Following a month of open discussion and commentary, the Accounting and Auditing Organisation for Islamic Financial
Institutions (AAOIFI) has officially approved a new gold standard under Sharia financial law on Dec. 5.
Coordinating with the World Gold Council for much of 2016, the AAOIFI has formulated the processes and procedures for the 1.6 billion Muslims around the world, and in particular the 110 million Muslims who participate in active investing, to be able to purchase, own, and invest in physical gold and gold based products such as mining shares.
The sharia gold standard announced yesterday allows the over 110 million investors in the Islamic world to invest in:
a) vaulted gold
b) gold savings plans (such as GoldCore's GoldSaver)
c) gold certificates
d) physical gold ETFs including "probably" the SPDR Gold Trust, the biggest exchange-traded gold (GLD)
e) gold mining shares (within certain Shari’ah parameters)
We know three things that the new Shariah gold-standard will achieve:
a) Increase diversity in the number of available Shariah gold compliant investment products
b) Greater emphasis on the role of physical gold in gold transactions
c) Islamic finance will have greater say in the setting of the gold price
To some, this may appear to be an unnecessary formality taken by the body whose guidelines are followed by Islamic finance institutions across the world. After all, physical gold is Shariah-compliant and holds a unique status for Muslims.
AAIOFI states, "From the perspective of Islamic Fiqh and the Islamic economic system, gold has its specific significance. This significance arises from the specific principles provided for gold and silver as Thaman in Shari'ah."
According to Islamic texts, gold is a ribawi item, which means that it must be sold on weight and measure, and cannot be traded for future value or for speculation. In order for a gold instrument to be Shariah-compliant, the precious metal must be the underlying asset in related transactions. - Goldcore via Zerohedge