Gold is a useful metal, yes. Its use as a money standard is arbitrary. A wiser commodity standard for currency would be a basket of non-scarce commodities that historically do not fluctuate much in price.
But commodity standards in general are not preferred by governments. You could even make an argument that forgoing fiat currency is a national security risk. Countries which use fiat money can conduct warfare more efficiently. And in peacetime they can conduct counter-cyclical monetary policy.
These key advantages make fiat the obvious choice for governments.
Gold is just another fiat currency, plus at a high value it's even more worthless as a currency since you'd need such minuscule amounts to trade for goods/services.
Gold has utility besides its currency value; it's easy to work, highly conductive and non-reactive, making it ideal for many industrial and aesthetic purposes.
Paper currency is backed by a government promise. Of course, if people lose faith in a state or a government persistently debases the fiat currency, people will lose confidence in it. But as I've pointed out before, while there have been many hyperinflationary episodes, it's not that frequent of a problem relative to the number of countries and currencies in existence.
I don't think you're using the term Fiat currency properly. Gold is only worth something if other believe it is worth something. It's use in electronics and industry only makes up around 7% of total supply [0].
Yet, gold isn't a fiat asset because its value is anchored to its physical properties. It is finite and cannot be freely created. It doesn't oxidize, is resistant to most acids and other corrosives, and has the highest specific gravity of any naturally occurring element. It is a naturally good store of value because of these properties.
Bitcoin also has underlying properties, but instead they are guaranteed by mathematics and game theory instead of physics. Take that as you will, but both assets are much more solid than Fed Coin (USD) which is effectively backed by the government's commitment to enforce the federal reserve act while trying their best--and failing--to resist printing more and more money to perpetuate an unsustainable system.
I don't think gold failed as a currency, I could pretty much go anywhere in the world with a bar of gold and exchange it for currency to buy whatever I want. It is still a universal currency, although not an everyday currency.
I'm not sure what point you think you're making here, because this is in fact entirely correct for gold and why gold isn't some magic "better money" alternative.
I can make an argument for anything being better than cash including a massive tinned baked bean stockpile. It is quite hard to do worse than cash.
> Gold is something people often make an argument for in this case but it's historical returns are pretty bad.
I don't follow, gold has been making pretty reasonable returns for about 20 years now and has been a far superior option to cash. What don't you like about it?
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