I hear some economics arguing that currency should be pegged to gold as a way of ensuring that its value isn’t arbitrary / volatile but I don’t understand how this would solve the problem. I understand that gold is a scarce resource that is difficult to mine but is it this alone that gives it intrinsic value ?
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Gold is extremely dense. Moreso than any other commonly found element (Tungsten is similar and there are some denser platinum group elements but those are really rare and not yellow). That means gold is effectively impossible to counterfeit and easy to verify with simple measuring devices.
It doesn’t rust or corrode, so it can store value indefinitely.
It’s also soft so it can be easily worked cold allowing change to be made long before standard coinage, just split a small amount as needed.
It’s also rare enough that one person can carry a lot of value on their person.
All these factors make it nearly perfect as a trustless money. So it was very widely used as money by many societies.
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