Can Lebanon tap its treasure to save banks and citizens?

Lebanon entered 2026 with its economy still crippled by inflation, institutional decay, and a lack of meaningful reforms, as debate resurfaces over whether the country should tap one of its most sensitive assets: its vast gold reserves. At the same time, ordinary citizens are increasingly turning to gold and silver to protect what remains of their battered wealth.

Lebanon’s financial system collapsed in late 2019, wiping out depositors’ savings and plunging about half of the country’s 6.5 million people into poverty. After decades of corruption, waste, and mismanagement, losses in the financial sector reached an estimated $70 billion. The damage was compounded by roughly $11 billion in losses from the 2024 war between Israel and the Hezbollah militant group, The Associated Press writes. 

The renewed attention on gold comes as prices surged to record levels. Gold recently climbed to an all-time high of $5,354 per ounce before slipping back below $5,000, driven by geopolitical instability and questions surrounding U.S. President Donald Trump’s push to lower interest rates, which could weaken the dollar. Central banks worldwide have been among the biggest buyers. Silver prices have also jumped, boosted by industrial demand and its relative affordability.

Lebanon’s central bank has held 286 tons of gold—around nine million ounces—since the 1960s, making it the second-largest official gold holder in the Middle East after Saudi Arabia. At its peak, the value of those reserves reached about $50 billion, more than double Lebanon’s gross domestic product.

Some in the banking sector are now suggesting that part of the gold stockpile be used to help compensate depositors whose savings were lost in the crisis. A senior banking official told The Associated Press that some banks favour using the reserves to partially bail out the sector. The officials spoke on condition of anonymity in line with regulations.

But selling the gold would violate a 1980s-era law that banned its sale during Lebanon’s civil war to protect state assets amid extreme instability. The reserves were never touched during the 15-year civil war that ended in 1990, nor during subsequent wars with Israel.

A handful of economists have floated the idea of using a small portion of the gold alongside sweeping reforms to rehabilitate essential public services such as electricity, healthcare, and education. Any move would require parliamentary approval, an unpopular step unlikely ahead of general elections. When the issue surfaced in a recent session, Speaker Nabih Berri cut it short.

“Not feasible,” he said sternly.

Meanwhile, a draft fiscal gap law outlining how depositor losses might be addressed remains stalled amid disagreements over whether banks or the state should absorb the costs.

As authorities debate, many Lebanese have lost faith in the banking system and are turning directly to precious metals. Long lines have formed outside major metals traders near Beirut, as people buy coins, bars, and medallions in a cash-based economy ravaged by inflation.

“For those making up for losses, gold is not a safe haven — it’s the only haven,” said Chris Boghos, the managing director of Boghos SAL Precious Metals.

Economist Sami Zoughaib of The Policy Initiative pointed to deep-rooted cultural habits.

“There has always been this propensity for the Lebanese people to go buy up gold in order to hedge against possible inflation,” he said.

Outside Beirut’s gold markets, Alia Shehade described her jewelry as a source of security, citing the saying “an adornment and treasure.”

“If a woman is in a tough situation ... she can sell her gold. And when gold prices go up, then she’s the winner,” she said.

Reflecting broader resistance to selling the reserves, Zoughaib added: “I think this just tells us just how important that gold is in the psychology of people.”

“They are not even able to imagine a use case for it beyond being a hedge,” he said.

By Sabina Mammadli