In a sense, the value of currency is backed by the economy it is part of--how much people need to have it to buy stuff, pay taxes, and so on. For instance, a co

In a sense, the value of currency is backed by the economy it is part of--how much people need to have it to buy stuff, pay taxes, and so on. For instance, a country can get into a spot of trouble if their economy weakens and they have foreign debt in another currency they have to buy, at ever-increasingly unfavorable exchange rates. People then indeed 'lose faith' that their currency is worth holding. But he also says, "Instead, the value of an asset depends on what people think it’s worth. " That's basically how commodity markets function. Buyers bid on the price based on what's available for sale right now and how much they need to have it. Some commodities are driven by the demand for consumption of the good, some have more, shall we say, speculative valuations. Commodity markets can be volatile and fickle.