Breaking news: Islamic investors to push gold prices… a lot higher
Trading gold as a commodity has always been a subject of debate among Islamic scholars. Religious laws give conflicting advice about gold investments, but that is about to change radically.
What is happening with gold in countries like Bahrain, Qatar, Indonesia, Saudi Arabia, or Malaysia and how will that impact prices? Read on and find out how Islamic investors are to revolutionize the world’s gold market.
To date, gold is mainly used as a currency or owned as jewelry in Islamic countries due to the Sharia law. This means that gold is a “Ribawi item”. In other words, Muslims cannot consider gold as a financial protection for their future because of religious laws. But that will be no longer the case.
A new gold standard
The new gold standard is called “Sharia Gold Standard”, and it is the result of an agreement among scholars. It will clarify Islamic gold-investing rules and will allow approximately 100 million active Muslim investors to have gold as an investment option in 2017.
The potential of Muslim gold buyers in the world market
If only a small percentage of the money invested in Islamic finance assets move into gold in 2017, the gold market will have a huge new source of demand.
Let’s compare this to China’s demand. China is a huge gold buyer. During the past year only, the country’s demand for gold amounted to 1,000 tonnes. Given the current gold prices, if Islamic investors opt for gold this year, their demand would practically equal China’s. And this means another 1,000 tonnes of extra demand.
The impact of the new demand
Once the Sharia Gold Standard is adopted, countries like Bahrain, Qatar, Indonesia, Saudi Arabia, or Malaysia will massively start investing in gold products like ETFs, which are already very popular in the rest of the world.
“Muslim investors will quickly embrace gold investments because gold has historically been the choice of individual Muslims desirous of preserving wealth and value.”
Yusuf DeLorenzo, an AAOIFI member
(Accounting and Auditing Organization for Islamic Financial Institutions)
A huge new source of demand will soon enter the market… And this could push gold prices a lot higher in 2017. It is only a matter of time: this is only the beginning of a golden year.