Gold Standard/Commodity-based Standard

A monetary system in which currencies are defined in terms of a given weight of gold or some other commodity. The value of the commodity-based money fluctuates with the value of the commodity and the amount of currency issued against it. Unlike fiat currency, which is valued because of the confidence that people have for it, commodity-based money is valued because people know it is backed by the value of the commodity. See also fiat money.