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New gold fund unpopular; coin demand high

November 3, 2009

Dubai fund managers are surprised that Muslims would rather buy gold coins than a gold fund.  I’m not.

DUBAI, Oct 28 (Reuters) – The Gulf region’s first gold exchange traded commodity (ETC), a new investment vehicle launched earlier this year, is seeing only modest growth due to regional unfamiliarity with the product.

Grant Collins, senior managing director of the Dubai Commodity Asset Management, said the security was also hampered by a trend for bullion investment in the Middle East to come from individuals rather than institutions or funds.

Collins told the Reuters Middle East Investment Summit that the group may not have realised just how much people preferred to have the the gold rather than a gold-backed product.

For fun, google “Islamic gold.” You’ll find roaring sales pitches for gold coins that would put G. Gordon Liddy to shame.  Why the push to sell Muslims gold?  Old-fashioned gold-buggery plays its part, but these Islamic legal arguments have played a role: 

  1. Paper currencies are backed by issuing countries.  Major currencies are infidel currencies, and the Koran suggests infidels will not back up the paper (see Koran 3:68).
  2. References to money in the Koran are to gold dinars and silver dirhams, not paper.
  3. Paper currencies are like promissory note debts that, according to some Hadith, cannot be circulated (Malik Muwatta Book 31, Sec.17).
  4. The zakat must be paid from possessions, not from debt (Malik Muwatta, Book 17, Sec. 8).
  5. Paper money can be devalued which is contrary to Islam.
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One comment

  1. To,
    The Emergency Appeal.

    Dear /Sir,

    My name Asma D/o late Abdul Karim, from Khuzdar Balochistan Pakistan. I am belong to a very poor family. My parents has passed away. I have one brother and five sisters. I am the only one responsible of my family. I am homeless. Me and my family so much in difficulty. We have no home for living. I am not able to buy home for us. Because my financial problem.
    Therefore, I am requested you please financial assistance me for home $15,000/- only. Me and my sisters pray for you in Ramadan Mubarak Month. I hope that you will help me.

    Thank you.
    Your’s obediently,

    Asma D/o late Abdul Karim.

    Account Title: Ahmed Khan
    Account No. 0489174951000512
    Bank Code: 0567
    Bank Name: MCB Khuzdar Branch Balochistan Pakistan.
    Contact No. 0092-3337995777

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