Hypothetically, if people in a culture usesgold to preform exchanges, but store their wealth in diamond, which would be considered money for the purpose of applying Austrian Economics?
Money is the commodity medium of exchange.
It would be gold. The function of money is to facilitate indirect exchange. It`s fucntion is not to be a store of value. Portability, a high value to weight ratio, is just one of the qualities that make a commodity a better money with respect to competing commodities. So while money can be used as a store of value, that is not what makes it money.
But money is considered a store of value. Otherwise you wouldn’t save money. You would buy and save something else. Fiat money has proven to be a poor store of value because fiat money is not a good money.
Value is a imaginary concept. It cannot be stored.
from Mises, p. 395 of Human Action:
“A medium of exchange which is commonly used as such is called money.”
In your example, gold is money, diamonds are assets.
In a free market, you could generally expect a commodity money such as gold would maintain or increase its nominal value relative to other goods and services, assuming that the production of those goods and services is increasing more rapidly than the production of the commodity money. If for some reason, such as war or pestilence, the quantity of goods and services contracted dramatically, then prices would naturally increase, even if gold was money.
There is no guaranteed store of value because the future production of goods and services is not guaranteed.