (176,502"](0001999371-24-003926|7) | — ["Redemptions… —"](0001999371-24-003926|7) | | Change in unrealized gains (losses) | 711,174 ["Change in unrealized… 711,174"](0001999371-24-003926|7) | (60,006) ["(60,006"](0001999371-24-003926|7) | | Ending balance | **6,506,367** ["Balance at end… 6,506,367"](0001999371-24-003926|7) | **5,745,945** ["5,745,945"](0001999371-24-003926|7) | --- ## 7) Risk map (what filings emphasize) Below are the “big levers” PHYS itself flags, with the practical investor implication. ### A) Gold price risk dominates everything PHYS openly states it doesn’t actively trade gold; long-term gains require gold appreciation **in excess of expenses**. ["will yield long-term gains only"](0001999371-25-002923|6) ### B) Custody & recoverability nuances (Mint + insurance framing) - The Trust states it **does not insure its assets** (including bullion stored at the Mint). ["does not insure its assets"](0001999371-25-002923|6) - It warns recovery may rely on third-party insurance/resources and may be insufficient. ["may not be sufficient"](0001999371-25-002923|6) - It highlights a legal nuance: as a Crown corporation, the Mint could be found to have Crown immunity in some circumstances, potentially limiting recourse. ["limited recourse against the Mint"](0001999371-25-002923|6) ### C) Redemption mechanics can create “investor friction” - Gold/cash redemptions are monthly and notice-driven. ["processed on the last business day"](0001999371-25-002923|6) ["received… on the 15th"](0001999371-25-002923|6) - The Trust can **suspend redemptions** in certain conditions, which may affect trading price/liquidity. ["may suspend redemptions"](0001999371-25-002923|6) ### D) Concentration risk is explicit Audited notes say risk is concentrated because bullion is held at one location and represents ~99.6% of equity at 12/31/2023. ["risk is concentrated"](0001999371-24-003926|7) ["constitutes 99.6%"](0001999371-24-003926|7) ### E) Fee/regime changes at the Mint (a “recent structural change”) The Royal Canadian Mint disclosed a revised fee structure effective **April 25, 2024**, including: - Standard storage fee change (example table shows PHYS Ottawa per-bar storage from $17 to $16). ["$17.00 per bar"](0001999371-24-003942|1) ["$16.00 per bar"](0001999371-24-003942|1) - Standard redemption fee cap change for PHYS: up to **1.5%** (from up to 1.0% shown as “current fee”). ["up to a maximum of 1.5%"](0001999371-24-003942|1) ["up to a maximum of 1.0%"](0001999371-24-003942|1) - Supplementary redemption fee: **0.25%** after the first redemption in a calendar year (with 50% credited back as a storage-fee rebate mechanism). ["supplementary 0.25%"](0001999371-24-003942|1) ["50%… credited to the Trust"](0001999371-24-003942|1) PHYS’ AIF later describes the same framework (including the “Mint baseline fee amount” concept). ["Mint baseline fee amount"](0001999371-25-002923|6) --- ## 8) Practical diligence checklist (what to monitor from disclosures) 1) **NAV vs market price discount/premium** (persistent ~1–2% discounts matter vs ~0.4% MER). ["average discount… 1.6%"](0001999371-24-003926|7) ["MER… 0.41%"](0001999371-24-003926|7) 2) **Gold custody terms + termination rights** under the Gold Storage Agreement (e.g., termination for convenience with notice; unilateral rate changes limited to once/year with notice under specified conditions). ["terminate… 30 calendar days"](0001999371-25-002923|6) ["unilaterally change the rates… once per calendar year"](0001999371-25-002923|6) 3) **Redemption policy friction** (Good Delivery bar minimum; cash redemption haircut; irrevocable notices). ["one Good Delivery bar"](0001999371-25-002923|6) ["95% of the lesser"](0001999371-25-002923|6) ["notice… can no longer be revoked"](0001999371-25-002923|6) 4) **Bullion roll-forward** (purchases, redemptions for bullion, and whether bullion sales are happening to fund expenses). ["reconciliation of bullion holdings"](0001999371-24-003926|7) ["sell physical gold bullion… to pay Trust expenses"](0001999371-25-002923|6) 5) **Expense cap applicability** (watch whether expenses drift toward the cap and trigger fee reductions). ["Expense Cap"](0001999371-25-002923|6) --- If you reply with **“1”–“8”**, I’ll extend that section into a deeper, more granular drill-down (e.g., pulling more text from the AIF on custody agreement mechanics, exemptions/approvals, and the redemption fee logic) without needing any extra inputs from you.

## PHYS (Sprott Physical Gold Trust) — filings-driven deep dive (with “choose-your-path” navigation) **Executive takeaway:** PHYS is a closed-end mutual fund trust that aims to hold **substantially all assets in physical gold bullion** (long-term, unencumbered, fully allocated) and **does not speculate** on short-term gold moves. ["invest and hold substantially all"](0001999371-25-002923|6) ["unencumbered, fully allocated"](0001999371-25-002923|6) The investor experience is governed less by “portfolio management” and more by **(i) NAV mechanics, (ii) custody/verification, (iii) issuance/redemption plumbing, and (iv) fee drag vs spot gold**. ["CALCULATION OF NET ASSET VALUE"](0001999371-25-002923|6) ["Custodian for the Trust’s Physical Gold Bullion"](0001999371-25-002923|6) ["REDEMPTION OF UNITS"](0001999371-25-002923|6) ["yield long-term gains only"](0001999371-25-002923|6) --- ### Quick navigation (reply with the section number if you want me to expand further on that one) 1) What PHYS is (structure + objective) 2) What backs PHYS (gold, cash, where it sits) 3) NAV: how it’s calculated (and why it matters) 4) Issuance & redemptions: the “mechanics” that drive premiums/discounts 5) Fees & expense drag (including the expense cap) 6) Financial snapshot tables (assets, NAV/unit, expenses, bullion roll-forward) 7) Risk map (custody, gold price, liquidity, tax, operational) 8) Due diligence checklist (what to monitor) --- ## 1) What PHYS is (and what it is not) PHYS is described in its audited financial statements as a **“closed-end mutual fund trust”** organized under Ontario law, with Sprott Asset Management LP as the **Manager**. ["closed-end mutual fund trust"](0001999371-24-003926|7) ["Sprott Asset Management LP (the “Manager”)"](0001999371-24-003926|7) Its stated purpose is essentially “gold exposure without physical hassles”: it aims to hold physical bullion and provide an exchange-traded alternative to direct bullion ownership. ["invest and hold substantially all"](0001999371-24-003926|7) ["exchange-traded investment alternative"](0001999371-24-003926|7) It also explicitly frames itself as **not a tactical trading vehicle**: it “will not speculate” with regard to short-term changes in gold prices. ["does not speculate"](0001999371-25-002923|6) --- ## 2) What backs PHYS: portfolio composition + custody rails ### Portfolio composition (from audited disclosures) As of **December 31, 2023**, the Trust’s “Summary of Investment Portfolio” shows essentially two line items: gold and a small cash sleeve. ["Portfolio Allocation"](0001999371-24-003926|7) | Portfolio line | % of NAV | |---|---:| | Gold | 99.6% ["Gold 99.6"](0001999371-24-003926|7) | | Cash | 0.4% ["Cash 0.4"](0001999371-24-003926|7) | This is not a diversified portfolio by design—your outcome is dominated by **spot gold ± fees ± trading discount/premium**. ["primarily invested at all times"](0001999371-25-002923|6) ### Custody model (two “custody buckets”) PHYS’ disclosures split custody into: - **Physical gold bullion custodian: the Royal Canadian Mint**. ["Mint acts as custodian"](0001999371-25-002923|6) - **Non-bullion assets custodian: RBC Investor Services** (for “assets other than physical gold bullion”). ["RBC Investor Services acts as the custodian"](0001999371-25-002923|6) This separation matters because: - your **core asset risk** (the bullion) is concentrated with the Mint, and - “everything else” (cash, receivables/payables) sits with RBC Investor Services. ["assets other than physical gold bullion"](0001999371-25-002923|6) --- ## 3) NAV mechanics: the “heart” of a bullion trust PHYS’ annual information form (AIF) lays out a very explicit NAV chain of responsibility: - **Manager is responsible** for NAV calculation, and may consult the Mint/custodians. ["responsibility of the Manager"](0001999371-25-002923|6) - The Manager appointed **RBC Investor Services as valuation agent**. ["appointed RBC Investor Services as valuation agent"](0001999371-25-002923|6) - NAV is calculated as of **4:00 p.m., Toronto time, each business day**. ["4:00 p.m., Toronto time"](0001999371-25-002923|6) ### Gold pricing input (important detail) PHYS states it uses Bloomberg’s gold spot quote: **GOLDS COMDTY (USD)**. ["GOLDS COMDTY (USD)"](0001999371-25-002923|6) ### What NAV mathematically is (per the AIF) NAV = fair market value of assets minus fair value of liabilities (excluding liabilities represented by outstanding units). ["deducting… liabilities"](0001999371-25-002923|6) ### Why this matters to investors Two separate “prices” can exist simultaneously: 1) **NAV per unit** (internal valuation), and 2) **market price** (what you pay/receive on NYSE Arca/TSX). This spread shows up in the audited financial statements: during **FY2023**, PHYS’ units traded on NYSE Arca at an **average discount to NAV of ~1.6%**. ["average discount to net asset value of approximately 1.6%"](0001999371-24-003926|7) --- ## 4) Issuance & redemptions: the plumbing that shapes premiums/discounts PHYS permits monthly redemption for **physical gold** or **cash**, subject to suspension rights. ["redeemed… for physical gold bullion or cash"](0001999371-25-002923|6) ### Redemption for physical gold (key constraints) - Paid at **100% of NAV** of redeemed units on the last NYSE Arca trading day of the month. ["100% of the NAV"](0001999371-25-002923|6) - Minimum size: at least the value of **one “Good Delivery bar”** (350–430 troy ounces). ["Good Delivery bar… 350 and 430 troy ounces"](0001999371-25-002923|6) - Redemption request timing: must be received by **4:00 p.m., Toronto time, on the 15th** of the month (or next business day). ["received… no later than 4:00 p.m."](0001999371-25-002923|6) - Practical limitation: redemption can be constrained by the bar sizes held at the time. ["limited by the sizes"](0001999371-25-002923|6) ### Redemption for cash (structural “haircut”) Cash redemptions are at **95% of the lesser of**: - the month’s last-five-days VWAP (NYSE Arca; TSX fallback), and - month-end NAV (4:00 p.m. Toronto time, last NYSE Arca trading day). ["95% of the lesser of"](0001999371-25-002923|6) This haircut is *structural* and is one reason the trust warns cash redemption generally yields less than selling in the market (if selling is possible). ["will generally yield a lesser amount"](0001999371-25-002923|6) --- ## 5) Fees & expense drag (including the “expense cap”) PHYS’ AIF provides a clean fee architecture: ### Manager fee Management fee is **0.35% per year** (charged monthly: 1/12 of 0.35% of net assets), plus applicable Canadian taxes, accrued daily and paid monthly in arrears. ["1/12 of 0.35%"](0001999371-25-002923|6) ### Expense cap (important governance feature) The Manager contractually agreed that if monthly total expenses **including** the management fee exceed **1/12 of 0.65%** of net assets, the management fee is reduced (up to the gross management fee earned that month). ["expenses… exceed… 1/12 of 0.65%"](0001999371-25-002923|6) ### What the *actual* expense experience looked like (FY2023) From audited financial statements (USD, thousands), total expenses and their components are disclosed. ["Expenses"](0001999371-24-003926|7) | Expense line (USD ‘000) | FY2023 | FY2022 | |---|---:|---:| | Management fees | 21,463 ["Management fees… 21,463"](0001999371-24-003926|7) | 19,274 ["19,274"](0001999371-24-003926|7) | | Bullion storage fees | 1,577 ["Bullion storage fees… 1,577"](0001999371-24-003926|7) | 1,451 ["1,451"](0001999371-24-003926|7) | | Sales tax | 1,365 ["Sales tax… 1,365"](0001999371-24-003926|7) | 1,193 ["1,193"](0001999371-24-003926|7) | | **Total expenses** | 25,179 ["25,179"](0001999371-24-003926|7) | 22,825 ["22,825"](0001999371-24-003926|7) | And the audited “Ratios and Supplemental Data” shows **Management Expense Ratio (MER) = 0.41%** for 2023 and 2022. ["Management expense ratio… 0.41%"](0001999371-24-003926|7) Interpretation: The headline management fee is 0.35%, but “all-in” recurring costs show up closer to the ~0.4% level (at least in these years), before considering any market discount/premium effects. ["Management Fee… 0.35%"](0001999371-25-002923|6) ["MER… 0.41%"](0001999371-24-003926|7) --- ## 6) Financial snapshot tables (assets, NAV, bullion movements) ### Balance sheet snapshot (Dec 31, 2023 vs 2022; USD ‘000) | Line item | Dec 31, 2023 | Dec 31, 2022 | |---|---:|---:| | Cash | 25,484 ["Cash 25,484"](0001999371-24-003926|7) | 294 ["294"](0001999371-24-003926|7) | | Gold bullion | 6,506,367 ["Gold bullion… 6,506,367"](0001999371-24-003926|7) | 5,745,945 ["5,745,945"](0001999371-24-003926|7) | | **Total equity (NAV)** | 6,531,725 ["Total equity… 6,531,725"](0001999371-24-003926|7) | 5,746,095 ["5,746,095"](0001999371-24-003926|7) | | **Equity per unit** | 16.28 ["Total equity per Unit… 16.28"](0001999371-24-003926|7) | 14.46 ["14.46"](0001999371-24-003926|7) | ### Per-unit “bridge” view (multi-year, from audited highlights) This table is useful because a bullion trust has no operating revenue—changes are largely **gold price – expenses**. ["Total revenue —"](0001999371-24-003926|7) | Per-unit item | 2023 | 2022 | |---|---:|---:| | Net assets (beginning of year) | 14.46 ["Net assets, beginning… 14.46"](0001999371-24-003926|7) | 14.59 ["14.59"](0001999371-24-003926|7) | | Total expenses | (0.06) ["Total expenses (0.06)"](0001999371-24-003926|7) | (0.06) ["(0.06"](0001999371-24-003926|7) | | Unrealized gains (losses) | 1.78 ["Unrealized… 1.78"](0001999371-24-003926|7) | (0.15) ["(0.15"](0001999371-24-003926|7) | | **Net assets (end of year)** | **16.28** ["Net assets at December 31… 16.28"](0001999371-24-003926|7) | **14.46** ["14.46"](0001999371-24-003926|7) | ### Bullion roll-forward (fair value basis; USD ‘000) This is one of the most “tell me what actually happened” tables in the audited notes. ["reconciliation of bullion holdings"](0001999371-24-003926|7) | Bullion movement | FY2023 | FY2022 | |---|---:|---:| | Beginning balance | 5,745,945 ["Balance at beginning… 5,745,945"](0001999371-24-003926|7) | 5,001,081 ["5,001,081"](0001999371-24-003926|7) | | Purchases | 198,628 ["Purchases… 198,628"](0001999371-24-003926|7) | 806,723 ["806,723"](0001999371-24-003926|7) | | Sales | (9,779) ["Sales (9,779"](0001999371-24-003926|7) | (2,177) ["(2,177"](0001999371-24-003926|7) | | Redemptions for physical bullion | (176,502) ["Redemptions… (176,502"](0001999371-24-003926|7) | — ["Redemptions… —"](0001999371-24-003926|7) | | Change in unrealized gains (losses) | 711,174 ["Change in unrealized… 711,174"](0001999371-24-003926|7) | (60,006) ["(60,006"](0001999371-24-003926|7) | | Ending balance | **6,506,367** ["Balance at end… 6,506,367"](0001999371-24-003926|7) | **5,745,945** ["5,745,945"](0001999371-24-003926|7) | --- ## 7) Risk map (what filings emphasize) Below are the “big levers” PHYS itself flags, with the practical investor implication. ### A) Gold price risk dominates everything PHYS openly states it doesn’t actively trade gold; long-term gains require gold appreciation **in excess of expenses**. ["will yield long-term gains only"](0001999371-25-002923|6) ### B) Custody & recoverability nuances (Mint + insurance framing) - The Trust states it **does not insure its assets** (including bullion stored at the Mint). ["does not insure its assets"](0001999371-25-002923|6) - It warns recovery may rely on third-party insurance/resources and may be insufficient. ["may not be sufficient"](0001999371-25-002923|6) - It highlights a legal nuance: as a Crown corporation, the Mint could be found to have Crown immunity in some circumstances, potentially limiting recourse. ["limited recourse against the Mint"](0001999371-25-002923|6) ### C) Redemption mechanics can create “investor friction” - Gold/cash redemptions are monthly and notice-driven. ["processed on the last business day"](0001999371-25-002923|6) ["received… on the 15th"](0001999371-25-002923|6) - The Trust can **suspend redemptions** in certain conditions, which may affect trading price/liquidity. ["may suspend redemptions"](0001999371-25-002923|6) ### D) Concentration risk is explicit Audited notes say risk is concentrated because bullion is held at one location and represents ~99.6% of equity at 12/31/2023. ["risk is concentrated"](0001999371-24-003926|7) ["constitutes 99.6%"](0001999371-24-003926|7) ### E) Fee/regime changes at the Mint (a “recent structural change”) The Royal Canadian Mint disclosed a revised fee structure effective **April 25, 2024**, including: - Standard storage fee change (example table shows PHYS Ottawa per-bar storage from $17 to $16). ["$17.00 per bar"](0001999371-24-003942|1) ["$16.00 per bar"](0001999371-24-003942|1) - Standard redemption fee cap change for PHYS: up to **1.5%** (from up to 1.0% shown as “current fee”). ["up to a maximum of 1.5%"](0001999371-24-003942|1) ["up to a maximum of 1.0%"](0001999371-24-003942|1) - Supplementary redemption fee: **0.25%** after the first redemption in a calendar year (with 50% credited back as a storage-fee rebate mechanism). ["supplementary 0.25%"](0001999371-24-003942|1) ["50%… credited to the Trust"](0001999371-24-003942|1) PHYS’ AIF later describes the same framework (including the “Mint baseline fee amount” concept). ["Mint baseline fee amount"](0001999371-25-002923|6) --- ## 8) Practical diligence checklist (what to monitor from disclosures) 1) **NAV vs market price discount/premium** (persistent ~1–2% discounts matter vs ~0.4% MER). ["average discount… 1.6%"](0001999371-24-003926|7) ["MER… 0.41%"](0001999371-24-003926|7) 2) **Gold custody terms + termination rights** under the Gold Storage Agreement (e.g., termination for convenience with notice; unilateral rate changes limited to once/year with notice under specified conditions). ["terminate… 30 calendar days"](0001999371-25-002923|6) ["unilaterally change the rates… once per calendar year"](0001999371-25-002923|6) 3) **Redemption policy friction** (Good Delivery bar minimum; cash redemption haircut; irrevocable notices). ["one Good Delivery bar"](0001999371-25-002923|6) ["95% of the lesser"](0001999371-25-002923|6) ["notice… can no longer be revoked"](0001999371-25-002923|6) 4) **Bullion roll-forward** (purchases, redemptions for bullion, and whether bullion sales are happening to fund expenses). ["reconciliation of bullion holdings"](0001999371-24-003926|7) ["sell physical gold bullion… to pay Trust expenses"](0001999371-25-002923|6) 5) **Expense cap applicability** (watch whether expenses drift toward the cap and trigger fee reductions). ["Expense Cap"](0001999371-25-002923|6) --- If you reply with **“1”–“8”**, I’ll extend that section into a deeper, more granular drill-down (e.g., pulling more text from the AIF on custody agreement mechanics, exemptions/approvals, and the redemption fee logic) without needing any extra inputs from you.