And gold is rather sterile : no yield, cost to own (store, insure)
Buttonwood: Paper promises, golden hordes | The Economist:
"A gold standard clearly protects the interest of creditors since it ties the value of money to a scarce resource. A government cannot create new gold. But the law of volatility applies. If you fix one part of the economic system, trouble has to show up elsewhere. When countries on the gold standard suffered a shock they had to let the real economy, rather than their currencies, take the strain.
The Depression showed the problem with this approach. In theory businesses and workers should quickly adjust to a deflationary shock, by slashing their prices and wages. In practice they were slow to adjust and the results were bankruptcies and mass unemployment. Democratically elected governments proved reluctant to stand by and let this happen. By going off the gold standard and allowing their currencies to fluctuate, they protected the interests of the bulk of their populations at the expense of creditors.
Dropping gold did work. A recent paper* by Barry Eichengreen of the University of California, Berkeley, and Douglas Irwin of Dartmouth College found that countries that abandoned gold not only had shorter recessions but were also less inclined to raise tariffs than those countries that retained the link."