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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Besides the other properties mentioned, gold is also relatively hard to fake, thereby reducing counterfeits.
You can add silver which was hard to detect until Archimedes was handed the problem by a king who gave a jeweler some gold to make a crown. The king suspected the jeweler added silver and kept part of the gold for himself. Archimedes knew silver and gold have different densities, but since he didn’t know calculus he couldn’t determine the volume of the crown. That is until one day as he was getting into a bath and realized that he displaced the same volume of water. Legend has it he jumped out and ran naked down the streets of Athens shouting:”Eureka!” (I’ve got it!)
Apparently the crown was adulterated, but it is unclear what happened to the jeweler.
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