The paper bills we carry in our wallets are ultimately just paper. But they're valuable to us as a convenience of modern society: a means of exchange whose value we all agree on by consensus.
But societies have lost faith in the value of their currencies before - many, many times. When it happens, people are forced to rely on theft and barter in order to feed themselves. Faith in money is closely bound with the cohesion of civilization itself. If people can't trust their neighbors to value their currency, then they are less likely to trust their neighbors in general.
Gold has always been used as currency. It's compact, relatively rare, and impossible to counterfeit. It's still widely used as a reserve for the world's national treasuries - here's a great field report on Manhattan's Federal Reserve Bank gold vault, where 7,000 tons of gold are stored under the streets of the financial district in order to shore up our faith in the financial stability of national governments.
- The market doesn't seriously expect civilization and the dollar to collapse. And, as a corollary: the price of gold, which has more than doubled in four years, is an asset bubble just like McMansions and stock in Pets.com. Instead of a real estate craze or an internet craze, we're going through an Apocalypse craze.
- Glenn Beck's listeners would be much better off if they started buying bought renewable energy while it's still cheap, instead of overpriced gold coins.