ISHARES GOLD TRUST (IAU) stock intrinsic value fair value estimate & owner earnings analysis

The iShares Gold Trust is not an operating business. It is a passive trust, sponsored by iShares Delaware Trust Sponsor LLC, whose only asset is physical gold bullion held for it by JPMorgan Chase Bank N.A., London Branch, in London and, where permitted, New York or Toronto. Each share is a fractional claim on that gold, roughly 0.0188 troy ounce per share based on the trust's redemptions in late 2025. Large dealers can create new shares by delivering gold, or hand shares back in exchange for gold, in large blocks. That arbitrage is what keeps the share price very close to the value of the gold behind it. What the owner earns: nothing. The trust has no revenue and holds no cash. Its only recurring item is the sponsor's fee of 0.25% of net assets a year, paid by handing over a sliver of gold each month. We treat that gold as a cash cost, so the owner's earnings each year are simply the fee as a negative number: about -$0.06 a share in 2016, rising to -$0.16 in 2025, a figure that moves only with the gold price. The large gains and losses in the trust's reported net income ($24.3 billion of gains in 2025, a $4.1 billion loss in the first half of 2026) are the gold being revalued. We leave them out because they are changes in the price of the asset held, not earnings the asset produces. Once those revaluations are removed, what remains is exactly the sponsor's fee. How we value it: a permanent stream of small losses has no positive value on its own, so an earnings-based valuation does not apply. What a shareholder does own is a claim on gold that can be turned into close to its full value at any time, through the create-and-redeem mechanism, or through distribution if the trust is ever wound up. We therefore value each share at the gold it holds, using the latest value in the trust's filings: net asset value of $75.72 per share at June 30, 2026 (about $60.1 billion of net assets across 793.6 million shares). The cases: we do not forecast the gold price. No contract, capacity, pricing power or other business lever exists that we can point to as a driver of where gold goes, so no case assumes it rises or falls. That is why the bear, base and bull cases all come out at $75.72. The factors specific to the trust are small or have no evidence behind them. The 0.25% fee is certain and trims the gold behind each share by about a quarter of one percent a year, roughly $0.19 a share annually at June's value. The trust does not insure its gold and relies on whatever insurance the custodian keeps; no loss has occurred and nothing in the filings points to one. Creations and redemptions could be suspended during a market disruption, which could briefly open a gap between the share price and the gold value. None of these is large enough, or well enough evidenced, to move a case. What the identical cases do not mean: they do not mean the shares are low-risk. The value moves one-for-one with gold. Between March 31 and June 30, 2026 alone, net asset value per share fell from $86.73 to $75.72, about 13%, after rising from $49.29 to $81.13 during 2025. The value of the shares depends on the gold price, and that is outside what this analysis can value. If gold stays flat, the shares imply a slightly negative return because of the fee, far below the 6% a year used in our method. Margin-of-safety price: the shares almost always trade at the value of the gold they hold, so the market price carries no margin of safety on value. A margin of safety exists only if the shares trade well below the gold they represent. We set the margin-of-safety price at $56.79, which is 25% below June 30 net asset value, and it applies only if the shares trade at least 25% below the trust's current published net asset value per share. A discount that large would most likely appear only if the create-and-redeem mechanism broke down or confidence in the custody arrangements were shaken, so a wide margin is warranted. Note that the share price would also reach $56.79 if gold itself fell about 25%. That would not be a bargain under this approach, because the shares would still be worth only the gold behind them. What would make this wrong: a loss of gold in custody that the custodian's insurance did not cover; a lasting breakdown in the arbitrage that left shares trading well away from their gold value; or an increase in the sponsor's fee.