And what happens after the Islamists get a hold of Libya’s gold in storage? They will sell it and the price will go drastically down.
“Financial Times on March 21 cited data from the International Monetary Fund (IMF) that the Libya holds 143.8 tonnes of gold (see table), but some say the actual amount could be several tonnes higher.
Instead of vaults in London, York or Switzerland, Libyan bullion is in the country held by its central bank, which is under Gaddafis control. However, Financial Times noted some believe that the gold reserves may have been moved from the central bank in the capital, Tripoli, to another location such as the southern city of Sebha, close to the borders with Chad and Niger. “
Sell gold for what? Dollars? They don't want dollars.
Under Sharia, Islamic banking is gold-based. They will use the gold to set themselves up as one of many banking centers for the Islamic world. It will be the first step in demanding that customers for oil pay in gold, not dollars or euros.
This is precisely what the Arab oil producers did in the waning days of World War II, before the Bretton Woods agreement set up the dollar as the world's reserve currency backed by gold for non-domestic purposes. The dollar is failing, and this is about replacing a dying currency with gold.