Amid rapid economic developments and evolving methods of trade, the need to regulate financial transactions according to Islamic law has become increasingly pressing—particularly in the gold market, where the metal may function both as money and as a commodity. In this context, Dr. Hisham Rabie, Secretary of Fatwa at Egypt’s Dar Al-Ifta, outlined key rulings and controls governing gold and silver transactions, whether in raw or manufactured form, in addition to issues related to installment sales, consumer financing, and credit cards.
Dr. Rabie stressed that financial dealings constitute a fundamental pillar of religious life, no less significant than acts of worship. Limiting religiosity to rituals alone, he noted, may lead individuals into financial violations due to ignorance of relevant rulings. He cited the Prophetic tradition: “The lawful is clear and the unlawful is clear, and between them are doubtful matters,” emphasizing that ambiguous areas require consultation with qualified scholars.
Delayed Delivery of Gold and Silver
Addressing a common market concern, Rabie explained that purchasing gold bullion or jewelry with full payment made upfront, followed by delayed delivery for logistical or operational reasons, does not constitute usury (riba). In such cases, the transaction is considered a sale of a commodity for a received price—not an exchange of money for money.
Gold in its commodity form—whether bullion or jewelry—is treated as merchandise. Therefore, postponing delivery after full payment does not invalidate the contract, provided the price and delivery date are clearly agreed upon. The legal ruling depends on the substance and purpose of the contract, not merely its outward form.
Understanding the Hadith on Gold-for-Gold Exchange
Rabie clarified that the Prophetic statement, “Do not sell gold for gold except equal for equal,” aims to prevent excess or delay when exchanging items of the same ribawi (usury-prone) category. When gold is exchanged for gold, equality in weight and immediate possession in the same session are required to avoid riba al-fadl (excess) and riba al-nasi’ah (deferred exchange).
If the exchange involves different categories—such as gold for silver or gold for currency—immediate possession remains required, though exact equality is not. The objective of these rulings is to prevent injustice or exploitation when gold functions as money.
Monetary Function (Thamaniyyah) and Gold as a Commodity
Rabie elaborated on the concept of “thamaniyyah” (monetary function), which refers to an item serving as a medium of exchange and standard of value. Historically, gold and silver fulfilled this role, and thus strict anti-usury rules applied when they were exchanged within the same category.
However, once gold undergoes manufacturing and becomes jewelry or crafted items, it acquires a new legal characterization as an industrial commodity with added value derived from labor and craftsmanship. Many contemporary scholars therefore treat manufactured gold as merchandise rather than pure money, allowing it to be sold at market value—including labor costs—provided no usurious elements are involved.
The distinction lies between raw gold—closer to its monetary function—and crafted gold, which becomes a commercial product. The legal cause revolves around economic function, not the mere substance of the metal.
Exchanging Old Gold for New
Rabie addressed the widespread practice of requiring customers to leave a store after selling old gold before purchasing new items. He explained that physically exiting the store is not a religious requirement. What matters is that the old gold is sold in an independent transaction with a known price, followed by a separate purchase of new gold at a clearly agreed market price—without direct gold-for-gold exchange involving excess or delay.
Constructive possession (legal empowerment to dispose of the proceeds) may suffice; physical transfer is not always required. The essence lies in ensuring genuine, independent contracts and avoiding disguised usurious exchange.
Salam and Istisna’ Contracts in Gold
If gold is purchased but not available at the time of contract, with specifications and delivery date clearly defined, the transaction may qualify as a salam contract—provided the full price is paid upfront. Partial payment with deferred balance and vague specifications, however, may introduce uncertainty (gharar).
In cases where gold is manufactured upon customer request, the arrangement may resemble an istisna’ (manufacturing) contract, which many contemporary scholars permit when price, specifications, and delivery timeline are clearly established.
In all scenarios, validity depends on clarity of the object sold, definite pricing, and defined delivery terms.
Reservations and Price Fluctuations
Given gold’s price volatility, Rabie emphasized the importance of fixing the price at the time of contract. Leaving the price subject to future market fluctuations introduces instability and resembles speculative risk. Islamic sales contracts require clarity in both the subject matter and the price.
A binding contract cannot be unilaterally revoked unless mutually agreed upon or stipulated in advance. A pre-agreed penalty clause to compensate for damages may be permissible if clearly defined and mutually accepted, serving as protection rather than profit.
Installment Sales of Gold
Gold may be sold on installment, according to many contemporary scholars, provided several conditions are met:
The total final price must be fixed at the outset.
The number, value, and schedule of installments must be clearly specified.
The price must not be tied to future market changes.
No additional increase may be imposed after the debt is established due to delay.
If the contract represents a sale with a known deferred price, it is valid. However, imposing extra charges on an established debt in exchange for additional time constitutes riba.
Consumer Financing
When a financing company pays the full price of gold to the merchant and the customer repays the company in installments, the arrangement is permissible if the total cost and financing charges are clearly determined from the beginning. In this case, the transaction finances a genuine commodity purchase.
However, practices such as “cash-out” schemes—where a fictitious purchase is used to obtain cash in exchange for repaying a larger amount—amount to a loan with interest and are prohibited as riba.
The determining factor is substance over form: legitimate financing funds real purchases, while disguised cash extraction constitutes usurious lending.
Credit Cards
The ruling on credit cards depends on usage. If the full balance is paid within the grace period and no interest accrues, the transaction is permissible. Once interest begins to accumulate due to late payment, it becomes a loan with excess repayment and thus riba.
Installment credit plans that clearly state the final price, number of months, and installment value at the time of purchase are permissible as deferred sales, provided no variable or compounding interest applies.
Core Principles
Dar Al-Ifta summarized that sound gold transactions rest on four main principles:
A clearly determined final price at contract formation.
Precise identification of the commodity.
Contractual stability without uncertainty or speculation.
Avoidance of excess and delay when exchanging identical ribawi items.
Gold may function either as money or as a manufactured commodity, and rulings follow its economic role. Transparency, documentation, and consultation with qualified scholars remain essential to safeguarding transactions, preventing usury, and maintaining stability in one of the most sensitive and volatile markets.
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