This is the second thread I have seen where gold was mentioned, and the second time I have seen a vitriolic response about gold.
Gold will always be valuable and it will always be part of a sane person's plan for dealing with a "things are going to crap" scenario. Along with some form of food storage to deal with logistic interrruptions and some form of personal defense (mace, pepper spray, knives, guns, etc.)
For varying values of valuable. Our bold leader Gordon Brown sold off the UK's gold reserves for about a third of the current market price. He even announced well in advance that he was planning to dump a load of gold on the market, so the price dropped even further. Gold's a great asset but it's not the be-all and end-all.
How do you know? While I'm all for world & class asset diversification, the whole reason is because I/we don't know.
2. It is internationally recognized as being valuable, regardless of culture. That is, cultures as diverse as India, China, England, Russia, pan-Arabic (i.e. non-Jews in the Middle East) have all viewed gold as having value, and that over at least 1000 years of recorded history each.
3. It does not corrode or rot the way paper money does. In Israel they recently found some Byzantine-era gold coins, aside from the obvious numismatic/collector value they still retain value for the gold itself.
4. Gold does not require a government to enforce its value. It's value is innate or intrinsic to the thing itself. As such if a government falls or decides to modify the value of a paper dollar (as Mexico, Argentina etc. have done in the past) then the value changes. Gold that you have in your pocket cannot have its value modified by a government order.
Here's one response to the gold bug arguments, by Nobel prize winner Krugman:
http://web.mit.edu/krugman/www/goldbug.html
Even libertarians like Arnold Kling don't really have much time for the gold standard:
http://econlog.econlib.org/archives/2007/01/the_new_deal_an.... (and in other articles)
Generally, it's not regarded as territory for "serious economists", although of course it is always possible that serious economists are wrong.
Both are much better than the Krugman piece.
The gold standard, having been around for 2,000 years, is the constant subject of serious study by economists.
Incidentally, I think the "because we did it that way for a long time" argument is a terrible one. There are plenty of things we've done for a long time as humans and as societies that aren't very good, and are worth discarding. I don't think the gold standard is a good idea myself, but in the arguments for it, there are better ones than that one.
I personally haven't met anyone who has argued for the gold standard and has read it although that may be a comment more on the academic backgrounds of the people who used to write pro-gold stuff and stuff it into my inbox back in college than the theoretical basis of the argument. So while gold may have a place as an investment (especially as a hedge against inflation) in large part people who spend considerable breath on extolling its virtues using words like "intrinsic value" and "stability" and "natural" are kooks. Their choice of the word "natural" is also odd since gold coinage is hardly more natural than paper and in fact is less easy to control the asset base.
When economists talk about not repeating the mistakes of the 1930s, they are by and large talking about the importance of maintaining liquidity in the system to prevent deflationary spirals, and avoiding liquidity traps. They are also cognizant of Keynes' proof that Say's Law does not work once people want to start doing things like holding liquid assets, and the dismal performance of things like the zero-inflation policy in Canada and other countries through the 1990s.
I'm amazed by the number of Internet libertarians who have jumped on this bandwagon.
It appears (to me and probably others) that part of the current problems the USA is facing is due to a govt that grows and grows, without a method to have a feedback loop that would restrict it - currently it seems the answer is to just print (electronically or physically) more $100 bills (which cost about 4 cents to make).
The lesson the Keynesians took from this episode was not to go on a gold standard in the first place. The lesson the Austrians took was that government should not dilute the currency. Since all government's prefer to dilute the currency, and most "mainstream economists" are government funded, mainstream economists are almost all Keynesian, not Austrian.
The best two articles I've read in defense of gold are these two: http://unqualified-reservations.blogspot.com/2007/11/who-hec... and http://unqualified-reservations.blogspot.com/2008/02/return-...