Is Gold Money?

The question of whether any particular good is or is not money, can be posed in this way: is the good in question accepted as the final means of payment for transactions?

At present, in the developed world, nearly every nation has its own money or belongs to a currency union, such as the EU. Some nations in the developing world use the US dollar. In highly inflationary environments, the local currency is often spontaneously rejected in favor of the dollar or another foreign currency. Hardly anywhere do we find gold generally accepted as a means of payment. So gold must fail the definitional test of moneyness.

Is this the end of the argument (and so the end of a very short article)? Not quite. Gold is not money, but it has most of the desirable properties of money, and the process by which it became money in the past gives some clues about how it may become money once again.

Gold. Our dollars used to be redeemable for gold. Later they were redeemable for silver. Now they're IOU's. An act of faith in government promises.