Islamic Investors

Guernsey Gold Islamic Section

In the time of the Prophet Mohammed (صلى الله عليه وسلم‎)) gold and silver were simply a form of currency for the purpose of buying and selling goods. Their universal value ensured that there was no need for foreign exchange. He taught that money should not be used to make money without an economic outcome which is otherwise known as usury; a practice that was forbidden by our wise ancestors. The avoidance of interest ensured that the sharing of risk and reward became a pre-requisite for business transactions. Without this restraint, the increase of money without work becomes highly destructive, as has been amply demonstrated by the credit crisis. This prohibition of riba applies to more than just interest but also to many forms of destructive finance. Western banking is typified by an imbalance of risk and reward in favour of the institution where interest acts as a sugar coating for toxic financial practices. These include speculation and the inflationary effect of credit creation which ultimately impoverishes the public. This was also well understood by the Founding Fathers of America, who wrote the US Constitution in the same year as the French Revolution, which was the end result of a debt crisis. When gold and silver were currencies, money could not be mass produced through trickery and deception as the evidence of forgery could be seen or felt in the coinage. Since the end of the Gold Standard in the 1970's, money has steadily been diluted and devalued resulting in asset price inflation and a surge in government and household debt.

While it is acceptable to buy bullion in Islam, hoarding is of course haram, or forbidden. This approach applies as much to food and knowledge as it does to wealth. These are gifts from Allah (swt) and are meant to be shared. To avoid the purchase of gold becoming a form of hoarding, it is essential that any bullion stored or possessed by a Muslim be included as part of their annual Zakat calculation. Islamic investors can be reassured that they will only be buying bullion that we have in stock so that we avoid selling an item that we do not already own. This prevents the forbidden practice short selling. Although conventional insurance is used for the storage and postage of precious metals this is acceptable because the gold is not yet in the client's possession. If Muslims wish to use Guernsey Gold to sell their bullion then we can be appointed as their agent to find a purchaser and agree an acceptable price. Like any other investment, gold should not be traded for speculative purposes.