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It's a problem because the people who are using bitcoin have seen the value drop to less than 10% of what it was, so why should they trust it to be a currency worth using?

For it to be a currency it doesn't need a huge value per bitcoin, nor does it need to be constantly rising a huge amount - but it does need to be reasonably stable.

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That's a great question as to why anyone would use a currency whose valuation had dropped to 10% of what it was. http://www.kitco.com/charts/popup/au3650nyb.html

I'm failing to see the relevance of the price of gold to the bitcoin discussion.

He's probably trying to claim that the 10x increase in the price of gold over the past ten years is a 10x decrease in the value of the USD rather than a speculative bubble in gold. (And even if it were, it wouldn't be remotely comparable to the 10x decrease in the value of Bitcoin over the past three months.)

As a sidenote, that's a terrible graph(as are most graphs of this nature). There's a wonderful technology called a logarithmic plot for that sort of thing.

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