Hoarding isn't even a gold based economy's biggest failing. There isn't enough gold in the world for it. The world economy would essentially be fixed to the physical amount of gold that is in the possession of human beings. Monetary policy would essentially be nonexistent and we're ride the unguided roller coaster of pure unchecked speculation. We used to do this in the USA, and the result helped lead to the worst economic catastrophe our country ever saw: the Great Depression.

For a practical experience, imagine we're on the gold standard wanting to buy a home. You go to the bank and ask for a loan. You get told the few people with spare money (because the amount of money is fixed to how much gold the USA has) want 75% interest on the money you're asking for to buy the house. There's no "prime" interest rate because a federal centralized banking policy doesn't exist. Maybe you can go to another bank and they only want 65% interest, but only have half the money you need to borrow. This is just one example.

For a business owner, if they can't get a loan to expand, they can't hire the 10 new people they want to create more widgets. With cash on hand they can hire 1 person, and then the business will have to grow much slower before they can hire the second or third person, rinse, repeat. Business growth is very very slow.