Gold, Gold, What is it good for?
Once upon a time you could go out and dig for gold and every speck or nugget was adding to the world’s supply of currency.
Unlike paper currency, gold has some kind of intrinsic value. Why is this so?? After all it’s pretty much useless for any kind of industrial purpose. It’s too soft and weak of a metal to be used as any kind of tool. It has no useful chemical reactive properties. It’s shiny, pretty and rare and therefore has always been used to decorate Kings and Lords as a symbol of royalty and divinity. So maybe it’s the prestige of possessing gold that people value so highly. At any rate people value gold, meaning they are willing to trade almost anything for it. As such it was only natural that it would become the symbolic unit of equitable exchange across the world.
It’s funny that we think of gold now in terms of its currency value or the price you can sell it for. Back when we were on the gold standard people would wonder “how much stuff can I get for this nugget of gold?” This is really no different than walking into McDonalds and wondering what’s new on the dollar menu. The fact is, back then gold was currency, even though we printed paper currency, it was really just a coupon, or bank check or an IOU for X amount of gold. We did this because it’s much easier to carry some slips of paper in one’s pocket than a bunch of gold nuggets. We also did it because we knew ultimately gold is a finite resource. There is only so much of it to go around! How could we have unlimited wealth with a finite supply of currency?