value of the U.S. dollar kept sinking, despite attempts by the U.S.,
German, Japanese, and even OPEC governments to halt its fall.
did the rest of the world care?
U.S. dollar was still the primary reserve currency of the world.
Countries holding dollars, instead of gold, as a reserve asset did
not want to see the value of their assets fall.
1979, investors, including Saudi Arabia and other oil-producing
nations, backed away from holding U.S. dollars as reserves, since
they could no longer count on them to retain their value. They sold
their surplus dollars for alternative reserve assets, like German
marks, Japanese yen, and Swiss francs. In addition, dollar holders
increasingly wanted non-monetary assets such as gold and silver,
as well as art and real estate. This pushed gold prices from $200
per ounce in early 1979 to $875 less than a year later.