{"id":2696,"date":"2016-12-05T13:40:42","date_gmt":"2016-12-05T13:40:42","guid":{"rendered":"https:\/\/www.riaabarkergillette.com\/uae\/?p=2696"},"modified":"2016-12-05T13:40:42","modified_gmt":"2016-12-05T13:40:42","slug":"gold-now-accepted-sharia-investment","status":"publish","type":"post","link":"https:\/\/riaabarkergillette.com\/uae\/news-story\/gold-now-accepted-sharia-investment\/","title":{"rendered":"Gold is now an accepted Sharia investment"},"content":{"rendered":"<p>Gold can now be used as an fully-fledged \u201ccommodity\u201d to back Sharia-based financial products.<br \/>\n<script src=\"\/\/api-public.addthis.com\/url\/shares.json?url=http%3A%2F%2Fgulfnews.com%2Fbusiness%2Fsectors%2Finvestment%2Fgold-is-now-an-accepted-sharia-investment-1.1940210&amp;callback=_ate.cbs.rcb_lbbd0\" type=\"text\/javascript\"><\/script><\/p>\n<p>This follows an initiative launched by London based World Gold council and the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) and follows approval from the world\u2019s leading Islamic scholars.<\/p>\n<p>Standards have now been set by which financial institutions can apply Sharia principles in the direct physical handling of gold as well as based on any instructions they might give for the metal to be an underlying asset in any transaction. It will be known as the \u201cSharia Standard No. 57 on Gold and its Trading Controls\u201d.<\/p>\n<p>This immediately raises gold\u2019s prospects to take on a more central role in the global Islamic finance industry, valued at $1.88 trillion (Dh6.91 trillion) in 2015. \u201cThe speed of acceptance depends on the individual country \u2014 lots of Islamic countries have holdings in bars and coins, not modern day gold products,\u201d said Natalie Dempster of World Gold Council. \u201cThis is an opportunity to change that.<\/p>\n<p>\u201cFor the last 18 months, WGC has sought advice from Islamic scholars on their stance to whether it\u2019s permissible to invest in gold. The responses varied from \u201cYes\u201d to \u201cNo\u201d, but the vast majority replied \u201cThey didn\u2019t know\u201d. There was always that risk of not knowing.<\/p>\n<p>\u201cNow, clear rules have been set out related to trading and structured gold-backed products.\u201d<\/p>\n<p>The earlier doubts on gold\u2019s status as a financial instrument related to its historic status as a \u201cribawi\u201d, which are everyday commodities in Islamic culture. This meant that stringent transaction rules were in effect to \u201cprevent injustice or inequality between transacting parties\u201d. This meant that \u201cribawi items must be transferred immediately\u201d.<!-- Fact Box description starts here--><!-- Fact Box description ends here--><\/p>\n<p>This meant that gold products had to be spot traded. Another debate swirled around whether gold is a currency or a commodity, \u201cmaking the design of consistent Sharia rules for modern gold products more difficult\u201d.<\/p>\n<p>\u201cNow that the standards have been set, there is a lot of pent-up demand to bring gold-backed Sharia instruments to market,\u201d said Dempster.<!-- Fact Box description starts here--><!-- Fact Box description ends here--><\/p>\n<p>Discussions on the new standard were finalised at the AAOIFI Sharia Board meeting on November 17-19, where the final wording was approved. The development incorporated a consultation period \u2014 including public hearing sessions involving key stakeholders \u2014 to ensure that the final standard \u201cwould be a practical tool for the industry\u201d.<!-- Fact Box description starts here--><!-- Fact Box description ends here--><\/p>\n<p>According to Dempster, the Islamic principles do not extend to the mining and sourcing of the metal \u2014 \u201cThere are already established standards that are applied by the OECD on these activities.\u201d<!-- Fact Box description starts here--><!-- Fact Box description ends here--><\/p>\n<p>According to the WGC, gold is less volatile than major Islamic equity indices, REITs (real estate investment trusts) and the Takaful index. And \u201cwhile it can be more volatile than sukuk, it can be a safer asset class because it carries no credit risk or third-party liability.\u201d<!-- Fact Box description starts here--><!-- Fact Box description ends here--><\/p>\n<p>Moreover, gold has brought about better returns than other major Sharia-compliant asset classes in recent times, It has outperformed such assets by 8 per cent over the past eight years and by 28 per cent in the year-to-date.<!-- Fact Box description starts here--><!-- Fact Box description ends here--><\/p>\n<p>According to Dr Hamed Hassan Merah, Secretary-General of AAOIFI, \u201cOne of the reasons for making this standard a priority was to ensure appropriate products are available as investment solutions within Sharia-compliant options, as well as to help manage liquidity for Islamic financial institutions. This standard &#8230; won\u2019t simply enable more Sharia-compliant investment; it may lead towards revolutionary change within the Islamic finance and investment community.\u201d<\/p>\n<p>Source: <a href=\"http:\/\/gulfnews.com\/business\/sectors\/investment\/gold-is-now-an-accepted-sharia-investment-1.1940210\">Gulf News:\u00a0Gold is now an accepted Sharia investment<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The move could ensure the metal a central role in the $1.8t Islamic finance industry<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_coblocks_attr":"","_coblocks_dimensions":"","_coblocks_responsive_height":"","_coblocks_accordion_ie_support":"","footnotes":""},"categories":[9],"tags":[65],"class_list":["post-2696","post","type-post","status-publish","format-standard","hentry","category-news-story","tag-islamic-finance"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.2 - 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