> [Gold] is difficult to break into smaller payments without a furnace.
Although that is true, it is likely that gold could be replaced with money substitutes (think IOU) that are controlled by private individuals and banks (not government).
The collapse of the fiat system doesn't mean the collapse of money substitutes.
Look at a history of money and banking. You will always see that precious metals were the primary choice of money – and when the problems that you correctly identified surfaced, money substitutes (certificates, "dollars" that were redeemable for X amount of gold/silver) were sufficient.