Gold, and its brother silver, have always been the basis of money, back to the beginnings of “money,” in the late fourth millennium B.C. Already by 2000 B.C., gold and silver had been “money” for over a thousand years–the entire history of “civilization” on this planet. Gold was still the basis of money in the 1960s, in an unbroken line stretching back to the beginnings of history.

Thus gold becomes the best measure of stability in monetary value. Certainly nobody–including Mill–argued that gold’s performance in this role was perfect. But, after centuries of experience, we can say that gold’s deviation from this perfect ideal was minor enough that it didn’t matter much. It was good enough that there was no need to find something better, even if one could, which nobody ever has.