Monday, July 1, 2013

Gold is not a means of payment

A currency serves three functions, providing a means of payment, a unit of account, and a store of value.

Gold may be a store of value for wealth, but it is not a means of payment; you cannot pay for your groceries with it. Nor is it a unit of account; prices of goods and services, and of financial assets, are not denominated in gold terms.