{"id":21919,"date":"2011-06-24T12:16:05","date_gmt":"2011-06-24T16:16:05","guid":{"rendered":"http:\/\/www.investmentu.com\/?p=21642"},"modified":"2011-06-24T12:16:05","modified_gmt":"2011-06-24T16:16:05","slug":"financial-lessons-from-an-african-dictator","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2011\/06\/24\/financial-lessons-from-an-african-dictator\/","title":{"rendered":"Financial Lessons from an African Dictator"},"content":{"rendered":"

Financial Lessons from an African Dictator<\/a><\/p>\n

by Rich Checkan, Investment U<\/em> Contributor
\nFriday, June 24, 2011: Issue #1542<\/p>\n

[Editor’s Note<\/strong>: Richard Checkan is one of the smartest investment minds I know. The Vice President of Asset Strategies International, Rich has often contributed unique moneymaking insights to Investment U<\/em>. His specialty: building wealth using gold, silver and other hard assets. Today’s piece is one of his most provocative… and potentially valuable. ~ Garrett Baldwin]<\/p>\n

Core holdings.<\/p>\n

These represent your emergency finances. Your ace in the hole – the gold and silver (and maybe some platinum) that you hope you never have to use, but thank the heavens you have if you do. They are your bridge across social, political and economic chaos. And the world is full of chaos.<\/p>\n

With Libya now looking like America’s third war in little more than a decade, it’s hard to imagine what the people of Tripoli are doing in order to make ends meet with the country burning around them. I was reminded of the importance of core holdings recently when I saw a Financial Times<\/em> article about Libya’s beleaguered dictator, Col. Moammar Gadhafi.<\/p>\n

The article explained that Gadhafi had only one hope of financing his war against the insurgents who were threatening to topple his regime. He couldn’t borrow the money. He couldn’t even access funds Libya had moved abroad. His accounts were frozen worldwide…<\/span><\/p>\n

Gadhafi Saved By Libya’s Core Holdings in Gold <\/strong><\/p>\n

His only source of funds was his “core holdings<\/a>” – the gold that he had stored at the Libyan Central Bank. While most central banks store their gold in London, Switzerland, or New York City, this is not the case with Libya. Gadhafi had always insisted that Libya’s gold be stored at the Libyan Central Bank in Tripoli.<\/p>\n

We’re not talking about some coins or bars tucked away in a safe-deposit box, by the way. Libya’s gold holdings rank in the top 25 in the world. It is estimated that the bank is sitting on roughly 144 tons of the world’s oldest and best form of money. At today’s prices, that is $6.5 billion worth of the yellow metal. That may only represent a few minutes worth of government spending in this country; but in Libya, it’s enough to finance a war.<\/p>\n

So while no legitimate business or government will loan Gadhafi money now, or even trade with him, his hoard of gold may be the answer to his financial needs. He can use it to acquire currency, arms, food and other supplies for his military.<\/p>\n

Wealth Insurance: Core Holdings of Gold and Silver <\/strong><\/p>\n

As I read the article, I was struck by this real-world example of the message we have preached so many times: When markets are volatile, you need some “core holdings” of gold and silver. There is simply no better “wealth insurance” than having precious metals as part of your portfolio<\/a>.<\/p>\n