I was speaking to a friend regarding investments and the security that GOLD has to offer. I cited the example that in the 1980’s, when I was employed by the bank, a Kruger Coin cost about R80.00 a coin. Today, the price of a Kruger Coins (or Mandela Coins) fluctuate around R16000 and have peaked to R17500.00 a few months ago. I know of a few people who had bought at approximately R80,00 per coin in the 1980’s and have recently sold these coins at current market value, therby allowing them to purchase a prime residential property for nearly R1,500,000.00, all this from investing in GOLD!
My question therefore, is that are their any reliable ahadith or advices from the Shariah for us to willingly and confidently invest in GOLD or SILVER as long term investments, allowing for financial growth in a HALAL manner?
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
There is no doubt that Islam encourages the protection of wealth and employing it in such a way so that it is not wasted.
In a hadith, Rasulullah (salallahu alayhi wa sallam) has said: Allah has detested for you three things: useless talk (or being careless in conveying matters of din), wasting of wealth and asking too much (useless questions or continuously asking others for money). [i][ii]
Wasting of the wealth also means not keeping it safely or not managing it properly so that it goes to waste. [iii]
In another hadith, it is mentioned about a man who heard a voice ordering the clouds to water the garden of so-and-so. When the man followed the water and reached the garden he asked the owner of the garden his name and realized it was the same name he had heard coming from the cloud. So the person asked the owner of the garden: What do you do in it (that you are so blessed by Allah)? He said: Now that you have said this I look at what yield I get from it and I give one-third of it in charity. My family and I eat one-third of it and one-third I return to it (as investment). [iv]
In another hadith it is stated that: “Whoever sells a house or piece of land and does not put its price into something similar, will not be blessed in it.”
The above hadith means that it is not recommended to sell houses or landed property (i.e. immovable property) and put its price into something “movable”. This is because immovable property (real estate) has a lot of benefits such as that it cannot be stolen. As a result it is better not to sell a property, and if it is sold then its best for the money received to be put into another piece of property. [v]
The above makes it clear that safeguarding one’s wealth properly (while being generous and avoiding miserliness) is an important aspect of thanking Allah for the blessing of wealth. However, in the time of Rasulullah (salallahu alayhi wa sallam) the default currency was dinar (gold) and dirham (silver). Fiat (paper) currency did not exist at that time. As a result we have not come across any specific advice relating to specifically investing in gold and silver.
Since fiat currency in general is no longer backed by a gold standard, investing in gold or silver is today seen as one of the better ways of safeguarding one’s wealth. In addition, the fact that its been used for thousands of years as an accepted medium of exchange and value is a very favorable advantage. However, there is no guarantee that its price will always continue to rise or that its value won’t crash.
When paper currency is devalued or when hyperinflation wreaks havoc on a currency (as was in the case of Zimbabwe when prices were doubling in a little bit more than 2 weeks) gold is seen as an ideal hedge to protect one’s savings. At the same time it is not without risk and one needs to take that into consideration as well.
Therefore one should consider all possible halal avenues of investment available to him, make istikharah, make mashwarah and then proceed relying on Allah, the Razzaq (the Provider), the Wahhaab (the Bestower).
For further benefit please also review Fatwa #17398: http://askimam.org/public/question_detail/17398
And Allah Ta’āla Knows Best
Sohail ibn Arif,
Student Darul Iftaa
Checked and Approved by,
Mufti Ebrahim Desai.
With the following observations:
The price of gold and silver is not immune from manipulation. To briefly expound on this, observe the history and sequence of money.
- The bartering system through commodities. This was in ancient primitive times.
- Metallic money system. This was to overcome the cumbersome exchange of commodities in the bartering system. People began using gold and silver as a means of convenient exchange.
- Thereafter, the Chinese formally made gold and silver into currency and a means of evaluation by melting the gold and silver into coins. This system spread to many countries.
- Before 1834, when silver was cheap in UK, Americans would sell gold and purchase silver and sell at a profit in America. In this way, the gold from America came to UK.
- In 1834, in order to get the gold back into America, the Americans devised a system where gold was equivalent to silver coins. Now people from UK started purchasing silver from America and gold returned to America.
- In 1990, Sweden introduced bank notes as a legal tender to represent gold and silver. This is known as the gold bullion standard.
- Overtime, Governments started printing notes without being backed by gold and silver. This is known as the Fiduciary System.
- In 1914, if a person had 1700 pounds of more, only he could redeem his gold. Others could not.
- In 1935, redeeming gold in exchange of any amount of money was completely abolished. This was now exclusive to Government exchanges.
- On 15 August, 1975, exchange of gold among Governments too was abolished.
- While gold and silver has been manipulated and in this era of recession, there is a call to revert to the gold system, history shows, gold and silver is also subject to manipulation.
I therefore advise not to concentrate only on gold and silver. Follow the advice of put your eggs in different baskets. Invest in various and multiple Shariah Compliant Schemes, for example in properties, business partnerships etc.
سمعتُ النبيَّ صلَّى اللهُ عليهِ وسلَّمَ يقولُ إنَّ اللهَ كَرِهَ لكم ثلاثًا : قيلَ وقالَ ، وإضاعةَ المالِ وكثرةَ السؤالِ [i]
صحيح البخاري الرقم ١٤٧٧
انعام الباري ٥/ ١٣٢ [ii]
إضاعة الأموال ، وهو أن يتركه من غير حفظ له فيضيع، أو يتركه حتى يفسد، أو يرميه إذا كان يسيرا [iii]
كبرا عن تناوله، أو بأن يرضى بالغبن، أو ينفقه في البناء واللباس والمطعم بإسراف، أو ينفقه في المعاصي، أو يسلمه لخائن أو مبذر، أو يموه الأواني بالذهب أو يطرز الثياب به، أو يذهب سقوف البيت، فإنه من التضييع الفاحش لأنه لا يمكن تخليصه منه وإعادته إلى أصله، ومنه قسمة ما لا ينتفع بقسمته كاللؤلؤة، ومنه الصدقة وإكثارها وعليه دين لا يرجو له وفاء دينه، ومنه سوء القيام على ما يملكه كالرقيق إذا لم يتعهده ضاع، ومنه أن يتخلى الرجل من كل ماله وهو محتاج إليه غير قوي على الصبر والإطاقة، وقد يحتمل أن يؤول معنى الإضاعة على العكس مما تقدم بأن يقال: إضاعته: حبسه عن حقه والبخل به على أهله كما قال الشاعر
(وما ضاع مال أورث المجد أهله … ولكن أموال البخيل تضيع)
عمدة القاري، ٩/ ٦١
بينا رجل بفلاة من الأرض ، فسمع صوتا في سحابة : اسق حديقة فلان . فتنحى ذلك السحاب . فأفرغ [iv]
ماءه في حرة . فإذا شرجة من تلك الشراج قد استوعبت ذلك الماء كله . فتتبع الماء . فإذا رجل قائم في حديقته يحول الماء بمسحاته . فقال له : يا عبدالله ! ما اسمك ؟ قال : فلان . للاسم الذي سمع في السحابة . فقال له : يا عبدالله ! لم تسألني عن اسمي ؟ فقال : إني سمعت صوتا في السحاب الذي هذا ماؤه يقول : اسق حديقة فلان . لاسمك . فما تصنع فيها ؟ قال : أما إذ قلت هذا ، فإني أنظر إلى ما يخرج منها ، فأتصدق بثلثه ، وآكل أنا وعيالي ثلثا ، وأرد فيها ثلثه
صحيح مسلم ٢٩٨٤
قال المظهر: يعني: بيع الأراضي والدور وصرف ثمنها إلى المنقولات غير مستحب، لأنها كثيرة المنافع قليلة [v]
الآفة لا يسرقها سارق ولا يلحقها غارة بخلاف المنقولات، فالأولى أن لا تباع وإن باعها فالأولى صرف ثمنها إلى أرض أو دار
مرقاة المفاتيح شرح مشكاة المصابيح، ٥/ ١٩٨٣
Free Islamic Finance Course
Mufti Ebrahim Desai Saheb will be dedicating the following year 2015 in having weekly discourses on Islamic Finance & Economics, primarily from Bukhari Sharif and other Hadith Kitaabs, incorporating contemporary issues of Fiqh. We wil notify the public on the schedule and venue.
The course is open to the public and is free of charge. Generally, Seminars of Islamic Finance charge exhorbitant amounts and very little is understood.
This is your opportunity to enrich yourself for free.You will be offered to write an exam at the end of the course.