Rush from the Dollar

The value of the U.S. dollar kept sinking, despite attempts by the U.S., German, Japanese, and even OPEC governments to halt its fall.

Why did the rest of the world care?

The 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.

Gold Rush

In 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.

Silver Rush

How Much Silver Does Your Money Buy?

The price of silver shot up, doubling in both 1979 and 1980. The cost of silver flatware followed suit. The money that bought an entire place setting in 1978 purchased only one utensil in 1980.