Demand for gold is strengthening, with investors seeking safety as a new trade war unfolds between the world’s top two economies. The precious metal could reach $4,000 an ounce next year — about 25% above current levels — amid a wave of purchasing by central banks and recession risks, according to Goldman Sachs Group Inc. Can Lebanon seize the opportunity?
Following the recent appointment of Karim Souaid as the governor of Lebanon’s Central Bank, Banque Du Liban (BDL), on March 27, 2025, a central debate has emerged regarding the potential use of the nation’s significant gold reserves. These reserves, valued at $28.34 billion at the end of March 2025 and constituting 30.28% of the BDL’s total assets, position Lebanon as the 21st largest gold reserve holder globally and 2nd in the MENA region. The debate over the issue of gold liquefaction is top news amongst experts in Lebanon as the buying frenzy in China has seen prices move to a premium of around $20 an ounce over international prices, reversing a discount it saw for the majority of the past year when domestic demand was weak, according to Bloomberg calculations.
Lebanon’s gold holdings represent a significant and often underappreciated asset amid the country’s ongoing financial crisis. Official figures of the customs say that Lebanon has exported more than 2 bln dollars in gold. These figures are a déjà vu in the economy.
As of early 2025, Lebanon’s gold reserves stand at approximately 286.8 metric tons, valued at around $26.4 billion, making up over 76% of the country’s GDP—the highest gold-to-GDP ratio globally—and about 30% of the Banque du Liban’s (BDL) total assets. This substantial stock positions Lebanon among the top countries worldwide in terms of gold reserves relative to economic size, and second in the MENA region after Saudi Arabia in absolute tonnage. . In light of this, Governor Souaid has suggested investing a portion of these assets to provide liquidity for depositors, while firmly rejecting their sale. This proposal prompts crucial considerations regarding how the BDL might leverage its gold holdings to aid Lebanon’s financial recovery, pending parliamentary approval.
The rise in gold prices and its positive impact on reserves
The value of Lebanon’s gold reserves has risen sharply in recent years, primarily due to the global increase in gold prices. Since the end of 2019, gold prices have surged from roughly $1,500 per ounce to an all-time high exceeding $2,860 per ounce in 2024, driving a 70%+ increase in the valuation of Lebanon’s gold holdings—from about $15 billion in 2019 to over $26 billion in early 2025. This appreciation has boosted the BDL’s balance sheet and foreign assets, improving Lebanon’s balance of payments position by increasing its official reserves.
To note the banking sector is divided over the issue. A research by BLOMINVEST quotes that Notably, one-third of the BDL’s gold reserves are held in the United States, resulting in annual storage fees, while the remaining two-thirds are stored in the central bank’s vaults in Beirut. This arrangement means the BDL is effectively incurring losses on a significant portion of its gold holdings. Lebanon officially holds approximately 286.8 tons of gold, or 9.25 million ounces. This reserve was accumulated under the 1963 Monetary and Credit Law to back the Lebanese lira. Currently, two-thirds of the gold is stored securely at the central bank in Beirut, while the remaining third is held at Fort Knox in the United States.
Despite the growing interest in leveraging this asset, Lebanese law strictly prohibits any direct or indirect transaction involving the gold. Law No. 42 of 1986 mandates that any sale, leasing, or investment of the reserves must receive explicit approval from Parliament. Before Lebanon’s financial collapse in late 2019, the central bank held around $33 billion in foreign currency reserves, while gold reserves were valued at $16 billion. The cash reserves were largely depleted through unsustainable subsidy programs, leaving only $8.5 billion today. “We lost one and a half times the value of our gold, and it didn’t solve anything. The idea of using gold is simply not an option,” he said.
International markets under pressure
According to Michel Kouzah, a leading financial expert and trader in Beirut, the gold issue has to be followed within its fluctuations in international markets. Kouzah told NOW Lebanon, demand for gold is strengthening, with investors seeking safety as a new trade war unfolds between the world’s top two economies. The precious metal could reach $4,000 an ounce next year — about 25% above current levels — amid a wave of purchasing by central banks and recession risks, according to Goldman Sachs Group Inc. Investors continue to favor gold as a safe-haven asset and long-term portfolio diversifier, as domestic bonds and equities come under pressure. And the dollar’s share declined to 57.8% of total allocated exchange reserves at the end of 2024, the lowest since 1994, down by 7.3 percentage points in 10 years, as central banks have been diversifying their holdings for years to assets denominated in currencies other than the dollar, and into gold, he said. After four decades of unloading their gold holdings, central banks started re-adding gold about 20 years ago, he added. Gold hit another high as warnings from Federal Reserve Chief Jerome Powell about the impact of the trade war fueled volatility on Wall Street, leading to sharp declines in stocks and the dollar. We will see a new move of the Fed, he says. The purchase of gold by central banks is often motivated by the desire to reduce their dependence on the US dollar, he said. By diversifying their reserves, they seek to protect themselves against fluctuations in the American currency, he added.
Central banks have become major players in the gold market. In 2023, they bought 1000 tons of gold, accounting for more than 23% of total demand. Major buyers include Turkey, China and India. These countries are seeking to diversify their reserves and protect themselves against inflation. The massive gold purchases by central banks can have a significant impact on the global economy. For example, when the People’s Bank of China paused its purchases, it caused a slowdown in the market. Kouzah believes this trend could continue for several years, influencing the gold price and economic stability.
The forecast for the future is optimistic. According to a recent survey, 29% of Central banks plan to increase their gold reserves in the coming year, showing a desire to reduce dependence on the dollar and strengthen financial security.
Investing in gold reserves
More importantly, the decision to keep these substantial reserves unutilized represents a significant opportunity cost. This is the potential profit or benefit Lebanon is missing out on by not investing or strategically utilizing these valuable assets for economic growth and stability, Kouzah stated.
Analysts widely agree with Governor Souaid’s rejection of selling Lebanon’s gold reserves, considering it an irreversible loss of a vital national asset with no lasting economic benefit. This stance is further supported by the global trend of central banks increasing their gold reserves as a hedge against rising geopolitical instability, a trend expected to persist in 2025.
Kouzah says the issue is much more complicated as any investor with 100,000 dollars can be a player in the market. There is a need to liquify.
Potential role of gold reserves in addressing the banking crisis
Lebanon’s banking sector has been paralyzed by a severe liquidity crisis, with depositors facing restricted access to their savings amid a collapsing currency and hyperinflation. In this context, the gold reserves represent a tangible, high-value asset that could be partially liquidated or used as collateral to help reimburse depositors and restore confidence in the financial system.
Liquidating a portion of the gold reserves could provide the central bank with much-needed foreign currency liquidity to support the Lebanese pound and stabilize exchange rates, reimburse depositors trapped by capital controls and banking restrictions and finally rebuild foreign currency reserves to facilitate imports and service external debt. However, the decision to unlock gold reserves is politically and economically sensitive. Gold is traditionally viewed as a national safeguard, and selling it risks public backlash and potential loss of a critical buffer against future shocks. Moreover, the amount to be liquidated must be balanced carefully to avoid undermining confidence in the central bank’s solvency.
How much gold could be liquidated?
Given Lebanon’s current gold reserves of about 286.8 tons valued at $26.4 billion, even liquidating a modest portion—say 10-20%—could generate $2.6 to $5.3 billion in foreign currency. This sum could significantly alleviate liquidity shortages and help initiate the repayment of depositors, especially if combined with broader economic reforms and international aid.
Experts interviewed by NOW gave this a structured overview of investment options for Lebanon’s gold reserves beyond selling, incorporating legal and practical considerations from the latest developments. Central banks can lease gold to financial institutions (e.g., bullion banks), which lend it to borrowers like jewelry manufacturers. The borrower returns the gold after the lease period with a Gold Lease Rate (GLR) payment. Lebanese law (No. 42/1986) prohibits leasing without parliamentary approval. Past mismanagement of reserves (e.g., depletion of $33B foreign currency reserves) has heightened caution against such transactions without strict oversight. Earnings from GLR, though modest compared to other options.
Temporarily exchanging gold for foreign currency (e.g., USD/EUR) with a financial institution, agreeing to reverse the transaction later at a fixed price is another option. Lebanon retains ownership while accessing liquidity. Issue bonds or securities collateralized by gold reserves. Investors receive gold if repayment fails, lowering interest rates due to reduced risk. Parliament must amend laws to permit this structure.
Investors raised capital in high-yield assets (e.g., renewable energy projects), generating returns exceeding bond interest costs. Legal Restrictions is the Law No. 42/1986 which mandates parliamentary approval for any gold transaction, creating procedural hurdles. Experts warn against repeating past failures, such as the depletion of $33B in reserves pre-2019. Lebanon holds $72B in underutilized state assets (land, real estate, infrastructure) that could be prioritized over gold.
Challenges and considerations
Lebanon’s gold reserves are a critical strategic asset that, given the sharp rise in global gold prices, have significantly strengthened the central bank’s balance sheet in nominal terms. Thoughtful partial liquidation or leveraging of these reserves could provide essential foreign currency liquidity to help reimburse depositors, stabilize the currency, and improve Lebanon’s dire financial situation. However, unlocking the value of gold must be part of a comprehensive economic recovery plan, including structural reforms and international support, to ensure sustainable recovery and restore confidence in Lebanon’s financial system. A key priority is securing an agreement with the International Monetary Fund (IMF) to ensure financial discipline, transparency, and oversight. Any decision regarding the gold reserves would require parliamentary approval and a clear, well-justified plan.
However, financial experts argue that Lebanon already possesses vast state-owned assets that, if managed properly, could help close the country’s estimated $72 billion financial gap. These assets include coastal and riverfront properties, 850 million square meters of state-owned land, high-value real estate in Beirut and other cities, as well as key infrastructure such as electricity, water, telecommunications, ports, and transport networks. Many of these resources remain underutilized due to corruption and inefficiency.
Maan Barazy is an economist and founder and president of the National Council of Entrepreneurship and Innovation. He tweets @maanbarazy
The views in this story reflect those of the author alone and do not necessarily reflect the beliefs of NOW
