INVESTING
IN GOLD
Free Writing Prospectus
Filed Pursuant to Rule 433
Registration No. 333-167807
October 12, 2010 |
2
Agenda
Benefits of ETFs
Traditional ways to access gold
Accessing gold today
Questions and answers |
3
The exchange traded landscape
Source: BlackRock, as of 12/31/09.
*Does
not
include
Target
Date
and
Alternative
funds.
There
are
a
total
of
912
Exchange
Traded
Products
(ETPs)
as
of
12/31/09.
ETFs
offer access to nearly any asset class or targeted market
segment in a cost-effective way.
0
100
200
300
400
500
600
700
800
900
1,000
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Year
Currency
Commodity
Fixed Income
Intl/Global Equity
Domestic Equity |
4
ETFs
include many different regulatory
structures
Open-End
Fund
Unit Investment
Trust
1940 Act
Closed-End
Fund
ETF structure has exposure, risk, and tax implications.
1933 Act
Limited
Partnership
Exchange
Traded Notes
Other Listed
Vehicles
Grantor
Trust |
5
The benefits of iShares ETFs
Low cost
Transparency
Exchange traded liquidity
Targeted exposure for implementing strategies |
6
Examples: Mining
companies, precious
metals mutual funds
Reasonable costs
and low minimums
20 mutual funds:
$29 billion in assets
4
0.75:
average five-
year correlation of
mutual funds to gold
spot price
5
Equities
and funds
Traditional ways to access gold
1.
One tonne
is equivalent to one metric ton, which is equivalent to 1,000 kilograms or
32,150.7465 troy ounces. 2.
Source: Gold Survey 2010, GFMS Limited. GFMS Limited is an independent
precious metals research organization based in London. 3.
Source: Ibid.
4.
Source: Morningstar, as of 4/30/10.
5.
Source: Ibid.
Predominantly
limited to large
institutional
investors
Derivatives
and futures
contracts
Examples: Bullion,
jewelry and gold
certificates
Provides pure
access to gold
1,759
tonnes
($55 billion):
2009 jewelry
consumption
473 tonnes
($15 billion):
2009 bar hoarding
and coin investing
Physical
gold
1
2
3 |
7
Accessing gold today
Exchange traded product landscape:
Provides access to gold through a vehicle that trades on an exchange
Low minimum investment amount
Gold exposure through equities, gold-based futures or physical gold
Eleven gold ETFs: $56 billion in assets
Three hold physical gold
Eight use derivatives or publicly traded equities
Gold
exchange
traded
products
1.
Source: Morningstar, as of 4/30/10.
Derivatives
and futures
contracts
Equities
and funds
Physical
gold
1 |
8
A closer look at physically backed gold ETFs
Source: BlackRock, as of 8/6/10.
0
2
4
6
8
10
12
14
1/05
1/06
1/07
1/08
1/09
1/10
0
200
400
600
800
1,000
1,200
1,400
iShares Gold Trust NAV
COMEX Spot Settlement Price
Past performance does not guarantee future results. Please see slide 12 for more
performance information. Spot
settlement
prices
are
for
illustrative
purposes
only
and
do
not
represent
actual
iShares
Gold
Trust
performance.
Spot prices do not reflect any fees, transaction costs or expenses.
iShares Gold Trust |
9
Conclusion
ETFs
offer access to a wide range of asset classes and
strategies
Investor demand for gold has been increasing amid global
and political uncertainty
Access to the gold market varies depending on the
investment vehicle
Gold ETFs backed by physical gold offer investors an
innovative way to access the price of gold |
APPENDIX |
11
iShares Gold Trust (IAU)
Gold ETF (the Trust) that seeks to reflect, at any given time, the
price of gold owned by the Trust at that time, less the expenses and
liabilities of the Trust Holds fully allocated
gold daily
Shares are listed and trade
on NYSE Arca
Cost-efficient
Transparent
Key Considerations
Trust Details
Ticker
IAU
Inception Date
1/21/05
Sponsors Fee
0.25%
Trust Profile (as of 10/1/10)
Total Net Assets
$4.22 Billion
Shares Outstanding
327 Million
Total Ounces of Gold
3.21 Million
Total Tonnes
of Gold
99.72 |
12
iShares Gold Trust Performance
The performance quoted represents past performance and does not guarantee future
results. Investment return and principal value of an investment will fluctuate
so that an investors shares, when sold or redeemed, may be worth more or less than the
original cost.
Market
returns
are
based
upon
the
midpoint
of
the
bid/ask
spread
at
4:00
p.m.
ET
(when
NAV
is
normally
determined for
most
iShares
products)
and
do
not
represent
the returns you would receive if you traded shares at other times.
1.
COMEX
Spot
Month
Settlement
Price.
Spot
settlement
prices
are
for
illustrative
purposes
only
and
do
not
represent
actual
iShares
Gold
Trust
performance.
Spot prices do not reflect any fees, transaction costs or expenses.
Performance History (as of 9/30/10)
Trust inception date: 1/21/05
Trust
19.10%
29.27%
20.28%
22.29%
21.28%
Benchmark
1
19.41%
29.74%
20.75%
22.76%
16.93%
21.74%
Market Price Returns
19.27%
29.52%
20.29%
22.31%
21.28%
YTD 2010
1-Year
3-Year
5-Year
10-Year
Since Trust Inception |
iShares
Gold Trust (Trust) has filed a registration statement (including a prospectus) with the SEC
for
the
offering
to
which
this
communication
relates.
Before
you
invest,
you
should
read
the
prospectus
and
other documents the Trust has filed with the SEC for more complete information about
the issuer and this offering.
You
may
get
these
documents
for
free
by
visiting
www.iShares.com
or
EDGAR
on
the
SEC
website
at www.sec.gov. Alternatively, the Trust will arrange to send you the prospectus if
you request it by calling toll-free 1-800-474-2737.
Investing involves risk, including possible loss of principal. The iShares Gold Trust
(Trust) is not an investment company registered under the
Investment Company Act of 1940 or a commodity pool for purposes of the
Commodity Exchange Act. Shares of the Trust are not subject to the same regulatory requirements as
mutual funds. Because shares of the Trust are created to reflect
the price of the gold held by the Trust, the
market
price
of
the
shares
will
be
as
unpredictable
as
the
price
of
gold
has
historically
been.
Additionally,
shares of the Trust are bought and sold at market price (not NAV). Brokerage
commissions will reduce returns. Shares of the Trust are created to reflect,
at any given time, the market price of gold owned by the trust at that time less
the trusts expenses and liabilities. The price received upon the sale of the
shares, which trade at market price, may be more or less than the value of
the gold represented by them. If an investor sells the shares at a time when no active
market for them exists, such lack of an active market will most likely adversely
affect the price received for the shares. For a more complete discussion of
the risk factors relative to the Trust, carefully read the prospectus.
Following an investment in shares of the Trust, several factors may have the effect
of causing a decline in the prices of gold and a corresponding decline in
the price of the shares. Among them: (i) Large sales by the official sector. A
significant portion of the aggregate world gold holdings is owned by governments,
central banks and related institutions. If one or more of these institutions
decides to sell in amounts large enough to cause a decline in world gold prices,
the price of the shares will be adversely affected. (ii) 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. (iii) A significant
change in the attitude of speculators and investors towards gold. Should the
speculative community take a negative view towards gold, it could cause a
decline in world gold prices, negatively impacting the price of the shares.
The amount of gold represented by shares of the Trust will decrease over the life
of the trust due to sales necessary to pay the sponsors fee and trust
expenses. Without increase in the price of gold sufficient to compensate for that
decrease, the price of the shares will also decline, and investors will lose money
on their investment. The Trust will have
limited
duration.
The
liquidation
of
the
Trust
may
occur
at
a
time
when
the
disposition
of
the
Trusts
gold
will
result in losses to investors. |
Although market makers will generally take advantage of differences between the NAV
and the trading price of Trust shares through arbitrage opportunities, there
is no guarantee that they will do so. There is no guarantee an active trading
market will develop for the shares, which may result in losses on your investment
at the time of disposition of your shares. The value of the shares of the
Trust will be adversely affected if gold owned by the Trust is lost or damaged in
circumstances
in
which
the
Trust
is
not
in
a
position
to
recover
the
corresponding
loss.
The
Trust
is
a
passive
investment
vehicle. This means that the value of your shares may be adversely affected by
Trust losses that, if the Trust had been actively managed, it might have
been possible to avoid. Shares of the iShares Gold Trust are not deposits or
other obligations of or guaranteed by BlackRock, Inc., and its affiliates, and
are not insured by the Federal Deposit Insurance Corporation or any other governmental
agency.
BlackRock Asset Management International Inc. (BAMII) is the sponsor of
the Trust. BlackRock Fund Distribution Company
(BFDC),
a
subsidiary
of
BAMII,
assists
in
the
promotion
of
the
Trust.
BAMII
is
an
affiliate
of
BlackRock,
Inc.
Although shares of the iShares Gold Trust may be bought or sold on the exchange
through any brokerage account, shares of the Trust are not redeemable from
the Trust except in large aggregated units called Baskets.
Commodity
Exchange,
Inc.,
and
COMEX
are
trademarks
of
Commodity
Exchange,
Inc.,
and
have
been
licensed
for
use for certain purposes to BlackRock, Inc., and the iShares Gold Trust. The Trust
is not sponsored, endorsed, sold or promoted by Commodity Exchange, Inc.,
nor does Commodity Exchange, Inc., make any representation regarding the
advisability of investing in the Trust.
©2010
BlackRock
Institutional
Trust
Company,
N.A.
All
rights
reserved.
iShares
®
is
a
registered
trademark
of
BlackRock
Institutional
Trust
Company,
N.A.
All
other
trademarks,
servicemarks
or
registered
trademarks
are
the
property
of
their
respective owners. iS-3615-1010 3101-CM12-8/10
|