Can someone explain exactly what gold does?

When is in my barraks? When it is in the castle?

Gold increases morale of knights giving them advantage in combat. It shouldn't matter if it's stored inside the castle or guard structures. Check the resources section on this page. There's a link to the game manual.

Gold increases the morale of the knight. There is a display of it. Its a relative value, but basically if it says 10% you win 1 out of 10 fights. And so on.

There is no difference in its value if it is in the castle, warehouse or guard structures EXCEPT two (based on the manual):

1. You can lose the gold if it's in the guard structure. If you lose the guarding house, you lose the gold in it
2. The gold will increase the development of guards into higher levels where it is stored. So if you have gold in a guard house, the knights in there will develop faster into higher levels.

This can create some interesting strategic choices in later games. Building bigger castles take longer and often puts you in a disadvantage. EXCEPT it will make your knights faster more powerful. So you get better and faster high level soldiers you can fight with.

wow thx so much you guys

so gold gold gold gold gold;)

The best forum ever :)

so gold gold gold gold gold;)

Yes, mostly. But you need to find the fine balance between the resource and time-investment and what you get out of it.

In the first levels you have enough gold in your castle. So its sufficient to just build the building producing gold (sorry, I do not know the English word for it :D). This way you can speed up winning the level enormously. :)