Does gold have some sort of magical properties to retain its value?

[the2real4mafol]

richardhutnik said:

the2real4mafol said:
Gold is fine, it's just like oil. The price just varies all over the place and is quite rare

The problem with oil is that it gets consumed.  If you were to use oil as a currency, then you would watch you amount of currency in the economy shrink, which would cause deflation.  People could also end up hoarding the oil in hopes of it being worth more later and thus decrease the value of its usage in the economy.  Currency, by default, ends up needing to be circulated (see that currency has the word "current" in it, thus it circulates).  Because of this, the item used as the currency can't be consumable.  It should also have some degree of durability also.  And then, people have to want it, so they give it up.  And Bitcoin can be seen is having this to, complete with ZERO intrinsic value (even less intrinsic value than gold).

Problems with a single item as currency is that it isn't universally demanded, and then you get bubbles where people end up buying it, hoping to flip it later for gain.  But the price of it, and its future value, is dependent upon demand for it also.  And what can kill demand is excess production of said item, or people valuing other things.

You see one side of this in the Twilight Zone episode "The Rip Van Winkle Caper".

http://en.wikipedia.org/wiki/The_Rip_Van_Winkle_Caper

Imagine they then be able to manufacture gold.  The rareness goes out the window.

I though we didn't use the gold standard anymore, just ordinary currency on its own. But, anyway all this takes alot to understand.