While Lebanon is experiencing an unprecedented economic crisis, some are talking about the possibility of resorting to gold reserves. It is necessary to see what it really is.

How old are Lebanon’s gold reserves?


This gold was acquired between 1963, the date of the creation of the Banque du Liban (BDL) and 1975, at the start of the civil war. These purchases were financed by the budgetary surpluses of this period considered as the Golden Age of Lebanon elsewhere.

What are gold reserves today?


Gold reserves of the Banque du Liban represent 286.8 tons or 10,116,572 ounces.

At current prices, these reserves are estimated at more than $14 billion. The amount of gold reserves of the BDL actually depends on the world price of this precious material.

The country of cedars ranked 20th in the world according to the IMF report dated July 2019.
Lebanon ranks 2nd among the Arab countries in terms of reserves, after Saudi Arabia which has 323.1 tons of gold, at the regional level, it is also overtaken by Turkey which has 500 tons.

Where is the gold of Lebanon?


It is not stored at Banque du Liban headquarters, nor in Lebanon, but mainly in the United States. As far as we know, the gold of Lebanon is present in New York, within the FED, as well as in Fort Knox.

What is the point of holding gold today?


For a long time, gold served as collateral for monetary issues. It was the gold standard. Between 1944 and 1971, the price of gold was indexed to that of the American dollar since the Bretton Woods agreements. After the Jamaica agreements of January 1976, the states put an end to this gold standard system, thus officially confirming the abandonment of the international legal role of gold, in favor of a floating exchange rate regime. that is to say that the parity of a currency is now established according to the laws and market forces.

This period that has ended has obviously transformed the role that gold plays at the economic level. The main interest is psychological, which consists in reassuring investors about the value of their currency in a floating exchange system. It is moreover this system which made it possible to maintain the confidence of the Lebanese population vis-à-vis its banking system during the civil war until recently.

Even if today, states proceed to the massive purchase of gold betting on a collapse of the system where the dollar plays the role of principal means of world monetary exchange. This is particularly the case of Saudi Arabia, China or even Russia and emerging powers, its main interest being on the one hand not to be exposed to inflationary pressures induced by the budget deficits of the States- United but also to escape possible economic sanctions, if necessary, sanctions whose consequences we know in Lebanon.
There is therefore a double act of sovereignty, both economic and political.

Lebanon being in crisis, why not resort to it?


Investing in gold is also securing the future. Gold is not intended to stay forever but must allow us to get through tough times like those that Lebanon is facing today.

However, to want is not to be able.

There are a number of technical and also psychological obstacles.
To sell the gold that Lebanon owns, 2/3 of the deputies would have to be present and approve this sale, a quorum is certainly not found given the current circumstances.
Also, the sale of gold would mean the end of the Lebanese monetary system as we know it and the total collapse of its financial system. It is a weapon of last resort, an atomic bomb, the use of which could prove more dangerous in terms of its consequences for the Lebanese economy than its maintenance as a deterrent.

Last point, when Germany decided to repatriate its gold from the United States after a lot of difficulties finally got the FED to accept it, it seems that the serial numbers of the gold bars repatriated do not correspond to the books of accounts .
The question that therefore arises would be whether the FED is still hosting Lebanese gold or if it has not already sold it, and this question has a particular political impact in Lebanon and will probably be the subject of an American veto because of the influence of the United States in the region and locally.

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