Gold Trading and Islamic Finance: Unraveling the Halal Perspective – Gold transactions made via an online platform are permitted if the cost is paid immediately to the seller or credited to his account. 2. Upon completion of the transaction, the seller is obliged to transfer his gold back to the purchaser right away or to the person who has the authority to accept the gold on his behalf.
Answering your question, Dr. Mohammad S. Alrahawan, Associate Professor in the Department of Islamic Studies in English, Al-Azhar University, Egypt, says:
To answer this question, you must make two fundamental introductory points:
The primary objective of this Islamic transaction law is to attain justice and to block any possible methods of risk of fraud, dishonesty or injustice. The standard rule for every transaction is that they are legal unless there is an express restriction or prohibition that a clear and precise text of the Quran or Hadith can prove.
There are four kinds of trading in commodities:
(1) Spot commodity trading makes the product and price available in real-time. It is legal by the consensus among all academics.
(2) Trading in future commodities based on the delay of both price and commodity is not allowed. It is believed that the Prophet (peace be upon his name) prohibits the trading of delayed (commodity) to an unspecified (price). The Islamic Fiqh Academy ruled against this transaction at their Seventh Annual Full Meeting 1412 A.H./1992 (Resolution No.63/1/7). C).
(3) Trading in future commodities based on the delay in receiving the commodity; for example, A buys B a ton of sugar, which will be delivered by the end of August. Still, the price has already already been transferred to B’s accounts. This is referred to as salam or buying in advance. It’s the sale of described goods that is the seller’s responsibility to deliver the item to the buyer within a specified date. Shariah regulates this kind of transaction by imposing specific conditions to limit risk and avoid committing fraud.
(4) Future tradition of commodities based on a delay in the receipt of price. It is permitted, provided it doesn’t include an usurious interest. For instance, if A sells the car at B at 10.000 US in instalments, he increases the price to 12.000 after a month. In addition, the price and the product shouldn’t fall within the six categories the Prophet has deemed usury, i.e., silver, gold wheat, barley, dates, salt, etc.
Conditions of Gold and Silver Exchange
If one wants to exchange gold for silver or gold for silver, the following conditions have to be fulfilled:
1. Both the price and commodity have to be paid at the same time. This is based on the information of Muslims according to the tradition of Ubadah Ibn As-Samit, who said that the Prophet declared, “Gold must be paid through gold, silver by silver, wheat by wheat, barley by dates with dates and salt by salt as akin to and equal to equal.” Payment is made by hand.
If the classes are different and you want to sell them, do so as you like if the payment is made hand by hand.” The expression “hand-to-hand” implies that the transaction must be completed on the spot by handing over the price and commodity.
2. In every transaction it is the Shariahgave buyers and seller the option to purchase something or try it for a specified period, during which both parties can end the contract at any time by refunding the purchase price to the buyer and the item in the hands of the vendor. This is known as the khimar, i.e. both parties can agree to the possibility of cancelling the contract in which either party can decide to end the contract. The option to cancel or the option to cancel does not apply to usury commodities. This is an interpretation of the hadith of Umar ibn Al-Khattab. He reported the words of the Prophet, “[Exchanging] gold for silver is not riba unless it’s performed in a spot. Dates exchanged to date are not riba except if performed at the point of exchange. The exchange of barley for wheat will be the same as riba unless it’s executed in person. Barley exchange is an offence unless it’s done in person.”‘ (An-Nasa’i) It is graded to be authentic).
3. The amount of commodity and price must be equal, i.e., dual, we must bet. This is the case when you sell silver for gold or gold for silver. This interprets the Prophet’s words, “like for like and equal for equal.” This is not a requirement if one sells silver for gold or gold in dollars; however, the other two requirements must be met.
Also Read: Is Investment Banking Haram?,
Gold trading (Islamic Finance) on the Internet via an online medium
Based on these introductory assumptions gold, trading on an online medium is legal when all the conditions listed below are satisfied:
The purchase price has to be paid immediately to the seller or credited to his account.
Following the transaction, the seller must transfer his gold back to the buyer immediately or to the person authorized to receive it on his behalf. However, the seller can keep the gold as long as:
With your permission
The gold’s status is that it is yours.
The gold cannot be used without your consent since it is yours.
The weight/quantity isn’t altered; it either increases or decreases.
You can use your gold anytime, or you could ask the party who has sold the gold to offer your gold to another.
The company on the Internet functions as a wakeel, i.e., it is authorized by you to conduct trades on your behalf. In this instance, you pay the business for its services, and they trade on your behalf. The company has to receive the gold and either send it to you or hold it in trust. It cannot make any transactions with that gold without your approval.
Allah Almighty knows best.
