In the context in which it appears, “touchstone” in sentence 4 most nearly means

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Life, they say, is the constant oscillation between the two horns of a dilemma. Going by the history of the Gold Standard, the quotation seems to be worth its weight in gold! Gold Standard allows the governments to sell gold bullion in exchange for circulating currency. Starting somewhere in 610 BC, gold has been the most trusted currency for trade and for determining the value of goods. Since the fascination with gold is rooted in the farthest reaches of recorded human history, it comes hardly as a surprise that alchemists tried for hundreds of years to find a touchstone that could convert base metals into gold. In the Middle Ages, gold coins issued by the Byzantine Empire were found throughout Europe and the Mediterranean.  The decline of the Byzantine Empire saw a decline in the use of gold as currency and silver became the de-facto medium for trade. However, Sir Isaac Newton, while the master of the Royal Mint, effected a new standard that put gold firmly in the driving seat, once again, as the choice medium for trade.
The Gold Standard, in effect, was the practice of backing circulating currency with full convertibility to gold. Since trade with China involved primarily imports, the cost had to be paid in precious metals, mainly silver. This led to an unprecedented shortfall in the availability of silver as a currency in Europe during the late eighteenth century. This prompted the central banks of European nations to substitute the coins with paper notes (also called bank notes). Since these notes were nothing but a substitute for the silver currency, they continued to be backed by their worth in gold. The first big body blow for the Gold Standard, which proved to be decisive in the long run, was the First World War. Faced with increasingly draining war effort, governments temporarily suspended the convertibility of the bank notes. Germany, after losing the war, could not move back to the gold standard as it had lost all its gold reserves towards war reparations. The process of printing deutschemarks, without backing of gold reserves, lead to hyperinflation in Germany, and drove the first nail in the coffin of Gold Reserve.