Price of Gold Could Have Impact on Libyan Rebels
As Libyan rebels dance in the Tripoli streets, gold traders are dancing on Wall Street. However, rebels and traders might have more in common than dancing since the price of gold might hold the key to how the rebels finance their revolution.
The price of gold has risen to another all-time record high of $1,873.40 an ounce Monday, which is partially due to the unrest in Libya that is attracting investors to the stability of gold, according to Forbes. It is thought that Libya has one of the largest gold reserves in the world.
The Libyan revolution is not the only reason gold has seen a near vertical rise in value this month. Gold is traditionally seen as a safe haven for investments during times of instability and with the political and economic instability in Japan, as well as the deepening of the European debt crisis, gold is more attractive than ever, raising the price to record-breaking levels several times this year. While that is good news for gold traders, it might be even better for the Libyan rebels.
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In March of this year, the International Monetary Fund estimated that Libya’s gold reserves to be approximately 4.9 million ounces, which is nearly $9 billion at current market prices. As the BBC put it, that is about half of how much gold the UK has, but with a tenth of the population. That means it could be a substantial force in financing a new transition government.
Indeed, Libya’s large gold reserves were thought to be Gaddafi’s secret weapon for staying in power, with the money being able to be used to pay for his military and additional mercenaries, the FT reported earlier this year. However, that was in March. How much gold is left is difficult to ascertain and where it is might be even more difficult.
Rumors of Gaddafi smuggling gold outside of Libya have been floated around for months, and recently, Venezuelan president Hugo Chavez, who has publicly supported Gaddafi, withdrew large amounts of gold from its overseas reserves, shortly after nationalizing the Venezuelan gold industry.
