State Street’s 2026 Outlook Exposes Why Most Investors Still Underweight Gold After Its 50% Rally

State Street’s 2026 Global ETF Outlook revisits its prior-year forecasts and flags a finding most investors glossed over: precious metals returned roughly 50% in 2025, and US precious metals ETFs now hold about $310 billion in assets. That is a generational run, and yet typical retail and advisor portfolios still carry low-single-digit gold exposure. Three physically backed funds captured nearly all of the move, and the gap between owning the right one and the wrong one comes down to fees and tax treatment.

What the data shows

The three vehicles tracking LBMA gold prices delivered nearly identical returns over the past year. iShares Gold Trust (NYSEARCA:IAU) returned 39.36% over the trailing year and 69.3% from January 2, 2025 through May 4, 2026. iShares Gold Trust Micro (NYSEARCA:IAUM) returned 69.72% over the same window, and SPDR Gold Trust (NYSEARCA:GLD) returned 68.98%.

The spread maps to expense ratios. IAUM charges 9 basis points, IAU charges 25 basis points, and GLD charges 40 basis points. On a $100,000 position, that is $90, $250, and $400 in annual carry. AUM tells a different story: GLD remains the institutional liquidity vehicle, while IAU sits at $68.4 billion and dates to January 2005.

The macro backdrop

The setup that drove the rally persists. CPI sits at 330.3 in March 2026, a 90th-percentile reading, and M2 money supply expanded to $22.69 trillion. The 10-year Treasury yields 4.39%, elevated but well off the May 2025 high of 4.58%. Lower real yields reduce gold’s opportunity cost. All three ETFs carry the same tax wrinkle: long-term gains are taxed as collectibles at up to 28%, not the standard 15% to 20% capital gains rate. Hold them in an IRA where possible.

How to position

A 5% to 10% gold sleeve works as an inflation hedge without crowding out equity compounding. On a $500,000 portfolio, that is $25,000 to $50,000. Match the wrapper to the use case:

• IAUM for buy-and-hold core exposure. The 9 bp fee compounds into measurable edge over a decade.
• IAU for investors wanting iShares scale with deeper liquidity than IAUM.
• GLD for active traders and options users needing the tightest spreads and largest order book.

Investors holding GLD as a long-term core position should reconsider the 40 basis point drag versus identical pre-fee exposure at 9 basis points in IAUM.

The takeaway

The 50% move is in the rearview, but the conditions that produced it persist. If gold has grown past the target weight, trim back to the band. If it never got there, the entry now sits after a 3.38% one-month pullback from recent highs.