Gold's Enduring Tailwinds with Aakash Doshi

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Stewart: Hey, welcome back to the Home of the World's Smartest Money. I'm Stewart Foley, Founder and now Senior Advisor to InsuranceAUM.com and Principal Architect of the CIIM designation, which there's more to come on that. That is the Chartered Insurance Investment Manager designation, and that is going to be coming out very early in 2026. You heard it here first and today we're digging into, no pun intended, one of the most talked about asset classes in the last two years, which is gold. Gold has been a top performing macro asset globally. It has been discussed in the context of portfolio construction, FIAT, debasement, geopolitics, and even crypto. And yet it is still misunderstood by many institutional investors, including insurers. I'd have to count myself in that camp as well, and I'm looking forward to our great education today. Our subject matter expert is Aakash Doshi, Global Head of Gold for the SPDR ETF business at State Street Investment Management. Aakash leads global gold strategy across North America and APAC, shapes the investment outlook for State Street's Gold ETF Suite, and is one of the most thoughtful voices in the global commodity space. Aakash, welcome to the InsuranceAUM.com podcast.

Aakash: Thank you for having me in. Happy holidays to you, Stewart.

Stewart: Yeah, thank you so much. You too. It is that time of the year. We're recording on December the 15th, so we're just getting ready here. We've changed our icebreaker recently, so you'll be happy to know. But the first part's the same, which is where did you grow up and what job would you most like to have, if not this one?

Aakash: Sure. So I grew up and was born in Philadelphia, Pennsylvania. The Go Birds, I have to say that or all my friends will give me a bit of tease if I don't. So go Eagles, Go Birds, and the job that I think I would most like to have if it wasn't this one... One, something to spend more time at home. So stay at home dad with my kids, although I don't know how my wife would feel about that. And the second one would be professional athlete.

Stewart: Professional athlete. Any sport or just in general?

Aakash: I think tennis, football or baseball.

Stewart: There you go. Yeah, those are very different gigs. I got to say that by the looks of things tennis is, that's a pretty good gig I got to think. But regardless, so as I mentioned at the top of the show, gold has been the top performing macro asset for the past two years. What's driving this move? And before I say that there's a lot of things driving that move, but when you think about the move it's had so far and you look into 26, why have we gotten here and where are we going?

Aakash: Sure. So let's decompose that into two parts. One, how we got here and then where we might go in 2026. So I think one way to frame the gold lens is let's look at what's happened since the 2020 pandemic shock. We can go back to the 1970s, eighties, or nineties, and I love financial history. It tends to rhyme, doesn't always repeat. However, I care more about what's happening in the modern evolution of the market. So if I think about the post pandemic regime, I think of gold as both a financial and physical asset. And the first phase of the rally post 2020 really solidifying a $2,000 an ounce baseline level for the yellow metal was a shift out in the physical demand curve. This was driven by record central bank purchases that started in 2022 with the Russian invasion of Ukraine and the weaponization of the US dollar to some degree with its sanctions policy.

Although central banks had started buying for a decade and a half almost prior to that, it really started accelerating during the first Trump administration in 2018, but then again in 2022 with that Russian invasion into Ukraine. And that really accelerated some of the physical demand pull on gold to the extent where central banks were buying 25 to 30% of primary mine supply. So think about it, you get the gold out of the ground, you refine it in Switzerland or the Middle East or India, and then about 30% of that refined product, rather than going into jewelry or fabrication or into private consumption, was going straight into central bank vaults. That really was the big driver in the early parts of the post pandemic rally. And this helped support prices, dampen downside volatility, and lifted the price floor in what was otherwise a very aggressive hiking campaign from the Fed starting in 2022 after the 2021 and early 2022 inflation shock.

The second thing was China retail. China retail really recovered after 2020, which was the worst jewelry and physical gold demand recession in China, far exceeding the global financial crisis, far exceeding the 2016 Asian jewelry recession. And combined China, the most important commodity consumer in the world, but also one of the most important gold consumers in the world and central banks together, that shifted out the demand rally phase 2024 and 2025, which brought upon $3,000 an ounce gold I think was driven by the return of Western investors, particularly ETF investors. So over this period in the post pandemic regime, 2021, 2022, 2023, even early 24 ETF holders of gold were actually selling gold. They were redeeming shares providing that physical supply into the market that was absorbed by central banks and China retail. My thesis and my theory was at the beginning of this year, and frankly late last year in 2024, but in early 2025 was what if ETF investors started to restock gold instead of destocking?

The Fed's going to cut in 2025. Again, Trump introduces a lot of uncertainty, both geopolitically and geo economically. What if ETF investors start reallocating to gold and these ETF outflows reverse the inflows? And lo and behold, 2025 has seen a record year of inflows in dollar notional terms and the strongest tonnage of buying since 2020. That's phase two of the rally, I think phase three and what can take us to 4,000 to $5,000 an ounce next year and targeting that $5,000 number is a strategic reallocation to gold. Gold can be an overbought asset, but it's under owned broadly in portfolios. And I think combined with the global trade demand for alternatives and alternative fiat, I think that's the next leg higher for gold. And I think that's what propels the market higher. Now as far as Stewart, where prices are going in 2026, I think the baseline is for high single digits, low double digit returns.

So gains to moderate after very supersized returns for a low volatility asset in 2024 and particularly in 2025. What does that mean? In simple terms, maybe prices around $4,500-4,600 as a base case baseline, but I do think the risk is asymmetric to the upside. I think $5,000 is more likely than $3,000. And even if the market was to unwind and sell off, I think there's strong support around $3,700 an ounce. So I see the rally continuing, but 2026 looking a little bit more like 1980, just a moderate return after the supersized returns you had in 78, 79 in 2026. Similarly grinding upwards, but moderating in path.

Stewart: Yeah, that's super helpful. So you mentioned the alt FIAT and the basement trade, and I got to be honest with you, I need a little education here. What is meant by that? And your explanation of the runup in price is different than I thought it was going to be, to be honest with you. I learned a lot there. So talk to me about what mean when you say alt FIAT or debasement trade and how gold fits into that narrative.

Aakash: Sure. So how do you visualize alternative FIAT or global debasement when you read that on your Bloomberg terminal or on Reuters.com, Wall Street Journal, et cetera, or you even hear it on your podcast, what does that mean? So I think of the global debasement trade favoring alternatives like gold that essentially serve as hedges against fiat money and printing and global debt loads. So if I asked you, Stewart, we can play a little trivia. If you don't want me to play host for a short time, just deflect. But if I asked you, Stewart, and this might be interesting for your insurance audience, what are global debt loads in 2025? I don't mean US government treasury debt, I don't mean just corporate debt. I'm adding up the US Europe, China, and we add this up across households, corporates, governments, and financial debt. This is a unique series from the Institute of International Finance. What do you think that number is in 2025 roughly on a global basis?

Stewart: $90 trillion

Aakash: Not a bad guess. That number is about four times higher at $340 trillion plus in the middle of 2025. Now you could say, “gosh, so what?” Global debt isn't an all-time record. It's been rising over the last 25 years, but so is population growth. Shouldn't debt be rising with population? And I'll concede that point, but if you decompose that 340 trillion into what the government share of that fiscal debt load is, it's also at a record in 2025 at just over 30%. And you've seen two market increases, Stewart, over the last quarter century of that government share of debt first during the global financial crisis following all the stimulus and bank bailouts, and then again in 2020 during the COVID pandemic shock. So you saw a sharp spike in this government share of debt that has never really retreated since the global financial crisis. So you combine all of this together, that has put investors in a precarious situation where they're more concerned that we'll develop market economies one day have to restructure their debt the way emerging market economies do two, what's happening to the purchasing power of my FIAT currency.

One thing I didn't mention in your first question, Stewart, but the big driver of gold's outperformance in 2025 was a dollar devaluation. It's no surprise that gold in 2025 has returned the most since 1979 with the US dollar devaluing the most in the first eight, nine months of 2025 since the 1970s. So you put all of this together and I think gold is really serving as a currency debasement and alternative fiat hedge. And I think of the global debt load, which is now three to four times global GDP as one of those drivers or way to illustrate the alternative fiat story.

Stewart: That's super helpful. So Aakash, you presented at some conferences arguing that the traditional 60-40 portfolio is no longer in vogue. That doesn't mean anything to the insurance investment community because this is not the 60-40 crowd. However, when I mentioned that prior to doing the podcast, you explained to me why it's still relevant to institutional investors. So can you talk a little bit about what that shift is and also how it impacts the broader market for gold?

Aakash: Absolutely, Stewart. So insurance industry, it doesn't matter as much because they tend to have a lot of asset liability management requiring cash flows to match their liabilities and their assets. But a lot of institutional investors and retail investors do benchmark off a 60-40 or 70-30. And what do we mean by that? That 60% equity allocation or 70% equity allocation offset by a 40 or 30% bond allocation respectively. Now traditionally, that is what a lot of wealth advisors and private bankers are benchmarked against and a lot of institutional look to as the traditional portfolio. My argument is that in an era of higher stock bond correlations, particularly US stock bond correlations, you need alternatives to serve as a diversification hedge to serve as a left tail hedge. And why is that important? Well, in 2022, when the Fed started its aggressive hiking campaign following the inflation scare of 2021, what you saw is US stock bond correlation, Stewart surged to multi-decade highs and they stayed there in 2023, 2024, even in 2025, as stock correlations have come down, they still remain historically positive.

So that adds room for alternatives, liquid and illiquid like gold to fit into the portfolio that provide diversification, low correlation and capital appreciation over the long term. So perhaps 60-40 or 70-30 isn't the new norm, but perhaps it should be 50-30-20 or it should be 60-30-10 where that last 10 to 20% represents an alternative sleeve and gold benefits from being a liquid alternative in that portfolio allocation. And I think from that standpoint, you're starting to see that growth traction in 2025, and I think it's something that'll grow legs in 2026 as well. And the reason insurers should care, or anyone who's following the gold market is this is financial demand on the aggregate. And even if the insurance industry doesn't manage its balance sheet that way, there're going to be a lot of investors that are going to consider alternatives and to have that diversification risk.

Stewart: Yeah, that's super helpful. So let's talk about implementation and if I'm a CIO and I want to make an asset allocation to gold and specifically to gold ETFs, how do I do it and how do I do it as an institutional investor at scale?

Aakash: Sure. So gold ETFs are a efficient, should I say, mechanism of interacting with the gold market and particularly to get spot old exposure. Many people don't know this, but to get commodities exposure directly on a spot basis, it can only be done with gold and precious metals to a degree through ETFs or holding the physical. You cannot get spot whale exposure through an ETF or a financial product. You cannot get spot hopper exposure through an ETF or financial product. Those typically are backed by futures or you have to have the physical itself. So the ETF is a very efficient way to get spot exposure to a commodity such as gold. It trades on exchanges, it's liquid, it has a very tight bid ass spread, and it absolves the end investor from having to pay a markup or markdown. When it comes to physical premiums, it ends up being a low transaction cost vehicle that has very low tracking error.

There are 33 ACT products that are physically backed by bullion, and it ends up being an easy way to have the end user participate in the gold investment ecosystem through a securities lending vehicle, allowing for options overlays if they choose to. Otherwise these ETFs are physically backed and do not use derivatives. So it's a very efficient way to get exposure. And within that context, the good news or the interesting way that you can get exposure to gold ETFs, you can do it very similar to how you can get exposure to equity indexes, the S&P 500, you go to a market maker authorized participant, and if there is demand for those shares, they will get it. They will source them from the secondary market and you pay that spot price for those shares. And if there is more demand than there is supply in the market, you have this create mechanism, create redeem ETF shares mechanisms where you can expand the pool of available ETF shares and then that can be delivered to the end client. So without discussing specific tickers for compliance reasons and so forth, what I would say is that gold ETFs are a very efficient way to get exposure to the market and it can be done at the institutional level, the direct retail level, and even the intermediary and wealth channel primarily as well.

Stewart: And so let me just push on this just a little bit. So you sit inside of a gold ETF franchise, and so if you were going to advise an insurance CIO that didn't have the ability to own gold or gold ETFs, what are they missing? So if you can strip away the gold part, what problem does gold uniquely solve that isn't easily replicated elsewhere?

Aakash: So you're thinking about the strategic case of gold, Stewart?

Stewart: Yeah, I mean normally speaking, I mean insurance companies are exposed to inflation on their liabilities, and that's a difficult risk to hedge given their regulatory framework. I mean, they can't own a ton of equity because the capital charges on equity are many multiples of that of fixed income. So fixed income hates inflation, and so that creates a challenge, right? But if I can't own gold, what does gold solve for me, I guess is what I'm asking?

Aakash: Sure. So gold is a quintessential left tail asset. So gold is a low volatility asset that provides three portfolio attributes over the long run. One is actually capital appreciation. So many in the insurance industry, many investors generally, you don't have to be in the insurance industry will say, well, I'm interested in gold. It's in the headlines a lot, but really Aakash, it doesn't pay a dividend, it doesn't have a yield, but gold does provide capital appreciation over the long run. Not that history is any guide for future financial performance, but it's important to note that since 1971 and the Nixon shock in the US exiting the Bretton Woods system in the free floating US dollar era, the gold has had average annual returns over the last five and a half decades of around seven to 8%, and frankly closer to 8%. Real returns adjusted for inflation have been three to 4%.

So gold is a low volatility asset, less volatile than equities, providing better returns than cash plus inflation. That's point number one. Capital appreciation in the long run provided in your portfolio. Two, it does so is a low volatility asset that's traditionally very low correlation to stocks and bonds. Certainly over the long run, if you look at static correlations, it tends to provide diversification benefits and very low correlation to traditional stock and bond portfolios. So that's a positive because by adding gold to your 60-40 or 70-30 construct, and again, that might not be the insurance industry, but just broadly speaking, what you're essentially doing is improving what's known as your sharpe ratio or your adjusted return over a long horizon. And this is particularly true during liquidity events and drawdowns where bonds, yes, they were the traditional safe haven hedge. But what we discussed earlier, Stewart, is that since 2022 bonds have not been the traditional safe haven hedge that they once wore given positive US stock bond correlations.

And given the fact that this fiscal and inflation impulse that's keeping the back end or long end of rates sticky is just changing that dynamic following a 40-year bull run for the bond market from the early 1980s up until the pandemic shock. And then the last point is that gold really does serve as an alternative FIAT hedge as part of this story of global debasement and concerns that there will be some sort of tail event, whether it's a geopolitical or geo-economic shock that could require restructuring in developed markets, something we see more often in emerging markets. So I think you put all of those three things together, but gold has a unique role in the portfolio in that construct.

Stewart: Yeah, it's interesting. Correct me where I'm wrong, but when Nixon exited Bretton Woods Gold was 35 bucks an ounce. Is that right? That was the fixed price, something along the lines.

Aakash: Yes.

Stewart: Bretton Woods fixed gold. It was $35, you could get 35 bucks or you could an ounce of gold. And when you think about the run, it is an incredible data point. I think it was August of 73. I may be wrong about that, but it is a really good anchor point to say, think about that. Okay, so I've got rapid fire for you on the way out the door and here we go. Our commodities broadly a replacement for a gold in a portfolio, or does gold still stand apart?

Aakash: Gold stands apart. So any benchmark commodity index or commodity fund that's broadly invested in commodities should have gold as a part of it. You'll have gold exposure because it is a very valuable, dense, precious metal with a high dollar value and it's very liquid. So it's similar to oil and copper, it's going to be part of a core commodity portfolio. Where gold stands out is the demand side. Very few commodities and very few assets have sources of procyclical demand, countercyclical demand, and non-cyclical demand. Commodities as an asset class tend to be pro-cyclical. They trend towards higher GDP and higher growth, tending to be positive for commodities and shifting out the commodities. Demand curve gold as pro-cyclical demand, jewelry fabrication, but it has countercyclical demand investment demand for gold tends to be countercyclical, and this is really critical, Stewart. It has non-cyclical demand because of the central bank demand for gold that has increased structurally since the global financial crisis. You have this geo-economic geostrategic price buyer of this underlying asset gold for reserve diversification purposes, de dollarization a whole other bunch of factors. And they're buying gold not for year one, year two, but they're thinking about 10, 20, 30 years down the line. So having that non-cyclical source of demand combined with pro-cyclical and counter-cyclical sources makes gold extremely unique and actually makes it unique even amongst commodities themselves.

Stewart: Okay. This is the rapid fire part of the program. Fair enough. Bear with me. So you're structurally bullish quickly. What are the bearish risks for gold as we look into 2026?  

Aakash: I think there would be two things. One is given the importance of China and India and Asian consumers to gold demand the largest share. If they have sticker shock, look at their currencies right now as much as the dollar devalued this year, you could see the rupee in India, the Chinese yuan has devalued as well over the last 12 months. So do they pull back a little bit? And that was a strong source of physical demand for gold. And then what if us growth really surprises to the upside. AI delivers productivity gains and so forth, inflation stays contained then in that environment. Does gold get the same bid that it has in 24, 25? That could send prices below $4,000 an ounce. But again, I do think we've rebased higher as a market

Stewart: Yeah, that makes sense. Okay, so I want to preface this by saying I'm not a crypto guy, I know it's generational. I'm old. What do you want to do? But is Bitcoin digital gold? And how do you think about crypto relative to gold in a diversified portfolio?

Aakash: Simple answer. No, Bitcoin is not a substitute for gold. And two, I think of gold and Bitcoin coexisting in a portfolio. Bitcoin being more of a right tail, hedge, gold being a left tail hedge. Is there overlap between the two in that alt fiat debasement trade? Yes, but Stewart, as we talked about earlier, gold has and non-cyclical sources of demand. Bitcoin primarily has only investment demand as this reason for existence. And it has a much shorter history. Gold has been around since biblical times. It was a gift from the three wise men since we're in the holiday season. However, Bitcoin has only been around for less than two decades.

Stewart: Yeah, that's a great point. Okay, super. It's been a great education on gold. I really appreciate you being on. I've got a couple fun ones freeing the way out the door. One, the first question is really intended to get at the culture of State Street, and so it goes like this. What characteristics do you think are most important when you're adding to members of your team? People talk about schools and people talk about different platforms they're adept at and whatever else. But what I've learned is it is often the characteristics of the person that is also very important. So how would you answer that?

Aakash: Stewart, we’re in the people business, we're in the relationship management business and we're in the client advisory business of managing assets and being that trusted advisor with the right financial products and toolkit. So I like to always say that we're in the paper economy, it's very important. But ultimately it's about having a trust with a client. So are you passionate about the market? Do you care about clients? Do you want to help partner with external internal stakeholders and help them succeed? That's really what's most important in this business. It's a relationship driven business and you're very blessed to work in that paper pushing economy if you can succeed in state street investment management. I think out of that culture of success.

Stewart: Yeah. That's super cool. So, alright, last one. I know this is coming, so you can have dinner with up to three guests, you and up to three guests. You can do one, two, or three dinners on us. Who would you most like to have dinner with alive or dead?

Aakash: I would probably choose some of my ancestors from my parents' generation so I could learn more about how they grew up and what their journey was to come to the United States and allow me to succeed in my life. But I tend to be a forward looking person, so maybe some old ancestors on my family's side, but otherwise I try to think about the future and not dwell too much on the past.

Stewart: Okay. Good deal. Thanks so much. Our subject matter expert today has been Aakash Doshi, Global Head of Gold for this SPDR ETF business at State Street Investment Management. Thanks for listening. If you have ideas for podcasts, please shoot us a note at podcast@insuranceaum.com. Rate us like us and review us on Apple Podcast, Spotify, or wherever you listen to your favorite show. And if you want to watch us, check us out on our YouTube channel at Insurance AUM Community. Thanks for joining us. This is the Home of the World's Smartest Money on the InsuranceAUM.com podcast. 

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