Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2025

2.1. Basis of Accounting

The Sponsor has determined that the Trust falls within the scope of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 946, Financial Services—Investment Companies, and has concluded that for reporting purposes, the Trust is classified as an Investment Company. The Trust is not registered as an investment company under the Investment Company Act of 1940 and is not required to register under such act.

Valuation of Bullion

2.2. Valuation of Bullion

The Trust follows the provisions of ASC 820, Fair Value Measurement (“ASC 820”). ASC 820 provides guidance for determining fair value and requires increased disclosure regarding the inputs to valuation techniques used to measure fair value. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Effective May 23, 2024, the Trustee, at the direction of the Sponsor, entered into an Allocated Account Agreement and Unallocated Account Agreement with ICBC Standard Bank Plc (“ICBC”), providing for the custody of the Trust’s Bullion. Prior to May 23, 2024, JPMorgan Chase Bank N.A. (“JPMorgan”) served as custodian of the Trust’s Bullion. The Trust’s Bullion may also be held by a sub-custodian selected by the Custodian to hold the Trust’s Bullion on a segregated basis and whose appointment has been approved by the Sponsor. At March 31, 2025, all of the Trust’s gold, palladium and platinum was held at ICBC. At March 31, 2025, all of the Trust’s silver was held at ICBC or a sub-custodian selected by ICBC.

The Trust’s Bullion is recorded, per individual metal type, at fair value. The cost of Bullion is determined according to the average cost method and the fair value is based on the relevant “London Metal Price” for each metal held by the Trust. This is the applicable “London Bullion Market Association (“LBMA”) PM Gold Price” for the price of an ounce of gold, the “LBMA Silver Price” for silver, and for platinum and palladium the applicable LBMA Price PM. If there is no LBMA PM Gold Price, or LBMA Price PM on any day, the Trustee is authorized to use the LBMA Gold Price AM or LBMA Price AM announced on that day. If neither price is available for that day, the Trustee will value the Trust’s gold based on the most recently announced price.

Realized gains and losses on transfers of Bullion, or Bullion distributed for the redemption of Shares, are calculated on a trade date basis as the difference between the fair value and average cost of Bullion transferred.

The LBMA Gold Price PM is set using the afternoon session of the ICE Benchmark Administration (“IBA”) equilibrium auction, an electronic, tradable and auditable over-the-counter auction market with the ability to settle trades in US Dollars, Euros or British Pounds for LBMA authorized participating gold bullion banks or market makers that establishes a reference gold price for that day’s trading. The “London Metal Price” for gold held by the Trust is the LBMA Gold Price PM.

The IBA conducts an electronic, over-the-counter silver auction in London, England to establish a fixing price for an ounce of silver once each trading day, which is disseminated by major market vendors (the “LBMA Silver Price”). The LBMA Silver Price is established by the nine LBMA authorized bullion banks and market makers participating in the auction and disseminated by major market vendors. The “London Metal Price” for silver held by the Trust is the LBMA Silver Price.

The LME is responsible for the administration of the electronic platinum and palladium bullion price fixing system (“LMEbullion”) as well as providing electronic market clearing processes for platinum and palladium bullion transactions at the fixed prices established by the LME pricing mechanism. LMEbullion establishes and publishes fixed prices for troy ounces of platinum and palladium twice each London trading day during fixing sessions beginning at 9:45 a.m. London time (the “LBMA Price AM”) and 2:00 p.m. London time (the “LBMA Price PM”). The “London Metal Price” for platinum and palladium held by the Trust is the LBMA Price PM.

Once the value of Bullion has been determined, the net asset value (the “NAV”) is computed by the Trustee by deducting all accrued fees, expenses and other liabilities of the Trust, including the remuneration due to the Sponsor (the “Sponsor’s Fee”), from the fair value of the Bullion and all other assets held by the Trust.

The Trust recognizes changes in fair value of the investment in Bullion as changes in unrealized gains or losses on investment in Bullion through the Statement of Operations.

The per Share amount of Bullion exchanged for a purchase or redemption is calculated daily by the Trustee using the London Metal Price for each metal held by the Trust to calculate the Bullion amount in respect of any liabilities for which covering Bullion sales have not yet been made, and represents the per Share amount of Bullion held by the Trust, after giving effect to its liabilities, to cover expenses and liabilities and any losses that may have occurred.

Fair Value Hierarchy

ASC 820 establishes a hierarchy that prioritizes inputs to valuation techniques used to measure fair value. The three levels of inputs are as follows:

– Level 1. Unadjusted quoted prices in active markets for identical assets or liabilities that the Trust has the ability to access.

– Level 2. Observable inputs other than quoted prices included in level 1 that are observable for the asset or liability either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments and similar data.

– Level 3. Unobservable inputs for the asset or liability to the extent that relevant observable inputs are not available, representing the Trust’s own assumptions about the assumptions that a market participant would use in valuing the asset or liability, and that would be based on the best information available.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in level 3.

The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

The Trust’s investment in Bullion is classified as a level 1 asset, as its value is calculated using unadjusted quoted prices from primary market sources.

The categorization of the Trust’s assets is as shown below:

(Amounts in 000’s of US$)	March 31, 2025		December 31, 2024
Level 1
Investment in Bullion	$	1,326,975	$	1,040,489

There were no transfers between levels during the three months ended March 31, 2025 or the year ended December 31, 2024.

Bullion Receivable and Payable

2.3. Bullion Receivable and Payable

Bullion receivable or payable represents the quantity of Bullion covered by contractually binding orders for the creation or redemption of Shares respectively, where the Bullion has not yet been transferred to or from the Trust’s account. Generally, ownership of Bullion is transferred within two business days of the trade date. At March 31, 2025, the Trust had no Bullion receivable or payable for the creation or redemption of Shares. At December 31, 2024, the Trust had no Bullion receivable or payable for the creation or redemption of Shares.

Creations and Redemptions of Shares

2.4. Creations and Redemptions of Shares

The Trust expects to create and redeem Shares from time to time, but only in one or more Baskets (a Basket equals a block of 25,000 Shares). The Trust issues Shares in Baskets to Authorized Participants on an ongoing basis. Individual investors cannot purchase or redeem Shares in direct transactions with the Trust. An Authorized Participant is a person who (1) is a registered broker-dealer or other securities market participant such as a bank or other financial institution which is not required to register as a broker-dealer to engage in securities transactions; (2) is a participant in The Depository Trust Company; (3) has entered into an Authorized Participant Agreement with the Trustee and the Sponsor; and (4) has established an Authorized Participant Unallocated Account with the Trust’s Custodian or other Bullion clearing bank. An Authorized Participant Agreement is an agreement entered into by each Authorized Participant, the Sponsor and the Trustee which provides the procedures for the creation and redemption of Baskets and for the delivery of the Bullion required for such creations and redemptions. An Authorized Participant Unallocated Account is an unallocated Bullion account, either loco London or loco Zurich, established with the Custodian or a Bullion clearing bank by an Authorized Participant.

The creation and redemption of Baskets is only made in exchange for the delivery to the Trust or the distribution by the Trust of the amount of Bullion represented by the Baskets being created or redeemed, the amount of which is based on the combined NAV of the number of Shares included in the Baskets being created or redeemed determined on the day the order to create or redeem Baskets is properly received.

Authorized Participants may, on any business day, place an order with the Trustee to create or redeem one or more Baskets. Effective May 28, 2024, the standard settlement period for Shares is one business day. Prior to May 28, 2024, the settlement period for Shares was two business days. In the event of a trade date at period end, where a settlement is pending, a respective account receivable and/or payable will be recorded. When Bullion is exchanged in settlement of a redemption, it is considered a sale of Bullion for financial statement purposes.

The amount of Bullion represented by the Baskets created or redeemed can only be settled to the nearest 1/1000th of an ounce. As a result, the value attributed to the creation or redemption of Shares may differ from the value of Bullion to be delivered or distributed by the Trust. In order to ensure that the correct amount of Bullion is available at all times to back the Shares, the Sponsor accepts an adjustment to its Sponsor’s Fee in the event of any shortfall or excess on each transaction. For each transaction, this amount is not more than 1/1000th of an ounce of Bullion.

As the Shares of the Trust are subject to redemption at the option of Authorized Participants, the Trust has classified the outstanding Shares as Net Assets. Changes in the number of Shares outstanding are presented in the Statement of Changes in Net Assets.

Income Taxes

2.5. Income Taxes

The Trust is classified as a “grantor trust” for U.S. federal income tax purposes. As a result, the Trust itself will not be subject to U.S. federal income tax. Instead, the Trust’s income and expenses will “flow through” to the Shareholders, and the Trustee will report the Trust’s proceeds, income, deductions, gains, and losses to the Internal Revenue Service on that basis.

The Sponsor has evaluated whether or not there are uncertain tax positions that require financial statement recognition and has determined that no reserves for uncertain tax positions are required as of March 31, 2025 or December 31, 2024.

Investment in Bullion

2.6. Investment in Bullion

Changes in ounces of Bullion and their respective values for the three months ended March 31, 2025 and 2024 are set out below:


	Three Months Ended March 31, 2025
(Amounts in 000’s of US$, except for ounces data)
Ounces of Bullion	Gold			Palladium			Platinum			Silver			Total
Opening balance		261,800.3			52,359.8			34,906.6			9,599,303.3			9,948,370.0
Creations		21,325.7			4,265.1			2,843.4			781,940.8			810,375.0
Redemptions		—			—			—			—			—
Transfers of Bullion to pay expenses		(392.8	)		(78.2	)		(52.2	)		(14,358.6	)		(14,881.8	)
Closing balance		282,733.2			56,546.7			37,697.8			10,366,885.5			10,743,863.2

Investment in Bullion
Opening balance	$	683,521		$	47,595		$	31,905		$	277,468		$	1,040,489
Creations		62,088			4,090			2,780			25,392			94,350
Redemptions		—			—			—			—			—
Realized gain on Bullion distributed for the redemption of Shares		—			—			—			—			—
Transfers of Bullion to pay expenses		(1,074	)		(73	)		(49	)		(438	)		(1,634	)
Realized gain / (loss) on Bullion transferred to pay expenses		421			(64	)		(5	)		122			474
Change in unrealized gain on investment in Bullion		135,786			4,207			2,803			50,500			193,296
Closing balance	$	880,742		$	55,755		$	37,434		$	353,044		$	1,326,975


	Three Months Ended March 31, 2024
(Amounts in 000’s of US$, except for ounces data)
Ounces of Bullion	Gold			Palladium			Platinum			Silver			Total
Opening balance		289,717.8			57,943.6			38,629.0			10,622,986.0			11,009,276.4
Creations		—			—			—			—			—
Redemptions		(15,229.4	)		(3,045.9	)		(2,030.5	)		(558,409.2	)		(578,715.0	)
Transfers of Bullion to pay expenses		(429.8	)		(86.0	)		(57.3	)		(15,759.5	)		(16,332.6	)
Closing balance		274,058.6			54,811.7			36,541.2			10,048,817.3			10,414,228.8

Investment in Bullion
Opening balance	$	602,149		$	65,824		$	38,629		$	252,721		$	959,323
Creations		—			—			—			—			—
Redemptions		(31,023	)		(2,917	)		(1,819	)		(12,764	)		(48,523	)
Realized gain / (loss) on Bullion distributed for the redemption of Shares		6,218			(2,498	)		(276	)		631			4,075
Transfers of Bullion to pay expenses		(882	)		(89	)		(53	)		(363	)		(1,387	)
Realized gain / (loss) on Bullion transferred to pay expenses		182			(65	)		(5	)		21			133
Change in unrealized gain / (loss) on investment in Bullion		30,218			(4,512	)		(3,333	)		6,352			28,725
Closing balance	$	606,862		$	55,743		$	33,143		$	246,598		$	942,346

Expenses / Realized Gains / Losses

2.7. Expenses / Realized Gains / Losses

The primary expense of the Trust is the Sponsor’s Fee, which is paid by the Trust through in-kind transfers of Bullion to the Sponsor.

The Trust will transfer Bullion to the Sponsor to pay the Sponsor’s Fee that accrues daily at an annualized rate equal to 0.60% of the adjusted daily net asset value (“ANAV”) of the Trust, paid monthly in arrears.

The Sponsor has agreed to assume administrative and marketing expenses incurred by the Trust, including the Trustee’s monthly fee and out of pocket expenses, the Custodian’s fee and the reimbursement of the Custodian’s expenses, exchange listing fees, United States Securities and Exchange Commission (the “SEC”) registration fees, printing and mailing costs, audit fees and up to $100,000 per annum in legal expenses.

For the three months March 31, 2025 and 2024, the Sponsor’s Fee was $1,761,323 and $1,376,799, respectively.

At March 31, 2025 and at December 31, 2024, the fees payable to the Sponsor were $663,662 and $535,618, respectively.

With respect to expenses not otherwise assumed by the Sponsor, the Trustee will, at the direction of the Sponsor or in its own discretion, sell the Trust’s Bullion as necessary to pay these expenses. When selling Bullion to pay expenses, the Trustee will endeavor to sell the smallest amounts of Bullion needed to pay these expenses in order to minimize the Trust’s holdings of assets other than Bullion. Other than the Sponsor’s Fee, the Trust had no expenses during the three months ended March 31, 2025 and 2024.

Unless otherwise directed by the Sponsor, when selling Bullion the Trustee will endeavor to sell at the price established by the LBMA Price for each metal held by the Trust. The Trustee will place orders with dealers (which may include the Custodian) through which the Trustee expects to receive the most favorable price and execution of orders. The Custodian may be the purchaser of such Bullion only if the sale transaction is made at the next LBMA Price for each metal held by the Trust used by the Trustee to value the Trust’s Bullion. A gain or loss is recognized based on the difference between the selling price and the average cost of the Bullion sold. Neither the Trustee nor the Sponsor is liable for depreciation or loss incurred by reason of any sale.

Realized gains and losses result from the transfer of Bullion for Share redemptions and / or to pay expenses and are recognized on a trade date basis as the difference between the fair value and average cost of Bullion transferred.

Effective December 31, 2024, The Trust adopted FASB Accounting Standards Update 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures (“ASU 2023-07”). Adoption of the new standard impacted disclosures only and did not affect the Trust’s financial position nor the results of its operations. Operating segments are components of a public entity that engage in business activities from which it may recognize revenues and incur expenses, have discrete financial information available, and have their operating results regularly reviewed by the public entity’s chief operating decision maker (“CODM”) when assessing segment performance and making decisions about segment resources. The Chief Financial Officer of the Sponsor acts as the Fund’s CODM. The CODM monitors the operating results of the Trust as a whole, and the Trust’s asset allocation is managed in accordance with its Prospectus. The Trust operates as a single operating and reporting segment pursuant to its investment objective and principal investment strategy. The Trust’s prospectus describes the Trust’s fees, investment objective, principal investment strategy and principal risks, among other items. The Fund’s portfolio composition, total returns, expense ratios and changes in net assets used by the CODM to assess segment performance and make resource allocations are consistent with the information presented within the Trust’s financial statements. The accompanying financial statements detail the Fund’s segment assets, liabilities, revenues, and expenses. Segment assets are reflected on the Fund’s Statement of Assets and Liabilities as “Total Assets” and significant segment expenses are listed on the Statement of Operations.

Subsequent Events

2.8. Subsequent Events

In accordance with the provisions set forth in FASB ASC 855-10, Subsequent Events, the Trust’s management has evaluated the possibility of subsequent events impacting the Trust’s financial statements through the filing date. During this period, no material subsequent events requiring adjustment to or disclosure in the financial statements were identified.

- Definition

Disclosure of accounting policy for income taxes, which may include its accounting policies for recognizing and measuring deferred tax assets and liabilities and related valuation allowances, recognizing investment tax credits, operating loss carryforwards, tax credit carryforwards, and other carryforwards, methodologies for determining its effective income tax rate and the characterization of interest and penalties in the financial statements.

+ References + Details

- Definition

Disclosure of accounting policy for investment in financial asset.

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abrdn Precious Metals Basket ETF Trust 10-Q