Purchasing Gold in Islamic Banking:

Challenges and Solutions for the Digital Economy

Basel Alshaer

 

Abstract: This article examines gold purchases in Islamic financing, specifically highlighting the challenges posed by the application of jurisprudence in the current digital age. There are six commodities classified as ‘Ribawi (usurious) commodities,’ and the process of gold purchase requires both Taqabud (delivery) and Tamathul (equality), involving immediate delivery. Contrary to conventional purchases, however, the adoption of digital technology and Gold Investment Accounts (GIAs) by Islamic Banks has raised issues related to delayed possession, legal uncertainties in instalment purchases, and the possibility of fractional reservation. By adopting a system of analysis rooted in AAOIFI’s Shari’ah Standard No. 57, the analysis evaluates these issues using classical jurisprudential foundations. This article argues that in light of increased convenience and accessibility, ‘fintech technology’ should be governed by and rooted in the principles of justice and transparency in Islam. This article proposes a system that hinges on a ‘100 percent reserve system’ and a universally recognised set of norms as a means to preserve the integrity of financial markets in relation to gold.