Nervous investors cause a gold rush

INVESTORS were yesterday able to resume buying shares in a gold fund run by Black Rock after they had been suspended on Friday due to overwhelming demand, writes James Salmon.

The turmoil on global stock markets in recent weeks has triggered a stampede among savers for the precious metal – which is traditionally seen as a haven when times are tough. The slowdown in China, concerns about the safety of European banks and the spectre of deeper negative interest rates has spooked financial markets.

It has also spurred the biggest buying spree for funds which blindly track gold prices.

Gold prices rallied to their highest level in five years on Friday and yesterday rose to $1266.5.

Funds under management at BlackRock’s iShares Gold Trust have surged by almost £1bn to £5.6bn since the start of the year.

It was forced to suspend trading on Friday after failing to anticipate the surge in demand.

The world’s largest asset manager exhausted its supply of registered shares and did not register more of them with the US Securities and Exchange Commission fast enough.

The blunder may have landed BlackRock in hot water with the SEC and the firm revealed that it may have to pay damages to investors.

Although the fund is only available in the US, BlackRock said it has also experienced a surge in demand for gold from customers in the UK and across Europe.