Sharia Gold Standard – $2 Trillion In Assets “Could Send Price Soaring”
SilverDoctors.com
May 5, 2016
The coming ‘sharia gold standard’ or shariah compliant gold could lead to a very significant source of new demand for physical gold coins and bars in the Islamic world.
It is believed that this will contribute to much higher gold prices and gold “soaring” as some of the $2 trillion in assets held in Islamic financial institutions are allocated to the very small physical global gold market.
“The Islamic finance entry into gold market could definitely shake the gold market as Islamic financial institutions around the world, which hold around $2 trillion in assets and are expected to double that asset base up to 2020, would certainly unleash large funds to participate in the Shariah-compliant gold trade” according to the Gulf Times:
“On the outlook for new investment opportunities, the rapidly growing Islamic finance industry has set sight on the gold market as initiatives are underway to establish a new standard to make the metal tradable under Shariah finance rules, eliminating disputes among scholars whether gold is to be treated as a currency or as a commodity.
So far, Islamic investors have been reluctant to invest in gold because to do so, they would need the metal in physical form as an underlying asset, which is rarely the case in conventional gold trade. Because of that, broadly traded gold futures do not qualify as a Shariah-compliant investment. Other conventional gold-based financial offerings in the form of derivatives are also widely viewed as unacceptable for Islamic scholars.
London-headquartered World Gold Council (WGC), together with Kuala Lumpur-based Amanie Advisors, an independent advisory firm on Shariah investments and the Accounting and Auditing Organisation for Islamic Financial Institutions in Bahrain, now have been developing a “Shariah Standard on Gold” which aims at “providing guidance from the Shariah perspective on the usage of gold in financial and investment transactions for Islamic financial institutions and participants,” as WGC head Natalie Dempster puts it.
There are still different opinions among scholars about the classification of gold either as a commodity or a currency, referring to its previous use as gold coins.
The Rest…HERE
