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A friend recently asked me, "why do people value gold, which has no intrinsic value?". I explained that he had it backwards: paper notes are the thing that have no intrinsic value. Ask anyone in Zimbabwe, where tiny grains of gold panned from local streams and rivers have far surpassed billion and even trillion dollar government notes in terms of viability as a medium of exchange. As Thomas Jefferson observed, "Paper is poverty,... it is only the ghost of money, and not money itself." The following video short explains what is and what isn't money as simply and succinctly as anything I've ever read, heard or seen.
Also, visit the "Gold Is Money" forums to read some in depth discussions on this topic.
