Gold Demand Trips Up BlackRock as ETF Halts Share Creation
BlackRock Inc. on Friday temporarily stopped issuing new shares in its $7.7 billion iShares Gold Trust, as surging interest in the precious metal caught the world’s largest money manager off guard.
Investors had piled into the fund so fast that BlackRock didn’t register in time with the U.S. Securities and Exchange Commission to issue more shares. The suspension means that the share price of the fund may deviate from the price of its underlying assets — the physical gold — until issuance resumes, probably within two or three business days, according to a person familiar with the matter.
The misstep by New York-based BlackRock comes as providers of exchange-traded funds face mounting concern that the products may pose risks that investors aren’t always aware of. Cracks in the system were revealed on Aug. 24, when many equities didn’t open for trading, yet the ETFs that hold them did, causing confusion among investors about their value.
“One would suppose this would be something they would be monitoring more carefully,” said Ben Johnson, director of global ETF research for Morningstar Inc.