A Lesson from Gaddafi about Gold

Mummar Gaddafi has never bought into the propaganda that the dollar is king.

The Libyan central bank – which is under Colonel Gaddafi’s control – holds 143.8 tons of gold, according to the latest data from the International Monetary Fund,  and FT says some suspect the true amount could be several tons higher.

Those reserves, among the top 25 in the world, are worth more than $6.5bn at current prices, enough to pay a small army of mercenaries for months or even years. says FT.

And the sly devil that Gaddafi is, he never shipped his bullion to the United States for safe keeping. FT again:

While many central banks hold their gold reserves in international vaults in London, New York or Switzerland, Libya’s bullion is in the country, said people familiar with the country’s activities in the gold market.

Even FT gets what it is all about (though it is FT, so ignore their snarky attitude about who owns gold):

The political turbulence in the Middle East – besides boosting the price of gold to a record $1,444 a troy ounce – has highlighted the property that has for centuries made gold so appealing to criminals, investors and dictators alike: it does not rely on a government for its value.

Gold gives you flexibility even in the most difficult situations. When others may not want to take a check from you, or have you wire money into their account, they will be much more willing to take gold from you in exchange. As the old saying goes, "gold has no smell".