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 valuable as a store of value because of it’s stock to flow value. Gold doesn’t corrrode so current stock of gold doesn’t decrease therefore maintaning it’s value, the incoming flow of new gold is also consistently low conpared to other precious metals.
Gold also fulfills the properties of money – durability, portability, divisibility, uniformity, limited supply, and acceptability
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