Sharia-compliant gold financing covers all the ways of acquiring, holding or using physical gold while respecting the rules specific to ribawi goods: immediate exchange, genuine possession, no interest and no speculation on metal that does not actually exist.
Why gold is not an ordinary commodity
The hadith of the six items (gold, silver, wheat, barley, dates and salt) places gold among the ribawi goods. Exchanged for gold, it must be traded weight for weight and hand to hand; exchanged for money, quantity is free but both counter-values must be delivered immediately.
AAOIFI Standard No. 57 on gold
Issued at the end of 2016 with input from the World Gold Council, this standard sets the conditions for trading gold: immediate delivery, actual or constructive, identification of the metal, and a ban on short selling and on contracts where no delivery is ever intended.
Constructive possession: is a certificate enough?
The standard accepts constructive possession when the buyer receives a document showing that specific, numbered bars stored in an identified vault belong to him. A mere balance in ounces, with no bars allocated, remains a claim on the custodian.
T+2 settlement versus the immediate-delivery requirement
On the wholesale market, trades usually settle two business days after execution. Several Sharia boards tolerate this technical delay as a market custom, while others require ownership to be transferred and recorded on the same day; opinions differ.
Buying gold on credit: the deferred-payment question
Selling gold for money with instalment payments raises a doctrinal problem, since both counter-values share a monetary character. The AAOIFI standard prohibits this deferral, whereas some boards, notably in Malaysia, accept it by treating gold as a commodity.
How a gold Murabaha is set up in Malaysia
The bank buys bars or coins for cash from a supplier, takes possession and resells them to the customer at a disclosed margin. The customer repays in fixed instalments, and the bank often keeps the metal as collateral until the final payment.
Worked example of a 10,000 euro Murabaha
A bank buys 10,000 euros of gold and resells it for 10,800 euros, payable in 24 monthly instalments of 450 euros. The sale price is fixed: if the gold price falls 15%, the customer still owes 10,800 euros and bears the loss alone.
No late-payment penalty that profits the bank
If an instalment is missed, the contract may impose a charge paid to charity to discipline the debtor, but the bank cannot raise its margin or compound the arrears. It may, however, sell the pledged gold to settle the outstanding debt.
Holding gold through a metal account or listed fund
Several Islamic banks offer gold accounts in which customers buy grams at the day's price. Compliance depends on allocation: the account must match metal actually stored, and the customer must be able to request physical delivery, sometimes for a fee.
Allocated or unallocated account: a decisive difference
In an allocated account, identified bars belong to the customer and stay off the custodian's balance sheet if it fails. In an unallocated account, the customer is merely a creditor for a quantity of gold, which most scholars consider incompatible with immediate exchange.
Gold-backed ETFs and indexed products: what is accepted
A compliant listed fund must hold physical, allocated bars covering all its units, with no metal lending and no derivatives. Synthetic products, futures and CFDs on gold are excluded because they rely on deferred settlement or bets on the price.
Zakat on gold holdings: threshold and rate
Investment gold reaching the nisab, commonly set at 85 grams, is subject to zakat of 2.5% after one lunar year of ownership. For jewellery that is worn, the schools differ: the Hanafis include it, while most other schools exempt it.
Specialist external source
The Securities Commission Malaysia gathers its guidelines on Islamic capital market products, useful for understanding how a fund or a gold-backed product is regulated.