Most of golds value is derived from the same thing that makes the dollar valuable. other than being a good conductor of electricity it has little real world applications. most of golds present value is do to the fact that people think it will be worth more than paper money which puts gold's value based on some belief (faith) rather than intrinsic value.But all gold bugs believe that the current value of gold represent it's value as a rare metal when steel has more uses and should be coveted for it's real world or industrial value.
The ultimate currency is the human brain and innovation. If you have a good and applicable idea, you are essentially printing money. However, if gold is the currency, wealth creation depends on the amount of gold that is available. This limitation renders the gold standard obsolete.
Ha. No. US currency is backed by it's ability to maintain control of USA and its citizen. Yes, you and me. The ability to extract part of our productivity (tax) is the collateral for our currency.
Send me your worthless dollars. Don't send any gold, just those worthless dollars. I'm happy to dispose of them for you.
OK, this much is true. Going back to a gold standard is not feasible, though. If money went back to a gold standard, the normal limitation of the amount of gold would inflate its "price" to a point of basically being a fiat currency anyways. One oz of gold currently trades for maybe 3 weeks, or 1/20th of a year's worth of manual labor. The intrinsic value people keep talking about is the value that a person would be willing to pay for gold jewelry. Currently a typical .33 oz wedding band would go for $400, or maybe one week of labor. The US treasury owns roughly 262 million troy oz of gold. The current M1 in the US is $1.7 trillion. To go to a fractional reserve gold standard we would need to peg the value of gold to $7000 an oz. To go to a fully gold backed currency, gold would be "worth" over $30k per oz! Do you feel that an oz of gold is worth 5 months of manual labor? I couldn't imagine anyone working for two months for a wedding band. At this "cost" gold is about as fiat as our current dollar.
We used seashells and measuring sticks once as a currency, as long as it can't be printed and represents the value of the countries' assets then almost anything can be used. It's also why you have things like collateral etc. though I of course shouldn't really need to explain this to someone on this site so I'll leave it at that.