Gold in history has been used as money. The reason for this is the properties gold possesses to make it ideal as a medium of exchange. Some of these properties are gold’s ability to hold wealth; the fact that gold does not rust or tarnish; gold’s rarity, gold’s ability to be combined, gold’s ability to be divided and the fact that pure gold is the same no matter when or where it was mined.

Fiat Currency on the other hand when used in history was always for a short time and ended up becoming worthless in less than one hundred years. The reason for this is the issuer or issuers of fiat currency can never know if they are issuing too much or too little currency until it is too late. Also when fiat currency was used rulers or governments had to use coercion to keep people from rejecting it as payment.

Gold takes desired work to get out of the ground and this keeps the purchasing power of gold relatively stable. If there is too much gold mined at any given time the price or purchasing power of gold will temporarily go down. This in turn will cause less gold to be mined because of the smaller profit margins. If there is too little gold mined at any given time the opposite will happen.

Gold has been used as money because of its time tested reliability to keep its purchasing power. Even when a manufacturer ceases to exists, the gold coins or gold bars they produce will still hold wealth. This feat is something that fiat currency usually can not follow. Gold is not only superior to fiat currency; history has shown if a people have the liberty to choose between the two, gold will usually come out the winner.