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Some of U Boyz were hitting on it..Rarity, the stability of the metal, and its old time usefullness (malability). Gold is a rare and hard to come by element. A few years back Gold cost $250 an OZ to mine, that was when it was down to $259 an OZ on the world market.

Gold has always been the safe haven bet. Back when currency was anew fangled thing, nobody knew how to put a value on it. Ahh but Gold you knew that was good.

Gold has always been a hedge bet against inflation. That might be the current play on the metal. The $$$ is simply declining so the price of Gold is going up relative to the $. One thing to check is to see if Gold is climbing in value relative to other currencies?

Today there simply is not enough Gold or other precious metal in the world to back all the $$, Pounds, Ruble, Euros floating around.

Currency is basically an abstraction saying that I will give you one unit of production, labour etc for a $, and the government guarntees that it will collect that unit. That is what backs the $ or any other currency for that matter.