Investing in Gold Now Compliant with Sharia Law - "Potential Huge": WGCBy Kitco News
Monday December 05, 2016 11:41
(Kitco News) - The gold market might now have access to 1.6 billion new buyers. The yellow metal is acceptable for the first time as an investment in Islamic finance.
The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) -- which establishes standards for Islamic finance -- and the World Gold Council made it official on Monday, announcing in a statement the changes which now make investing in gold compliant with Sharia law.
This marks the first time there are specific rules for the use of gold as an investment in the Islamic finance industry, the statement said.
“Until now, there have been no such rules. The new Standard shows that investment in gold is permissible provided that all the relevant Shari’ah rulings are satisfied, including those relating to taking possession of gold and the proper calculation of Zakah,” the statement said.
The rules, approved Nov. 19, allow gold to be used in the $1.88 trillion Islamic finance business, the statement noted. The World Gold Council has said the new regulations could spur demand for “hundreds of tons” of gold.
Kitco News started covering the news back in July when reports began circulating that the Islamic world could make this clarification to its Sharia law. The controversy surrounding the move at the time, was over whether or not Sharia law, which guides both the personal and financial lives of Muslims, permits the ownership of or investment in gold bullion as a tradable commodity.
Aram Shishmanian, CEO of the World Gold Council, commented: “This is a ground breaking initiative for Islamic investors and for the gold industry at large. We are delighted that there is now definitive Shari’ah guidance on the permissibility of investing in gold. Gold is a proven wealth preservation asset that Islamic investors can now deploy to protect their wealth and diversify market risks.”
The SPDR Gold Trust (NYSEARCA: GLD), the biggest exchange-traded fund backed by bullion, will most likely qualify, Mohd Daud Bakar, a Shariah scholar, said at a press conference in Dubai Monday. However, Comex gold futures will not qualify.
By Kitco News