Historically, gold had a lot of attractive properties for use as currency:

1. Compactness: high value/volume ratio.
2. Low upkeep/maintenance cost (due to chemical unreactivity)
3. Difficulty to counterfeit. This applies to all the elements really, although you could in theory produce sub-Nickel elements economically through nuclear reactions. However physical law prevents this for heavier elements.
4. Ease of verification (distinctive color plus chemical resistance allows easy 'field tests')
5. Inherent value independent of legal status as currency (jewellry, electronics, etc.)

Even today I doubt you could find an element that combines all these properties together. Platinum and a few others might qualify.

These properties make gold attractive as currency when a stable currency-issuing government doesn't exist, even today. This is why it fits in well with libertarian philosophy, since it's based on the assumption of small and limited government.

About your second question, I don't see the contradiction. Gold can also be produced, and in fact it has to do so in a growing economy based on the gold standard. The key phrase is 'proper political order.' The idea is to have a currency that can grow when things are good but be immune to things going bad.

By the way, I am most definitely not a libertarian, but the gold standard is hardly the biggest issue with libertarianism. The current monetary system might be better than the gold standard but that's only because the political climate is much different.