CapnZapp
Legend
To keep my post brief, I think the game rules should give Dungeon Masters options to choose between, rather than making the choice for them.To keep the post brief, I think gold should be used as an exchange of intangible experiences in a game rather than mechanical benefits like trading it in for magic items or XP.
The reason is that when players realize they can expend gold for concrete buffs to their character, they will hoard and only spend their gold on those buffs. But if they don't have that option, and (key point) they are aware that they can expend gold on fun intangible experiences, they will expend it there, increasing immersion and engagement with the world, as well as being a more fun experience having and spending gold.
For instance, rather than spending gold on buying a magic sword, they could go on a vacation to a mystical land where they recieve incite on their own character's magical affinity. Or something to that effect.
In other words, a full and complete ruleset would include rational and balanced pricing of magic items, but also say it is up to the DM and the party to choose to give gold this power (to provide "concrete buffs").
If the DM does not want that, he or she is free to ignore that extra information, which will then be valuable to some other groups instead.