BOURJ HAMMOUD, Lebanon (AP) \u2014 Tiny Lebanon sits on one of the largest gold reserves in the Middle East and its government is weighing whether it can use that stockpile to restore a crippled economy while its citizens are looking at gold as a way to protect their battered assets.<\/p>\n
Lebanon\u2019s economy hobbled into 2026 with ongoing inflation<\/a> and state decay and no reforms to combat corruption in sight. Its banks collapsed in late 2019 in a crippling fiscal crisis that evaporated depositors\u2019 savings and plunged about half its population of 6.5 million into poverty, after decades of rampant corruption<\/a>, waste, and mismanagement. The country suffered some $70 billion in losses in its financial sector, further compounded by about $11 billion in the 2024 war between Israel and the Hezbollah militant group. <\/p>\n The price of gold recently soared<\/a> to an all-time high of $5,354, before dropping back below $5,000, sparked by geopolitical instability and questions surrounding U.S. President Donald Trump\u2019s desire to lower interest rates that would ultimately devalue the dollar. Global central banks have been among the most avid buyers. Silver prices meanwhile have also surged due to industrial demand and the attractiveness of a much cheaper price than gold.<\/p>\n The central bank in Beirut has maintained a reserve of 286 tons of gold – some nine million ounces – since the 1960s. Only Saudi Arabia\u2019s central bank holds more in the region.<\/p>\n The government is considering using some of its gold reserves to bail out the banks and pay back depositors who got wiped out. But doing so would not only go against historical precedent, but also violate a 1980s-era law. Meanwhile, those depositors would like to make up some of their losses by buying gold and silver, hoping that prices will bounce back from the downturn of recent days and hit new highs.<\/p>\n Lebanon\u2019s untouchable asset<\/p>\n At one point the value of Lebanon\u2019s gold reserves reached $50 billion \u2014 over double Lebanon\u2019s own GDP. After years of economic crisis, and pushback against meaningful reforms to make the country viable again, some are again raising a sensitive question: Is it finally time to dig into this goldmine?<\/p>\n A senior banking official told The Associated Press that some banks are proposing to dig into the gold reserves to help pay back depositors<\/a> whose money was lost during the country\u2019s currency crisis, essentially partially bailing out the banks with the country\u2019s only viable public asset. The officials spoke on condition of anonymity in line with regulations. <\/p>\n Lebanon banned the sale of its gold in 1986 in the middle of the country\u2019s civil war to protect state assets during a time of extreme instability. The gold reserves have never been touched — not after 15-year civil war in 1990, and not after multiple wars with Israel.<\/p>\n