On December 6, 2016, a long-anticipated clarification of Sharia law that would permit the world’s 1.6 billion Muslims to invest in gold.

Owning gold investments has been a controversial issue, with different interpretations of Sharia law. To clarify the issue, the World Gold Council (WGC) and the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), which establishes Sharia standards for Islamic finance,  have drafted standards for investing in gold to comply with Sharia law.

Sharia compliant investing (also known as Halal Investing) is a subset of Socially Responsible and Ethical Investing based on investments that adhere to Islamic Principles. Whereas finance traditionally has been driven solely by the effort to maximize risk adjusted returns, Islamic and Socially Responsible investors have added an additional objective for financial market activity – compatibility with the investor’s ethics and promotion of social-welfare activities.
In brief, any portfolio cannot hold shares of a company that:

  • Provides non-Islamic financial services and any other related interest services.

  • Manufactures/sells products or services not approved by the Ethical Board (i.e. liquor, tobacco, gambling, pornography etc).

  • Have interest revenue exceeding a certain percentage of total revenue (usually 5%) - unless it is given to charity.

  • Do not have a certain percentage of non-liquid assets.


Purification is a pivotal element of the Islamic investment process and ensures that no money that has been earned has come from unethical means. If such money is discovered it must be given toSharia-compliant banking grew at an annual rate of 17.6% between 2009 and 2013, faster than conventional banking,[7] and is estimated to be $2 trillion in size

According to the World Gold Council, the new Sharia gold standard could result in “hundreds of tonnes” of new demand coming from Islamic investors



 


Comments

02/08/2017 6:08am

This is a new concept in Sharia law about gold. This needs more information, to purchase gold by Muslims. This will create a way to Muslims in the gold investments. A brief information is given by you in the article.

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