Before paper money governments would just debase their coinage - claiming that the coin was 100% gold or silver while being very much not.
Spain destroyed its economy by capturing vast amounts of precious metals in its colonies - even in a world where precious metals are the currency you can still get hyperinflation if you increase your money supply too rapidly.
A little bit of inflation works as lubricant to the economy. Too much or too little makes for very rough times.
Besides all of this, gold is just another form of fiat money. Its utility as "hard" money only lasts so long as it remains difficult to process - something which is likely to go away in the near future. Aluminum used to be a precious metal, bars of it were displayed beside the French crown jewels in the 1850s after a process of isolating it was discovered. Then electrolytic separation was discovered and aluminum became cheap siding for cheap houses.