Currencies actually fail quite regularly (hints: Zimbabwe, Venezuela) - it makes a lot of sense to hold wealth in a form that will survive that. Maybe someone wants to claim that any individual country "will never" suffer from a currency crisis. I'll just point out that America went from Barack Obama to Donald Trump in one election then agree to disagree.
Countries want an asset that can hold wealth through a crisis where the way things work radically changes. This asset needs to be:
* As indestructible as possible
* Easy to transport if an adversary is approaching (see also, European history :P)
* Hard to create
Gold satisfies these requirements really well; and as an added bonus it is nearly useless so hoarding it doesn't risk the real economy (see also; the US helium reserves and the risk to medical imaging or such when they run out).
EDIT I'll add that the 'easy to transport' part is what makes this Fed-Bundesbank business so completely weird - this quantity of gold is physically quite small and should be easy to inspect and audit.
But where currencies fail (as in Zimbabwe, Venezuela, Iraq, etc), gold never became a backup currency. No-one was trading gold coins for goods and services, and anyone trying to leave these countries carrying gold was at serious risk. Gold isn't going to help you here, at worst it'll put you in more danger.
The gold of the central banks is not for saving the asses of the common folk but for saving the ass of the government and to have at least the tiniest sliver of hope of being able to somehow rebuild an economy after the whole failing state business is over and done with.
Countries want an asset that can hold wealth through a crisis where the way things work radically changes. This asset needs to be:
* As indestructible as possible
* Easy to transport if an adversary is approaching (see also, European history :P)
* Hard to create
Gold satisfies these requirements really well; and as an added bonus it is nearly useless so hoarding it doesn't risk the real economy (see also; the US helium reserves and the risk to medical imaging or such when they run out).
EDIT I'll add that the 'easy to transport' part is what makes this Fed-Bundesbank business so completely weird - this quantity of gold is physically quite small and should be easy to inspect and audit.