Company Quick10K Filing
Vaulted Gold Bullion Trust
10-Q 2020-07-31 Filed 2020-09-14
10-Q 2020-04-30 Filed 2020-06-15
10-Q 2020-01-31 Filed 2020-03-16
10-K 2019-10-31 Filed 2020-01-29
10-Q 2019-07-31 Filed 2019-09-13
10-Q 2019-04-30 Filed 2019-06-14
10-Q 2019-01-31 Filed 2019-03-18
10-K 2018-10-31 Filed 2019-01-29
10-Q 2018-07-31 Filed 2018-09-14
S-1 2018-07-11 Public Filing
10-Q 2018-04-30 Filed 2018-06-14
10-Q 2018-01-31 Filed 2018-03-19
10-K 2017-10-31 Filed 2018-01-26
10-Q 2017-07-31 Filed 2017-09-13
10-Q 2017-04-30 Filed 2017-06-09
10-Q 2017-01-31 Filed 2017-03-17
10-K 2016-10-31 Filed 2017-01-27
10-Q 2016-07-31 Filed 2016-08-01
10-Q 2016-04-30 Filed 2016-05-19
10-Q 2016-01-31 Filed 2016-02-12
10-K 2015-10-31 Filed 2015-11-24
10-Q 2015-07-31 Filed 2015-08-20
10-Q 2015-04-30 Filed 2015-06-04
10-Q 2015-01-31 Filed 2015-03-16

VGBT 10Q Quarterly Report

Part I. Financial Information
Item 1. Condensed Financial Statements (Unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Changes in and Disagreements with Accounting and Financial Disclosure
Item 6. Directors, Executive Officers and Corporate Governance
Item 7. Executive Compensation
Item 8. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 9. Certain Relationships and Related Transactions, and Director Independence
Item 10. Principal Accounting Fees and Services
Item 11. Other Information
Item 12. Exhibits
EX-31.1 ex31_1.htm
EX-32.1 ex32_1.htm

Vaulted Gold Bullion Trust Earnings 2016-01-31

Balance SheetIncome StatementCash Flow

10-Q 1 d21116510q.htm FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2016 d21116510q.htm


UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 10-Q

x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended January 31, 2016

Or

For the Transition Period from ___________ to _____________
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-_________
 
____________________________
VAULTED GOLD BULLION TRUST
(Exact name of registrant as specified in its charter)
Delaware
46-7176227
(State or other jurisdiction of incorporation or
(I.R.S. Employer Identification No.)
organization)
 

c/o Bank of Montreal
3 Times Square
New York, New York 10036
Attention: Legal Department
(Address of principal executive offices)


(212) 885-4000
(Registrant’s telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes    No
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes    No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer
Accelerated filer
Non accelerated filer
Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
 
As of January 31, 2016, there were no Gold Deposit Receipts outstanding.
 


 
 

 
 
VAULTED GOLD BULLION TRUST
 
FORM 10-Q
 
FOR THE QUARTER ENDED JANUARY 31, 2016
 
INDEX
 
   
Page No.
PART I.
FINANCIAL INFORMATION
 
     
Item 1.
Condensed Financial Statements (Unaudited)
2
     
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
2
     
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
5
     
Item 4.
Controls and Procedures
5
     
PART II.
OTHER INFORMATION
 
     
Item 1.
Legal Proceedings
7
     
Item 1A.
Risk Factors
7
     
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
7
     
Item 3.
Defaults Upon Senior Securities
7
     
Item 4.
Mine Safety Disclosures
7
     
Item 5.
Changes in and Disagreements with Accounting and Financial Disclosure
7
     
Item 6.
Directors, Executive Officers and Corporate Governance
7
     
Item 7.
Executive Compensation
7
     
Item 8.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
7
     
Item 9.
Certain Relationships and Related Transactions, and Director Independence
7
     
Item 10.
Principal Accounting Fees and Services
7
     
Item 11.
Other Information
7
     
Item 12.
Exhibits
8
     
Signatures
9
 
 
 

 

CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS
 
The statements contained in this report that are not purely historical are forward-looking statements. The Vaulted Gold BullionTrust's forward-looking statements include, but are not limited to, statements regarding its expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipates,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predicts,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this report may include, for example, statements about:

 
·
The gold industry, sources of and demand for gold bullion, and the performance of the gold market; and
 
 
·
The development of a secondary market for the Gold Deposit Receipts.

The forward-looking statements contained in this report are based on the Trust's current expectations and beliefs concerning future developments and their potential effects on the Trust. There can be no assurance that future developments affecting the Trust will be those that it has anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond the Trust's control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include those factors described under the heading “Risk Factors” in the Trust’s Registration Statement on Form S-1 (File No. 333-194144) filed with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should any of the Trust's assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. The Trust undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

 
 

 

PART I. FINANCIAL INFORMATION
 

 
Item 1.  Condensed Financial Statements (Unaudited)
 
On February 4, 2015, the Vaulted Gold Bullion Trust (the “Trust”) filed a final prospectus; however, the Trust has had no activities. As discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” below, the Trust has no activities other than the issuance of Depositary Receipts (“Gold Deposit Receipts”), which represent an undivided beneficial ownership in a fixed quantity of unencumbered, allocated, physical gold bullion (“Gold Bullion”). However, as of the date hereof, the Trust has not issued any Gold Deposit Receipts. As a result, we have omitted financial statements from this Quarterly Report on Form 10-Q.
 
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
Overview
 
The Trust is a business trust formed under the laws of the state of Delaware on December 10, 2013 pursuant to an interim trust agreement that was amended and restated by the Depositary Trust Agreement, dated December 1, 2014, by and among Bank of Montreal, as Initial Depositor, BMO Capital Markets Corp., as Placement Agent, The Bank of New York Mellon, as Trustee and BNY Mellon Trust of Delaware, as Delaware Trustee (the “Depositary Trust Agreement”). On February 4, 2015, the Trust filed a final prospectus; however, the Trust has had no activities.
 
The Trust will issue Gold Deposit Receipts representing an undivided beneficial ownership in a fixed quantity of unencumbered, allocated, physical Gold Bullion. The Gold Bullion will be held for the benefit of holders of Gold Deposit Receipts in an account operated by Bank of Montreal at the Royal Canadian Mint (the “Mint”). The Gold Deposit Receipts are separate from the Gold Bullion.
 
The Trust holds gold bullion for the benefit of owners of Gold Deposit Receipts. One receipt represents the undivided beneficial ownership of one troy ounce of gold bullion. The Trustee performs only administrative and ministerial acts. The property of the Trust consists of the gold bullion and all monies or other property, if any, received by the trustee. The Initial Depositor sells gold bullion to the Trust and arranges custodial services through its gold storage account. There were no Gold Deposit Receipts outstanding during the three-month period covered by this report.
 
The Trust is not managed like a corporation or an active investment vehicle. It does not have any officers, directors, or employees and is administered by the Trustee pursuant to the Depositary Trust Agreement. The expenses of the Trust are borne by the Initial Depositor.
 
The Trust is newly formed. The Trust is not an investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”), and is not required to register under the 1940 Act. The Trust is not a commodity pool for purposes of the Commodity Exchange Act (the “CEA”), and the initial depositor is not subject to regulation by the Commodity Futures Trading Commission (the “CFTC”) as a commodity pool operator, or a commodity trading advisor. The Trust has no assets or liabilities.
 
The fiscal year end for the Trust is October 31.
 
Gold Industry
 
The participants in the gold industry may be classified in the following sectors: (1) mining and producer; (2) banking; (3) official; (4) investment; and (5) manufacturing. The following is a brief description of each of the sectors.
 
Mining and Producer Sector. This group includes mining companies that specialize in gold and silver production; mining companies that produce gold as a byproduct of other production (such as a copper or silver producer); scrap merchants; and recyclers.
 
 
2

 
 
Banking Sector. Bullion banks provide a variety of services to the gold market and its participants, thereby facilitating interactions between other parties. Services provided by the bullion banking community include traditional banking products as well as mine financing, physical gold purchases and sales, hedging and risk management, inventory management for industrial users and consumers, and gold deposit and loan instruments.
 
The Official Sector. The official sector encompasses the activities of the various central banking operations of gold-holding countries. In September 1999, a group of 15 central banks acting to clarify their intentions with respect to their gold holdings signed the Central Bank Gold Agreement commonly called the “Washington Agreement on Gold.” The signatories included the European Central Bank and the central banks of Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden, Switzerland, and England. The original agreement limited incremental sales by the 15 signatories to 400 tonnes per annum over the ensuing five-year period. The original Washington Agreement on Gold expired in September 2004, and was renewed by almost all of the original signatories for a second five-year period (England did not renew in 2004). The second Washington Accord Agreement expired in September 2009 and was renewed again by all signatories of the second agreement for a third five-year period. In addition, the central banks of Cyprus, Greece, Malta, Slovakia and Slovenia signed in 2009. The current per annum limit on gold sales is 400 tonnes, with total sales not to exceed 2,000 tonnes in the five-year period.
 
The Investment Sector. This sector includes the investment and trading activities of both professional and private investors and speculators. These participants range from large hedge and mutual funds to day-traders on futures exchanges and retail-level coin collectors.
 
The Manufacturing Sector. The fabrication and manufacturing sector represents all the commercial and industrial users of gold for whom gold is a daily part of their business. The jewelry industry is a large user of gold. Other industrial users of gold include the electronics and dental industries.
 
World Gold Supply and Demand (2005-2015)
 
The following table sets forth a summary of the world gold supply and demand from 2005-2015:
 
WORLD GOLD SUPPLY AND
DEMAND
(tonnes)
    2005 *     2006 *     2007 *     2008 *     2009 *     2010 *     2011 *     2012 *     2013 *     2014 *     2015 **
Supply
                                                                                       
Mine Production
    2,561       2,496       2,499       2,429       2,612       2,742       2,846       2,875       3,061       3,133       3,126  
Scrap
    903       1,133       1,006       1,352       1,728       1,713       1,675       1,677       1,287       1,125       1,161  
Net Hedging Supply
    -92       -434       -432       -357       -234       -106       18       -40       -39       103       -14  
Total Supply
    3,372       3,195       3,072       3,424       4,106       4,349       4,539       4,513       4,310       4,362       4,273  
Demand
                                                                                       
Jewelry
    2,722       2,302       2,426       2,308       1,819       2,033       2,034       2,008       2, 439       2,213       2,062  
Industrial Fabrication
    449       480       487       471       422       476       468       426       419       400       376  
…of which Electronics
    294       325       331       318       283       333       330       295       289       279       268  
…of which Dental & Medical
    62       61       58       56       53       48       43       39       36       34       32  
…of which Other Industrial
    92       94       98       97       86       95       95       92       93       87       76  
Net Official Sector
    -663       -365       -484       -235       -34       77       457       544       409       466       482  
Retail Investment
    416       428       436       916       830       1,221       1,556       1,343       1,775       1,079       1,053  
…of which Bars
    261       236       236       659       548       934       1,230       1,039       1,394       829       794  
…of which Coins
    155       192       200       257       283       287       326       304       380       251       259  
Physical Demand
    2,923       2,845       2,864       3,460       3,038       3,807       4,515       4,321       5,041       4,158       4,076  
Physical Surplus/Deficit
    448       350       208       -36       1,068       542       25       192       -732       204       197  
ETF Inventory Build
    208       260       253       321       623       382       185       279       -880       -160       -125  
Exchange Inventory Build
    29       32       -10       34       39       54       -6       -10       -98       1       -49  
Net Balance
    212       58       -35       -391       406       106       -154       -78       246       363       370  
Gold Price (London PM, US$/oz)
    444.45       603.77       695.39       871.96       972.35       1,224.52       1,571.52       1,668.98       1,411.23       1,266.40       1,160.00  
 
 
Note: 
Totals may not add due to independent rounding. Net producer hedging is the change in the physical market impact of mining companies’ gold loans, forwards and options positions. Implied net investment is the residual from combining all other Thomson Reuters GFMS data on the gold supply/demand as shown in the Summary Table. As such, it captures the net physical impact of all transactions not covered by the other supply/demand variables.
 
 
(1)
“Tonne” refers to one metric ton. This is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.
 
* Source: Gold Survey 2015, Thomson Reuters GFMS
 
** Source: Gold Survey 2015 Q4 Update & Outlook, Thomson Reuters GFMS
 
 
3

 
 
Historic Movements in the Price of Gold
 
As movements in the price of gold are expected to directly affect the price of the Gold Deposit Receipts, investors should understand what the recent movements in the price of gold have been. Investors, however, should also be aware that past movements in the gold price are not indicators of future movements.
 
The following chart provides historical background on the price of gold. The chart illustrates movements in the price of gold in U.S. dollars per ounce over the period from October 2005 to January 2016, and is based on the London PM fix.
 
 
Source: The London Bullion Market Association (accessed Jan. 2016)

The recovery in the gold price began in 2001. First, declining U.S. interest rates resulted in a fall in the contango (i.e., the premium available on gold for future delivery), which reduced the returns available to producers for forward sales. Second, several mining companies reduced or eliminated their hedging activities in 2001 in response to pressure from shareholders seeking greater leverage to the price of gold, thereby reducing the amount of gold supply entering the market. This led a number of speculators and others who were short gold to close out short positions, further increasing demand. Finally, the terrorist attacks of September 11, 2001 and their political, military, and economic implications led to a sharp rise in the gold price, although gains somewhat moderated by year end.
 
Between 2002 and 2004 the price of gold in U.S. dollars continued to rise due to a number of factors, including the decline in the U.S. dollar against other currencies, the poor performance of U.S. and other major equities markets, a surge in investment demand in commodities as an asset class generally and gold specifically, the renewal of the Central Bank Gold Agreement in 2004, and continued reduction in forward selling by mining companies. It is important to note that central bank gold sales continued over the period and, indeed, the second Central Bank Gold Agreement increased the potential size of sales by the signatories under the agreement. This increase in the price of gold during this period was the first such gain over a three-year period since the early 1990s.
 
 
4

 
 
After a rapid rise starting in the second half of 2005 through mid-2006, there was a period of short decline and volatility in the price of gold lasting through the end of that year. In May 2006, the peak was $725 per ounce. Until about August of 2007, prices were below that high, but since have moved up strongly, reaching a new high of $1,011.25 on March 17, 2008, and ending at $869.75 per ounce on December 30, 2008. Gold prices were quite volatile between the March 2008 high and the end of December 2008 with run-ups and falls of over $150 in each direction. The significant price movements reflect the battles between inflationary and deflationary pressures, U.S. Dollar strengthening against many major currencies and global economic uncertainty going into 2009.
 
The price of Gold continued its upward trend in 2009. After rallying to $1,212.50 per ounce in early December 2009, it fell back down to $1,087.50 per ounce to close the 2009 year. This still resulted in a gain of over 25% for the year. Upward price movement for gold price continued in 2010, reaching a new pre-inflation adjusted record high of $1,421.00 per ounce on November 9, 2010 and closing at $1,405.50 per ounce on December 30, 2010. On December 29, 2011, the price of gold was $1,531.00 per ounce, and on December 28, 2012, the price of gold was $1,657.50 per ounce. In 2013, the twelve-year bull run of gold ended. 2013 opened near the annual high, and the price declined approximately 29% over the year to $1,204.50 per ounce on December 30, 2013. During 2014, gold prices fluctuated between a low of $1,132 and a high of $1,392. In 2015, gold prices have fluctuated from a high of $1,295.75 on January 22, 2015 to a low of $1,049.40 on December 17, 2015.
 
As of January 29, 2016, the price of gold was $1,111.80 per ounce.
 
Liquidity and Capital Resources
 
The Trust is not aware of any trends, demands, commitments, events or uncertainties that are reasonably likely to result in material changes to its liquidity needs. In exchange for the Initial Depositor’s fee, the Initial Depositor has agreed to assume the expenses incurred by the Trust.
 
Off-Balance Sheet Arrangements
 
The Trust has no off-balance sheet arrangements.
 
Critical Accounting Policies
 
The Trust will prepare its financial statements in accordance with accounting principles generally accepted in the United States of America.
 
The Trust intends to adopt the provisions of Topic 946, Investment Companies, and follow specialized accounting. As a result of the adoption of this provision, the Trust will record its investment in gold at fair value and expects that there will be fluctuations in the value of investments based on changes in the price of gold.
 
Item 3.  Quantitative and Qualitative Disclosures About Market Risk

The Trust does not engage in transactions in foreign currencies which could expose the Trust or holders of Gold Deposit Receipts to any foreign currency related market risk. The Trust does not invest in any derivative financial instruments or long-term debt instruments.
 
Item 4.  Controls and Procedures
 
The Trust maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (the “SEC”), and that such information is accumulated and communicated to an executive or senior officer of the Initial Depositor familiar with and responsible for supervising the Trust and its operations, as appropriate, to allow timely decisions regarding required disclosure.
 
 
5

 
 
Under the supervision and with the participation of an executive or senior officer of the Initial Depositor, the Initial Depositor conducted an evaluation of the Trust’s disclosure controls and procedures, as defined under Exchange Act Rules 13a-15(e) and 15d-15(e). Based on this evaluation, the designated officer of the Initial Depositor concluded that, as of January 31, 2016, the Trust’s disclosure controls and procedures were effective.
 
There have been no changes in the Trust’s or Initial Depositor’s internal control over financial reporting that occurred during the Trust’s fiscal quarter ended January 31, 2016 that have materially affected, or are reasonably likely to materially affect, the Trust’s or Initial Depositor’s internal control over financial reporting.
 
 
6

 
 
PART II. OTHER INFORMATION

Item 1.  Legal Proceedings
 
None.
 
Item 1A.  Risk Factors
 
There have been no material changes to the risk factors previously disclosed in the Trust’s Annual Form 10-K filed with the SEC for the year ended October 31, 2015.
 
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
 
Not applicable.
 
Item 3.  Defaults Upon Senior Securities
 
None.
 
Item 4.  Mine Safety Disclosures
 
Not applicable.
 
Item 5.  Changes in and Disagreements with Accounting and Financial Disclosure
 
There have been no changes in accountants and no disagreements with accountants during the Trust’s fiscal quarter ended January 31, 2016.
 
Item 6.  Directors, Executive Officers and Corporate Governance
 
Not applicable.
 
Item 7.  Executive Compensation
 
Not applicable.
 
Item 8.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
 
Not applicable.
 
Item 9.  Certain Relationships and Related Transactions, and Director Independence
 
Not applicable.
 
Item 10.  Principal Accounting Fees and Services
 
Not applicable.
 
Item 11.  Other Information
 
Not applicable.
 
 
7

 
 
Item 12.  Exhibits
 
Exhibit
No.
Description
 
1.1
Placement Agency Agreement by and among Bank of Montreal, the Trust and BMO Capital Markets Corp., filed as an exhibit to the Registrant’s current report on Form 8-K dated December 12, 2014.
 
1.2
Depositary Trust Agreement by and among Bank of Montreal, BMO Capital Markets Corp., The Bank of New York Mellon, as Trustee and BNY Mellon Trust of Delaware, as Delaware Trustee, and included as an exhibit thereto, form of Gold Deposit Receipt, filed as an exhibit to the Registrant’s current report on Form 8-K dated December 12, 2014.
 
10.1
Form of Gold Carrier Agreement by and among Bank of Montreal and [________], filed as an exhibit to Amendment No. 1 to Registration Statement No. 333-194144 on June 5, 2014.
 
31.1
Certificate pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
32.1
Certificate pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
8

 

SIGNATURES
 
 Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned in the capacities thereunto duly authorized.
 
 
BANK OF MONTREAL
 
 
Initial Depositor of the Vaulted Bullion Gold Trust
 
 
(Registrant)
 
     
Date: February 12, 2016
/s/ Deland Kamanga
 
 
Managing Director and co-Head, Global Structured
Products
 
     
     
     
Date: February 12, 2016
/s/ Vandra Goedvolk
 
 
Assistant Corporate Secretary
 
     
* The Registrant is a trust and the persons are signing in their capacities as officers of Bank of Montreal, the Initial Depositor of the Registrant.
 
 
9