A scramble for gold by retail investors has forced Blackrock to put the brakes on one of most popular exchange-traded products that mimic the performance of the precious metal.
The world’s biggest money manager said yesterday that a huge inflow into its iShares Gold Trust, which trades under the ticker IAU, meant that it had to stop creating new shares because it was unable to register them quickly enough with the US Securities and Exchange Commission.
Investors began flocking to gold in January as the prospects of further rises in American interest rates diminished. The metal has had its best start to a year since 1980, despite the jitters that had been afflicting global markets having settled in the recent weeks.
Blackrock said that the iShares Gold Trust had enjoyed its biggest inflow in a decade last month and had expanded by $1.4 billion so far this year, taking its total assets to $8 billion.
Exchange-traded products offer retail investors exposure to commodities without having to physically own them. Unlike shares in quoted companies, they have open-ended share capital, which means that new shares are issued to buyers.
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Blackrock said that retail and institutional investors would still to be able to buy and sell shares in IAU, but it warned that a premium may open up between the trust’s price and the underlying price of gold because of the inability to create new shares.
Gold yesterday shrugged off positive US jobs numbers to rise 1.2 per cent to $1,273 an ounce, its highest in a year.
Ole Hansen, the chief commodity strategist at Saxo Bank, said that momentum appeared to have taken over. “Over the past couple of weeks, stock markets have stabilised and volatility has come down, credit risk has faded and gold has continued to go up,” he said. “Some of that might be explained by momentum . . . or it can also be the canary in the coalmine, signalling that investors don’t think that the stability that has returned in the past few weeks is going to last.”