Commodities are produced because they add value to society. Wheat is for food, oil for fuel and steel to build things. Why do mines burrow over two miles into the earth, process tons of hard rocks to refine the yellow metal that is then shipped and buried in some vault? What value does gold add to society that results in its production?
The value gold adds to society is in performing mental calculations of value. The constant marginal utility is unmatched by any other commodity. Therefore, gold is money and a currency. Most people perform mental calculations of value, the pricing mechanism, in US$, C$, Euros or some other national currency. However, all are ‘bills of credit’ and subject to Payment Risk. Those who disagree, and most financial professionals do, are like those who disagreed with Copernicus. Politicians who disagree can no more change this fact than vote to repeal the law of gravity. The earth (US$) revolves around the sun (gold). Either gold is a portfolio asset or everything else is. This is monetary law. This principle has been taught for centuries.
"What we fancy to be a rise in value of our products is merely an alteration of the name in money that we exchange them by; they are not altered thereby, in their exchange value, with regard to each other." - Charles Holt Carroll in an 1857 essay on page 54.
From An Enquiry into the Paper Credit of Great Britain, an 1802 book written by Henry Thornton who was an economist and governor of the Bank of England: "We assume that the currency which is in all our hands is fixed, and that the price of bullion moves; whereas in truth, it is the currency of each nation that moves, and it is bullion which is the more fixed."
Gold is currently the center of the financial universe because of the large above ground stockpiles.
But gold is not the only commodity that can function as a currency. If gold ceased to exist the free market would quickly find a substitute. Only a commodity based currency can be ‘risk-free’ or in other words subject only to Exchange-Rate Risk. Some key ratios are available to save you time. For these reasons it would be wise to use gold as the unit of account for financial statements. Mr. Maloney’s recent book is a great treatment on this topic. I recommend using gold as a presentation currency. It would also be prudent to be able to use it as a backup currency like GoldMoney.