Despite its severe financial distress, the small nation of Lebanon possesses one of the largest gold reserves in the Middle East. As citizens increasingly view gold as a means to protect their damaged assets, the government is exploring whether it can leverage this reserve to revive its paralyzed economy.

Lebanon's economy has been faltering since 2026, plagued by persistent inflation, deteriorating state governance, and long-delayed anti-corruption reforms. The country's banking system collapsed in a severe fiscal crisis at the end of 2019, wiping out depositors' savings and pushing half of its approximately 6.5 million people into poverty. This crisis resulted from decades of rampant corruption, resource mismanagement, and waste. The financial sector suffered losses of around $70 billion, which were exacerbated by an estimated $11 billion in damages from the 2024 war between Israel and the Hezbollah armed group.

Recently, driven by geopolitical instability and market expectations of potential U.S. interest rate cuts under President Donald Trump—which could weaken the U.S. dollar—gold prices surged to a historic high near $5,354 per ounce before retreating below $5,000. Central banks worldwide are among the largest buyers of gold. Concurrently, silver prices have also risen sharply due to strong industrial demand and its significantly lower price compared to gold.

The Central Bank in Beirut has held a reserve of 286 tonnes of gold, equivalent to approximately 9 million ounces, since the 1960s. In the region, only Saudi Arabia's central bank holds more gold than Lebanon.

The government is considering using part of the gold reserve to bail out banks and reimburse depositors who lost their savings. However, such a move would contradict historical precedent and violate a law established in the 1980s. Meanwhile, many depositors are turning to purchasing gold and silver themselves, hoping to recoup some of their losses and anticipating a rebound in gold prices to new highs after the recent dip.

Lebanon's Untouchable Asset

At one point, the value of Lebanon's gold reserves reached $50 billion, more than double the country's GDP. After years of economic crisis and stalled efforts to implement major reforms for national recovery, some are once again raising the sensitive question: Is it finally time to tap into this "gold mine"?

A senior banking official, who spoke anonymously as required by regulations, told the Associated Press that some banks have proposed using the gold reserves to help compensate depositors who lost funds in the currency crisis. This would essentially mean using the country's only viable public asset to partially rescue the banking sector.

In 1986, during the Lebanese civil war, a law was passed prohibiting the sale of gold to protect national assets in a time of extreme instability. Since then, the gold reserve has remained untouched, even after the end of the 15-year civil war in 1990 and following multiple wars with Israel.

Some economists have suggested that, alongside comprehensive reforms, a small portion of the gold could be used to repair Lebanon's dilapidated power sector or revive its battered education and healthcare systems for the benefit of the populace.

Any use of the gold reserves would require a parliamentary vote for approval. This is a highly unpopular proposition and is not expected to happen soon, particularly in the months leading up to a general election. During a recent meeting, when the topic of gold was raised, Parliament Speaker Nabih Berri quickly interjected to shut down the discussion, stating sternly, "It's not feasible."

A draft law aimed at creating a framework to cover some losses for depositors remains stalled in parliament due to disputes over who should bear the cost—the severely impacted and reluctant Lebanese banks on one side, and the debt-ridden, spendthrift state on the other.

Most Lebanese citizens distrust the authorities, who have for years avoided implementing significant reforms to combat corruption, reduce waste, and improve public services. Given this track record, many argue that the gold should be preserved for future generations and not be touched.

Cushioning the Economic Blow

While authorities debate the future of the national gold, many Lebanese depositors who lost most of their savings in the banks are now turning to gold and silver. They seek more tangible assets and hope to recover some of their losses.

Recently, long queues formed outside the shop of a major metal dealer in the northern suburbs of Beirut, with people eager to buy gold coins, commemorative medals, and gold bars.

Having lost trust in banks, they are trying to navigate a chaotic cash-based economy plagued by uncontrollable inflation, with no signs of meaningful reform on the horizon.

"For those trying to recover their losses, gold is not just a safe haven; it's the only safe haven," said Chris Bohossian, General Manager of Bohossian Precious Metals. Due to high demand, customers must now pay in advance and wait months to receive their metal, indicating a booming business.

Situated in a volatile region with a history of conflict and economic shocks, there is little hope among the populace that structural problems will change.

"Lebanese have always had a tendency to buy gold as a hedge against potential inflation, given the country's history of hyperinflation," said Sami Zoughaib, an economist at the Beirut-based think tank The Policy Initiative.

Zoughaib noted that this is also a natural shift, rooted in a long-standing regional tradition where a groom or his family gifts gold jewelry to the bride as her personal property before marriage, a practice common even among low-income families. Today, this tradition largely continues, despite many women being part of the workforce.

Outside a gold market in Beirut, Alia Shehadeh browsed in front of some shops. She said that as a woman, her collection of gold jewelry provides a sense of security during the financial crisis, citing an Arabic proverb: "An adornment and a treasure."

"If a woman finds herself in trouble... she can sell her gold. And when the price of gold rises, she wins," she said. However, she refuses to sell any of her pieces.

Reflecting on the reluctance of both the public and authorities to sell gold, Zoughaib added, "I think this speaks volumes about the importance of gold in people's minds. They cannot even imagine using it for anything other than hedging risk."