Confidence is what gives currencies their credibility. The U.S. dollar went off the gold standard with the Bretton Woods's agreement during the Nixon administration. This was done because more dollars were being printed than there was gold to back them (55% to 22%). Taking the U.S. off the gold standard, the BW agreement made the dollar the world's reserve currency. This meant many commodities were priced in dollars. Some currencies were permitted to float freely while others maintained a "currency peg" to the dollar. As of late 2011 the U.S. Dollar is still nearly 70% of foreign reserve holdings.
With expansionary dollar monetary policies post the 2001 and then 2008 bear markets investors started losing faith in the dollar given supply. And, this sentiment was transferred later to other fiat (paper money) currencies in general as 2011 euro zone debt issues surfaced. For U.S. citizens' purchasing power is being lost and investors look to the forex (foreign exchange) to hedge their dollar exposure or speculate in markets. ETPs (ETF/ETN) have emerged as an easier, less complicated and less leveraged manner to participate in these markets.
As a former CTA (Commodity Trading Advisor) and CPO (Commodity Pool Operator), I know the value of having an allocation to direct currency ETPs. It's essential to have exposure to these new instruments to hedge against dollar destruction not to mention exposure to gold.