Middle Eastern Kleptocrats Demand Gold

Retail investors aren’t alone in their flight from unstable currencies to precious metals.  Dictators in the notoriously unstable Middle East know the value of gold all too well.  They place such esteem in gold as a store of value that they’re willing to rely upon it as a ticket out of a crumbling regime.

Zine el-Abidine Ben Ali and his wife Leila Trabelsi looted the Tunisian central bank of one and a half tons of gold bullion. Such an audacious move did not escape the notice of either the international press or European financial regulators.  Yet the Ben Alis have not been remanded to the custody of law enforcement.  They got away with the heist!

Hosni Mubarak apparently had a similar plan all worked out long ago.  He didn’t have to wait until the last minute like his Tunisian friends. He spent years sequestering his gold and other investments all around the world, far away from prying Egyptian eyes.  How does a President become a billionaire?  Inquiring minds at Interpol would like to know.  They can start by asking any oil companies or defense contractors who’ve done business with his regime just how much they had to pay all those years for “access” in Cairo.

Libya’s Muammar Gaddafi (just how does that guy spell his name?) has been taking notes. His private jet is rumored to be loaded with gold and other precious goodies, ready to spirit him away to a comfy retirement far from the hassles of cracking down on protesters.  A planeload of bullion can buy lots of African savannah.

Perhaps this uncovers a hidden force behind the strong performance of gold in recent years.  Dictators in the Middle East and North Africa (that’s the MENA neighborhood for you investors looking for a new BRIC bloc) have been quietly taking lots of supply off the market.  Sarcasm aside, the World Gold Council will have to update its gold reserve figures with appropriate subtractions for looting by deposed autocrats.

Full disclosure:  Long GDX with covered calls.

About Anthony Alfidi 128 Articles

Affiliation: Alfidi Capital LLC

Anthony Alfidi is the Founder and CEO of Alfidi Capital. His firm publishes free investment research with honesty and humor.

Mr. Alfidi holds a Bachelor's degree in human resource management from the University of Notre Dame (cum laude) and an MBA in finance from the University of San Francisco. He is a life member of Beta Gamma Sigma, the academic honor society for business majors. He has been a private investor since the 1990s.

Visit: Alfidi Capital

Be the first to comment

Leave a Reply

Your email address will not be published.