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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There are multiple factors to this:
1. Scarcity, gold and silver and even copper are relatively rare and back in the day hard to purify and manufacture.
2. Ability to maintain itself, gold and silver, though particularly gold, doesnt take electrons or strip electrons much, so while it can tarnish a bit it doesnt gain their version of rust without specific conditions.
3. Usability, hold, silver and copper are “soft” metals. You can work them cold and with basic tools. Hell even just with your hands if they are large enough. This makes them good for minting.
To go along with this until the scientific revolution, gold and silver werent used for much else besides ornamentation and jewelry so along with scarcity they were great things to make currency out of. There are only a few instances where other metals were used like steel or iron or stone like Jade and barely any survive today.
Today they have very broad and great uses for nearly all types of industry.
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To top this off, things only have value we ascribe to them. Gold is still rare but its believed due to observation and scans and radiation patterns that lots of the bodies in our solar system are stuffed with “rare earth minerals”, called that because they are rare on earth but not in space.
There may be a time where gold is worth less than tin
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