Investing in a way that aligns with your values is important. For many Muslims, this means ensuring their investments comply with Shariah law. Hejaz can help you navigate the world of Islamic finance, including gold investment.
Here’s what you need to know:
- Understanding the permissibility: Our resources explore the Islamic perspective on gold investment. We’ve linked articles from reputable sources that delve into the permissibility of gold trading and avoiding Riba (usury).
- Shariah-compliant gold investment: Investing in gold can be a valuable strategy, but it’s crucial to do so within Shariah guidelines. Our linked resources provide insights on halal gold investment methods.
- Avoiding Riba in gold transactions: Riba is a key concern in Islamic finance. We’ve included resources that explain what Riba is and how to avoid it in gold transactions.
The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) is globally recognised as a leading authority in upholding Islamic finance standards. Its rulings are widely accepted across Islamic markets and have contributed to the development of numerous Shariah-compliant gold products and services, such as investment options, accounts, ETFs, gold saving plans, and spot contracts.
According to AAOIFI, certain standards must be met for Muslims considering investing in gold, including:
- Gold must be traded on a hand-to-hand basis.
- It can be jointly owned.
- Ownership can be either constructive or physical.
- Gold must be fully allocated, with no ambiguity regarding ownership.
- Allocation can occur through settlement, certification, confirmation, or receipts.
Under Shariah law, gold trading is considered haram if the following conditions are not met:
- The exchange of metals, such as silver for silver and gold for gold, must ensure equal weight and value.
- Transactions must be settled with immediate cash payment (no deferred payments or future options).
Riba or usury is strictly prohibited in Islamic law. Here are some suggestions to help you avoid Riba in your gold transactions:
Avoid Paper Gold: Stick to physical gold, such as coins or bars, rather than paper gold or derivatives. Paper gold often involves interest-based transactions.
Immediate Delivery: Engage in spot trading, where you buy and sell gold immediately, rather than entering into future contracts that may involve interest rates.
Explicit Terms: When buying or selling gold, ensure that the contract clearly outlines the terms of the transaction, including the price, quantity, and delivery date. Avoid vague or ambiguous terms that could lead to interest rates.
Trusted Partners: Work with reputable financial institutions that adhere to Shariah principles. They can provide guidance and ensure that your transactions are free from Riba.
Seek Guidance: If you have doubts or uncertainties, consult with Islamic scholars or financial experts who specialise in Shariah-compliant investments. They can provide tailored advice based on your specific circumstances.
By following these guidelines, you can significantly reduce the risk of Riba in your gold transactions and ensure that your investments are in accordance with Islamic law. Learn more about how to navigate your halal investments by reading more about Hejaz’ guides on how to achieve your goals such as learning the difference between halal shares and halal ETFs, the golden rules of investing, and halal investing vs ethical investing.
Disclaimer:
General information only. Investments carry risks, past performance is not indicative of future performance. Read the PDS and TMD before making financial decisions. Promoted by Hejaz Asset Management Pty Ltd AFSL 550009
