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Why does Gold have value?
I dont understand why gold is the base for all money? It has no practical use in society other than something that women desire. Does this mean that a woman's desire is more valuable than steel for example? Why wasn't steel, wood or food chosen as the base for all money? Gold has been the standard since ancient times, long before its electrical benefits were discovered. What is the reason for this since it has very little practical value compared to other materials around.
Gold has three properties which made it good for coinage: malleability, nobility ( resistance to corrosion ) and scarcity. Malleability means a cheaper coinage process is possible, nobility means the coins will last, scarcity means it's identifiable as gold and that counterfeiting isn't as easy. Gold wasn't always the most valuable metal. The Spanish used silver Reals as currency.
Economy is about manufacturing stuff (or providing services) and trading that stuff with other people. A primitive way of doing this is through barter. But barter can be slow and burdensome. So in the past, some commodities became barter "shortcuts". Instead of having to trade A for B, then B for C, then C for D, people would agree to trade A, B and C for D only, and then D for A, B, or C. In that way, you could get from any product to any other product in only two trades, instead of miriads. This made commerce much simpler and quicker. This reference commodity is commonly known as "money". You can use anything as money. In the past stuff as wheat and other grains became money. The reason is simple. Grains can be easily stored for a long time, and can be easily fractioned. So you can easily carry a few ounces of grain to pay for a chicken, or you can bring a whole sack to buy a pig. Try using a pig as currency and you'll understand why grains made sense. Currency needs to have two characteristics: it needs to be fractionable, and it needs to be of standard quality. An ounce of wheat is an ounce a wheat, whereas one pig may be more healthy than another and you could not tell the difference. So yes, food WAS used as currency.
As time went by, people realized that metals where a better currency. Not only where they fractionable and of standard quality, but you could imprint its value on it. So sure, gold was used as currency, but there where coins made of all sorts of materials too.
You could make coins of wood, and I'm willing to bet that wooden coins where used in the past.
To sum it up, the value of currency does not come from the intrinsic value of the material it is made of. Just think about today's economy; most money is nothing but bytes in the computers of the banks. If the bank's database says you have $100, you have $100, period. The value of currency comes from the time it saves us from having to barter all day to obtain what we want.
Gold is still sort of thought of as the base of currencies; however that has changed significantly in the past century. In the soviet revolution I believe they tried to replace it with iron as a base unit of value.
Gold started as a unit of value because it was 1) rare and 2) good for creating shiny, pretty things. Remember back 5000 years ago all they could do was wear pretty things to show their social status. Gold is shiny and easily workable. Good for making status-elevating stuff.
Why it's still somewhat thought of as the base of currency is simply because it's the oldest of all universally held units of value.
Its common useful properties are meaningless to talk about because practical things have never been elevated to positions of unit value. Remember the paper money you have in your pocket represents (or used to represent -- doesn't anymore sadly) an amount of gold held that could theoretically be claimed. When common items themselves (such as paper) come to have "value" then you've got real economic problems ahead (as we do), because the only thing sustaining the value is the faith of the people in the government which created the money, rather than their faith in the fabric of society itself which gave gold its deeper value. It's much easier to shake peoples' faith in their government than their whole society, and if that faith is shaken then the money becomes worthless, and economic collapse inevitable.
Gold is expensive because it takes a lot of work to get it out of the ground. The fact that it's valuable and doesn't rust or decay makes it a good store of value.It's much easier to store a billion dollars worth of gold than a billion dollars worth of wood.