Nobody would ever mistake me for an economics scholar, so forgive the dumb questions: What is the big deal with gold? Why is it so valuable?
What I have read is that gold is a storehouse of value. It has been for 4500 years. Read the wording on any greenback and it says it is backed by the full faith and credit of the US. I would like to have a large pile of paper money but in the end it is just that, paper, backed by nothing.
1) You can't create it out of thin air (MAJOR benefit of fiat currency) - you have to dig it up out of the ground and smelt it. In other words, you have to WORK to get it, which is why it is called "Stored Sweat".
2) Unlike steel or grain, it doesn't rust or rot - it LASTS - making it a good store of value.
3) If the govt backs their paper money with gold (in effect, a warehouse receipt), they can always claim that on Jan. 30, 1934, it now takes $35 in paper money to buy an ounce of gold instead of the $20.67 they told you it would buy on Jan. 29, 1934. However, they cannot say that today an ounce of gold weighs one half an ounce and not the full ounce it was yesterday. Governments can't manipulate it to their benefit, which is why their fear it.