With regard to the quantification of a good’s value, with what is it measured? How is the subjective value of a good expressed? Well, with money of course; one of the jobs of money in the marketplace is to measure value.
For most of the 20th century and at the beginning of the 21st century, the marketplace has used fiat debt notes, otherwise known as currency, instead of money. This works in the short-term (historically speaking) but only so long as real money continues to make a bid on the currency – i.e. while Gold continues to measure that the currency has a measurable value. If the currency goes ‘no bid’, meaning that it cannot be exchanged for Gold, then it is worthless.
Here is the Bid for the US$ in both Gold and silver, as of July 10th 2020 (taken from the Monetary Metals website).
A currency that failed to attract a bid in Gold could have no credibility in the marketplace.
This brings us into another area of confusion. The subject of money is replete with partial understandings, improper understandings and complete misunderstandings. The primary confusion is in the very definition of money. Money is not whatever happens to be in use as a medium of exchange, and neither is it ‘the most marketable good’ (covered here). But nor can money be defined as simply ‘Gold’. While money is indeed Gold, there is a subtle but profound qualification required to meet the standards of a definition.
If one had a nugget of Gold, how much money is that? To answer that question we would have to know what the exact weight of the Gold in the nugget was and, also, what its fineness (purity) was.
To achieve the state of being money, Gold has to be refined then, for ease of use, bars and coins stating a set weight and fineness have to be cast. All that prods us in the direction of the definition…
Money (n): ‘a known weight and fineness of Gold’.
All that, and much more, is explained in Dawn of Gold