Gov-issued banknotes used to be based on gold, so IIUC that theoretically meant you could always trade your cash for gold. And IIUC, that was also a control on inflation.
Then at some point the currency (guess I’m assuming USD but perhaps it applies to all currencies?) was no longer based on gold. People just simply trust the currency just because there are anti-counterfeit features, and perhaps because everyone else trusts it. Is that it? Is there nothing else to establish confidence in the value?
I ask because I saw a clever anti-cryptocurrency post saying something like:
1 coin of crypto = ½ unicorn horn = 1 faun hoof = ¼ vial of potion from an oni = 50 grams of fairie dust = ⅛ dragon egg = 1 Klingon tooth
Funny, but okay, he hopes to convince people that #cryptocurrency not being based on anything means it’s worthless. Couldn’t we just as well add USD to that equation, since US dollars are also not based on anything now that gold is out of the picture?
I heard a stat on BBC World News recently that 11% of the world’s gold is owned by Indian women. It’s highly regarded there. They consider it a safety net if, for example, they encounter hard times. They can sell it to get by. From there, I’m not sure if that answers the question. But it seems it’s considered a safety net not just cosmetic.
In the trading platforms gold is often linked to emotion in the market. If people anticipate a bad stock market they will cling to gold so gold increases.