The truth is that gold is not a currency because it does not meet the economic definition of “currency” and will never be able to do so in the modern world. The currency is something that can be used as a medium of exchange and must have certain characteristics that have been known at least since the 17th century. The capital gains tax makes it inconvenient to use gold and silver as currency. We should repeal the capital gains tax on gold and silver.
If the paper dollar better serves our modern economy than gold, people will continue to choose that dollar. Most economists, especially Nobel Prize winner Paul Krugman, are opposed to any form of gold standard. They think that simple paper money is good for us and that gold won't work. However, even without coercive laws, people choose cars over horses and mobile phones over telegraphs.
There is no need to force people to do what is good for them. Gold doesn't corrode, providing a sustainable store of value, and humans are physically and emotionally attracted to it. However, one limitation of the use of gold coins for trading has been that it was more practical for face-to-face transactions. The idea behind the possible public interest in owning such coins is that they contain the physical gold content contained in them.
Most would agree that gold has always had value for all of these reasons: a component of decorative jewelry, sometimes a currency, and as an investment. Once gold and silver coins disappeared from circulation, there continued to be demand for physical precious metals that could be used in everyday commerce. Perhaps gold's physical ability to absorb light causes its special brilliance to literally come from within. Silver and gold are beautiful metals that can easily be converted into jewelry, and both precious metals have their own devotees in fine jewelry circles.
Instead of issuing currency that could be redeemed for gold, the United Precious Metals Association began issuing “Goldbacks” a few years ago. They argue that in a modern economic environment, paper money is the preferred currency; that the only value of gold is as a material for making jewelry. Another limitation is that the relatively high value of gold made it not as practical for small transactions. If the modern paper money economy collapsed, gold may not have an immediate use, as panic takes hold and people fight for their basic needs, but eventually they will.
Since people throughout history have shown a preference for receiving physical gold or silver rather than other forms of payment, several attempts have been made to link these other forms to precious metals. Since others believe that gold has value, so do you; and because they think you value gold, others also value it. Finally, the government encouraged public acceptance of paper money by issuing gold and silver certificates that could be redeemed on demand for the underlying physical currencies. The third impediment to the potential demand for gold notes in circulation is that they are traded for a significant premium above the underlying gold content, well in excess of 50 percent.