Gold and Silver haven't been currency backers in a long time. Almost all money (domestic and international) is no longer backed by bullion of any sort. The concept of paper money was always based on faith - turn your gold over to the proper authority and receive a promissory note in exchange that could be exchanged in the future for the same value of gold. Yes, the original circumstance was that every dollar in circulation was backed by an equivalent amount of gold, but that is no longer the case. I'm also pretty sure that there isn't enough printed currency out in circulation to account for all the digital wealth that gets transferred around the world on a day to day basis. The primary reasons that gold prices have risen so high in the years are:
1). Dollar has weakened with respect to other currency - Because the value of the dollar has gone down, so too has its purchasing power. You now need more dollars to purchase the same amount of something as you needed 10, 15, 20 years ago.
2). Faith in the dollar has diminished. Almost all currency world wide is based on faith. People lose faith entirely in a particular currency, and the currency will no longer be worth anything. Because of the current lack of faith in the dollar, people who wish to hedge their bets are buying what gold they can. This has a couple of effects. First is, if you are purchasing tangible gold and silver (not certificates, but the real McCoy in your hand), every ounce that is purchased is an ounce less available on the market for other consumers to purchase. This then raises the price of available metal, and at the same time, will increase the value of every stockpiled piece of metal as well. This also increases speculation about the futures of gold. Since everyone is investing in gold, everyone is also speculating on the future of gold. As long as speculation remains promising, gold continues to be popular and continues to rise in price. However, as the economy improves and the spending power of a currency improves, people begin to retain lost faith in the currency, People who were stockpiling gold and silver before may stop altogether, slow down their rate of purchase or start liquidating their stockpiles to obtain larger quantities or stronger currency. The result of this is prices of real gold and silver will drop. What the drops in prices will be isn't something that can be determined right now, but it will occur. The best reason to hold onto metal is because it is essentially international hard currency. If I live in one nation and the currency of that nation flat of fails along with the economy, If my money was all invested in gold and silver, in theory, I can move right over to another country with a stronger currency and liquidate my hard metals for paper/digital currency.