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When Gadhafi falls, does Libya's gold get leased at 1% per year?
Or does it go straight to Morgan Chase?
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Gold Key to Financing Gadhafi Struggle
By Jack Farchy and Roula Khalaf
Financial Times, London
Monday, March 21, 2011
The international community has hit Mommar Gadhafi with a raft of sanctions and asset freezes aimed at cutting off his funding. But the embattled Libyan leader is sitting on a pot of gold.
The Libyan central bank -- which is under Colonel Gadhafi's control -- holds 143.8 tonnes of gold, according to the latest data from the International Monetary Fund, although some suspect the true amount could be several tonnes higher.
Those reserves, among the top 25 in the world, are worth more than $6.5 billion at current prices, enough to pay a small army of mercenaries for months or even years.
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.
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Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit, Extending the Mineralization of the Southwest Vein on the Property
Company Press Release, October 27, 2010
VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include:
-- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres.
-- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres.
-- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre.
Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface.
"The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest."
For the company's full press release, please visit:
U.S. and European governments have frozen billions of dollars in Libyan assets, as sanctions have hit the central bank, sovereign wealth fund, and state oil company.
But Libya's gold reserves may provide Gadhafi with a lifeline -- if he can sell them. To raise large amounts of money, bankers said, Gadhafi would have to transport the bullion out of Libya.
Before violence broke out the gold was stored at the central bank in Tripoli. But since then it may have been moved to another location, such as the southern city of Sebha -- within reach of the borders with Chad and Niger.
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.
Following the revolution in Egypt, the country banned gold exports for four months in order to prevent officials of the former government from moving their wealth abroad.
At the same time, Iran has been quietly stocking up on gold in recent years, in an apparent attempt to shift away from the U.S. dollar and thus protect its reserves from risk of seizure. Other significant buyers of gold include China, Russia, and India.
No international bank or trading house is likely to buy gold with any hint of a link to the Libyan regime, bankers said. "Physical trading houses are now quite reluctant to deal with countries that have been involved with conflict -- they don't know who's on the end of the trade," said one banker.
But Gadhafi could transport the gold to Chad or Niger, where the gold could be swapped for currency transferred into a bank owned by the Libyan Foreign Bank -- a branch of the central bank.
"If a country like Libya wants to make its gold liquid, it would probably be in the form of a swap -- whether for arms, food, or cash," said Walter de Wet, head of commodities research at Standard Bank.
In addition to the gold reserves, Gadhafi may also have hoarded some cash from oil sales outside of the traditional channels.
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