Markets have rebounded. And the price of oil is up 20%. But at least one investment is still showing signs that an investing apocalypse could still be on the horizon.
Gold, the asset that some flock to when they are particularly nervous, has become so popular with investors that BlackRock, the large asset management, has basically sold out. A surge in demand has caused the firm to cease issuing new shares in its popular BlackRock iShares Gold exchange-traded fund.
According to a statement from the company, “Since the start of 2016, in response to global macroeconomic conditions, demand for gold and for IAU has surged among global investors,” causing the ETF to expand its assets under management by $1.4 billion this year alone.
“This surge in demand has led to the temporary exhaustion of IAU shares currently registered under [law]. We are registering new shares to accommodate future creations in the primary market by filing a Form 8-K to announce the resumption of the offering of new shares,” according to the statement. “The ability of authorized participants to redeem shares of IAU is not affected.”
Gold investors, who tend to be a risk averse and suspicious lot in general, will rightly find this explanation a bit lacking, but Mohit Bajaj, director of ETF trading solutions at brokerage WallachBeth tells Barron’s that this is sort of situation isn’t rare for commodity-based ETFs. Before expanding assets under management, these types of fund must petition regulators for more “bandwidth.”
Gold prices are up roughly 20% to start the year.
