The permissible Method of selling Gold for Gold
Question :
I went to the gold merchant with a collection of old jewelry. Then, he weighed it and said that its value was 1,500 riyals. Then, I bought new jewelry from him for 1,800 riyals. Is it permissible for me to pay him only 300 riyals (the difference) or do I have to take the 1,500 riyals then give him 1,800 riyals all together?
Answer:
It is not permissible to sell gold for gold, except like for like and the same for the same. It must be weight for weight and hand to hand (i.e., paid on the spot). This is due to a statement from the Prophet, as is reported in the authentic Hadiths, even if the type of gold differs, such as in newness and oldness or other than that from the types of differences. Likewise, silver is to be traded silver for silver.
The permissible method is that the person who wants to purchase gold for gold sells what he has of gold for silver or some other money currency. He takes the price, and then he buys what he needs of gold with its price in silver or money currency. This is to be paid on the spot, because the money is considered as having the status of gold and silver in the process of Riba when selling some of it for some and when selling gold and silver for it.
However, if the person sells the gold or the silver with something other than cash, such as cars, goods, sugar and similar things, there is no harm in the people separating before the payment is received. This is because there is no process of Riba between the currencies of gold, silver and money and these mentioned things and whatever is similar to them.
Also, the time of payment must be made clear if the sale is based on the payment being made later. This is due to Allâh's Statement:
"O you who believe, when you contract a debt for a fixed period, write it down."
Source:
Ash-Shaykh Ibn Baz
Fatawa Islamiyah, Vol. 4 Pages 391-392
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