The sudden surge of interest for gold-related exchange traded funds on safe-haven demand has lead to suspended creation of new shares for a BlackRock iShares gold ETF.
The iShares Delaware Trust Sponsor LLC has temporarily suspended the creation of new shares of iShares Gold Trust (NYSEArca: IAU) until additional shares are registered with the Securities and Exchange Commission, according to a press release.
Potential investors should note that this suspension does not affect the ability to trade IAU on stock exchanges, so investors can still buy and sell shares of the ETF. However, due to the temporary suspension, IAU’s price can diverge from its net asset value, or trade at a premium to physical gold prices if investment demand continues unabated.
Moreover, the suspension does not affect the ability of Authorized Participants to redeem shares of IAU, so the ETF may not experience wide discounts to NAV in the event of a sudden sell-off.
The suspension comes off one of the largest inflows into IAU in a decade. Since the start of 2016, global volatility has triggered a surge in demand for safe-haven assets like gold. Consequently, IAU has attracted a net $1.4 billion year-to-date, with February marking its largest creation activity in 10 years.
“Though concerns about an economic slowdown partially abated mid-month, risk-off related ETFs dominated the top gainers in February,” Todd Rosenbluth, director of mutual fund and ETF research at S&P Capital IQ, told InvestmentNews.
Last week, Deutsche Bank advised investors to keep holding gold to hedge rising economic risks and potential market swings. [Gold ETFs Can Help Safeguard a Portfolio]