I see this all the time, mostly when references are made about the dollar and how it was once backed by gold
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The simple concept is that in a vault somewhere like Fort Knox there is a big pile of gold bars. One dollar, or pound or whatever, is worth a fixed weight of gold. The number of notes that exist is fixed by the quantity of gold that exists in that vault. The concern about “fiat currency” (ie banknotes that are not backed by anything physical) is that it costs a government far less than their face value to make more of them. If a government behaves irresponsibly it might just start printing a whole bunch more of them. That has happened in the past, and recently in badly behaved countries. The majority of governments don’t do that because it has really bad consequences.
The downside is that as the economy changes, the quantity of money actually circulating that will keep prices stable and people happy needs to change with it. Unless you find a new gold mine, you can’t change the quantity of gold you have, so you can’t change the quantity of money in the economy.
Gold is not the only metal used. Traditionally the UK used silver. The UK pound is called the “pound sterling” because way back in the day it’s value was literally one lb (one pound weight) of sterling silver.
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