Category: Riba, Loans and Working in Banks

The ruling on doing Business with Gold

Question :

What is the ruling of someone who does business with gold, meaning he buys gold when its price goes down and he sells it when it increases? For example, he buys an Uqiyah of gold for 30 riyals and when its price goes up, he sells it for 50 riyals. Please give us a beneficial answer regarding the Islamic ruling concerning this. Does it have the same ruling of selling cash for cash?

Answer:

There is no harm in selling gold for gold, as long as it is like for like, weight for weight, the same for the same (in measure) and hand to hand (i.e., paid up front). It makes no difference if the gold is new or old, or if one of them is new and the other is old.

Likewise, there is no harm in selling gold for silver or for paper money, as long as it is paid on the spot. This is due to the Prophet's statement:
"Gold for gold, silver for silver, wheat for wheat, dates for dates, barley for barley, salt for salt, like for like, the same for the same, weight for weight and hand to hand (i.e., paid on the spot). If these types of items differ, then sell however you wish, as long as it is hand to hand (i.e., paid on the spot)."

This was recorded by Muslim in his Sahih.

This is also due to his statement in the Hadith of Abu Sa'id :
"Do not sell gold for gold, except like for like (in measure), and do not prefer some of it over others (ie., selling the same items of different qualities). And do not sell silver for silver, except like for like (in measure), and do not prefer some of it over others (i.e., selling the same items of different qualities). And do not sell either of them by exchanging an absent thing with what is given in full"

The authenticity of this Hadith is agreed upon.

These two authentic Hadiths prove that there is no difference between buying gold for gold for acquisition or for the purpose of profit after the change in prices if the buying and selling are in the manner mentioned in the two Hadiths. And success is from Allâh.