Islamic Gold Investment

 From http://shariah-fortune.com

 How to preserve your money? You can do this by buying tangible assets - we call it real assets. You see we're not talking about paper assets like derivates or whatever artificial financial products nobody understands. We're talking about assets which have survived history - real assets.

One of these assets is gold. Why gold? Because it's a scarce, limited resource. You can not increase or multiply it as you like. That's why gold preserves your money and is what we call a real asset. In the Roman Empire you could have bought a tunic (roman outer garment) for a piece of gold. Nowadays you can buy a tailor-made suit for an ounce of gold. Gold keeps it's value even or especially in insecure times. That's simply the point.

So how do you invest in gold? Basically there are 4 options:

1.     You buy it physically, meaning you go to a bank or a gold shop and buy pieces of gold. Especially when you buy larger amounts this could be a security problem or at least leaves you with storage costs.  Buying physical gold is the easiest way for Muslims, because this is absolutely fine with Shariah-principles as you're in possession of the gold. 
2.          To avoid storage costs you could go for a gold ETF-investment (ETF, Exchange Traded Fund). This means you buy shares of an equity fund, which buys and stores the physical gold for you and other investors. If you for example invest USD 1000 in an gold ETF then they buy gold for USD 1000 (less management fees and costs of the fund) and store it in a secured and insured place. This is easy to do. You just have to go to your bank or broker to buy.
3. When buying a gold-ETF Muslims have to take care of buying an Shariah-compliant    ETF. There's just a few we found which is Al Bogari Islamic Gold, Dubai Gold Securities (DGS) trading on Nasdaq Dubai.
4.  One more option is to invest in gold mines, meaning you buy shares of a gold exploration company. This leaves you with the risk that sometimes the market value of the share is not related to the gold price. 

• For example if the management of the company is doing a bad job then the price of your share could go down, even if the gold price is rising.

Buying shares of goldmines is probably the most challenging investment for Muslims. It involves more efforts for Muslims to invest in gold mines. You have to check carefully if the company is Shariah-compliant. And many companies are not complying with Shariah-principles as they e.g. are financed in conventional ways (no interest is allowed,  usury), etc... If you want to dive into it there is an article we found for you: Shariah-compliance for mining stocks. 

All 3 investment possibilities are in common that you can sell your investment quite easiliy in case you think of cashing in.

Whichever way you chose it is important that you do not put all eggs in one basket. It's not advisable to invest all your money in gold. Economic books talk about a share of around 10-15 % of your assets.