> True, but once you've pegged the currency to gold, it can't fluctuate very far from the price of gold. I think this depends on what your definition of backed

> True, but once you've pegged the currency to gold, it can't fluctuate very far from the price of gold. I think this depends on what your definition of backed means. If you include the government not just buying the currency for a given amount of gold, but also selling the currency for the same amount of gold, I agree. But, otherwise, if the government guarantees it will only buy the currency for gold and not vice versa, then I disagree. For example, I could state tomorrow that I will guarantee to give anyone 1 oz. of gold is they give me $100 trillion in USD, and then technically USD would be backed by gold (by me), but such an offer would have no real effect on the how the market would value USD. I might be wrong about what backed means, but if so, then I also don't understand what is meant by partially backed.