That's fiat money.
But my last line still applies to all money.
That's why when someone mentions the phrase "intrinsic value", they are not seeing the core truth of money.
It's interesting that money is misunderstood by so many people while representing the fundamental fabric of human society.
There is no intrinsic value to anything in this universe, not one that applies to every single organism.
For humans and most life forms, the closest thing that I can think of is food/water/(oxygen for aerobic organism), force of violence, pleasure and time.
Today, most money aren't even in physical circulation. Most of the gold in the world sits in some cold dark vault.
It's literally a video game and the funny thing is, we have enough food and water for everyone in the world already.
'Gold as money' is still very much in circulation. Even as it sits in CB vaults.
At the moment money is a rather contorted and easily manipulable proxy for deservingness though which is the cause of a lot, if not the majority, of the world's troubles.
There's no technical reason though why we couldn't for example determine deservingness through interpersonal distribution of value; like PageRank but for people.
There's nothing in the phrase "Money is a piece of token that represents favor or debt the world owns to you" which specifies either fiat or specie currency.
There have absolutely been government-issued specie currencies through history. Virtually all have also seen tremendous devaluation. Look up the 94% devaluation (and corresponding inflation) of the silver Roman denarius.
It is not like fiat currencies in the sense of 'faith' that the scarcity will continue however.
Right now we have some incentives that work to keep fiat currencies scarce, but those forces are not the same as what keeps gold scarce.
Gold has not lost any value in the last century by comparison.
Gold has plenty of issues, confidence as a store of value is not one of them. By comparison, the global economy is filled constantly with stories, from one country or another, of fiat being demolished through constant inflation / aggressive devaluation.
Countries can drown their citizens via all sorts of schemes involving debt (ala Japan and the Yen), that then become currency devaluation schemes (QE) to debase that debt and chop down the standard of living of its citizens as a stealth move to pay for that debt. Such a thing inherently can't happen with gold.
The Euro zone for example is in the middle of seeing its citizens standards of living chopped down via QE, to debase the vast debt that has been choking off the growth potential of much of Europe since 2007 (the European economy has seen zero net GDP growth since roughly 2007). How many Euro zone citizens understand what the ECB is doing to them exactly? Do they realize that what they're about to suffer, is what Americans went through from 2002 to 2014 as the Fed debased the dollar to try to avoid multiple recessions, leading to a substantial decline in the US standard of living?
If the ECB drops the value of the Euro by 1/3 via QE, that substantially reduces in real terms the standard of living of anyone living on that currency. Gold shields against that abuse.
Sure, in the long run, gold holds its value, though it doesn't perform nearly as well as stock markets, or real estate. In the long run, a predictable 2% annual inflation erodes the value of savings, which is why people participating in the dollar economy tend to put their money in bank accounts paying interest rather than burying their cash in vaults,
But it's economically illiterate to pretend that gold price crashes haven't been a far more serious wealth destroyer over the last couple of years than the relatively stable and predictable inflation in developed countries, despite all the predictions that QE was going to make the sky fall in.
Not in that artificial timeframe, but surly in many other periods:
* it lost over 65% of its value between 1933 and 1970.
* it lost over 82% of its value between 1980 and 2000.
* it lost about 29% of its value the last two years.
(http://www.macrotrends.net/1333/historical-gold-prices-100-y...)
Gold is a highly speculative asset.
Alternatively, you could invert the graph to say that USD is a highly speculative asset - relative to gold :)