“The entire economy of gold consists of digging it out of the ground in one place and putting it back into the ground in another place.” -Keynes
Gold is a shiny metal. It has little intrinsic value other than in the electronics industry and dentistry. You cannot eat it. You cannot drink it. You can wear jewelry made from it, but it won’t protect you from the cold or the rain. If someone is breaking into your home, gold will not kill them. Gold has, at times, been used as money, but it has value only insomuch as it can be traded for things with intrinsic value like food and fuel and guns without which an individual or a nation cannot survive. At present, it cannot be traded for such things — you cannot go into a supermarket and buy a can of beans with gold — thus is simply another asset, not money.
Currencies are, in the end, backed by the production of goods and services in an economy purchasable by said currency, not by assets. The whole point of a currency is their utility at purchasing goods and services. It’s interesting that some of the assets of the Bundesbank may actually be fictional. But as long as there are goods and services purchasable by Euros, the Euro will continue to have value. The same with the U.S. dollar.
— Badtux the Economics Penguin