Economist Justin Wolfers, on Tuesday, highlighted a core idea in commodities that captures the forces driving today’s ETF flows: gold as a belief-driven asset and oil as a core pillar of the global economy.
Gold: A Belief-Driven Asset
In a social media X, Justin Wolfers said “Gold has no inherent value. It’s a shiny rock… people buy gold because they think other people value gold, and that’s a self-sustaining equilibrium.”
Though gold does not generate income or produce anything, Wolfers argue that its value largely comes from perception and a collective trust. People buy gold because they believe others will continue to see it as valuable in the future. This shared belief creates a cycle—since everyone expects others to value gold, demand stays strong, which in turn keeps prices high.
ETFs such as such as SPDR Gold Shares (NYSE:GLD) or iShares Gold Trust (NYSE:IAU) are one of the main …
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