Welcome! Very good questions Mattdude. Precious metals have always been a good store of value and I suspect will always be used as a medium of exchange. Historically, metals ended up being stored in vaults with receipts for the gold being used as money because people didn't want to carry chunks of gold around. Sadly, from that simple beginning we ended up where we are today - a massive shell game being run as a pyramid scheme by elite minded con-artists!
Perhaps it would be different if gold were used today as the common coin as there are so many people now, that gold and silver both have become very scarce relative to the population and their value so high that you'd only need to carry but the tiniest of amounts to satisfy the needs of trade.
However that brings up a very real problem that there are in fact so many people on the planet now that there probably isn't enough total gold and silver in human hands, such that we could each have even one tiny ounce of each!
So the coinage would have to be either very very tiny indeed or more likely diluted out with copper to such an extent that the money could scarcely be thought of as gold and silver. I'd speculate that we'd quickly head down the path again of allowing others to hold our gold for us and exchanging receipts as money or even exchanging digital receipts.
As for how governments could retake the control and issuance of currency, I suspect that it will take a very large crises indeed to bring about that transformation. Even in the dire straights we now find ourselves, the US congress has not yet pushed through Rep. Ron Paul's bill to audit the FED.
It is perhaps but a dream, but I think what I would prefer to see is for governments to abolish their central banks and completely abandon the printing and regulation of money altogether and to let the free market create independent currency exchanges using digital coin type systems. Each independent system would be linked (as each exchange sees fit) to other systems in order that they can exchange with each other.
The strength of such a system would be it's diversity and innovative & competitive nature, which would protect the overall economy from suffering the problems that we currently suffer from globally due to the relatively small number of highly manipulated currencies which themselves are intimately bound to one global currency - namely the US dollar. Within most of these trading zone we call countries there is no competition amongst currencies and thus is effectively a monopoly.
If there was competition and preferential treatment by governments was disallowed, then anyone could switch or leave currency providers that behaved badly and they would go out of business.
Well that's my two bits for today. . .thanks for joining the forum and welcome!
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