Is Online Gold Trading Halal In Islam?

For some reasons, gold can be considered as good investment. Investors usually invest in gold to hedge against inflation, and due to its scarcity, it is expected to keep its value. Gold, along with other investment, such as stocks and sukuk, can help diversify an investor’s portfolio. Is online gold trading halal in Islam? Trading gold is permissible (halal) in Islam, and it can be traded both online and offline. However, the transaction must meet two requirements:

  1. It should be on a cash basis. The price must be paid to the seller immediately.
  2. The exchange of gold should be made on the spot. The seller must immediately deliver the gold to the buyer or the authorised person to accept it on his behalf.

In trading gold online, the internet company works as a wakeel (agent) to trade on the buyer’s behalf. This means that buyer gives the authority to the online company to trade on his behalf. In this case, the buyer pays the fee to the agent (wakalah or agency fee). The agent must receive the gold and either send it to the buyer or hold it as a trust. The agent cannot make any transaction without consent from the buyer.

As gold is one of the Ribawi items, the investors should carefully select the Shariah-compliant way of investment. There are several ways to invest in gold online in the halal way:


Gold Backed ETFs (Exchange Traded Funds)

Gold-backed ETFs allow investors to monitor the price of gold in general, allowing them to benefit from the characteristics and security of holding physical gold without having to worry about storage and insurance. These gold-backed funds aim to combine the convenience and flexibility of stock-market trading with the advantages of owning actual gold. Investors can buy shares of gold-backed ETFs like stocks on a stock market, keep them in a securities custody account, and sell them at a reasonable cost when they choose.

Note: Muslim investors should check the Shariah-compliance of a specific ETF before investing.

Internet Investment Gold

Through Internet Investment Gold (IIG), investors can buy physical gold online and have it stored professionally on behalf of investors. Over the last decade, the landscape of such products has changed dramatically, with the major providers now holding billions of dollars in gold on behalf of investors.

Gold Mining Stock

The stock of gold mining firms is available for purchase by investors. The stock prices of gold mining companies may have a relationship with the price of gold. However, not only the value of gold but the company’s expected future earnings are also one of the factors in determining the stock’s growth and return. Other factors that affect the gold mining stock such as effective management, production costs, reserves, mine exploration and project development, and other activities. Investment in gold mining firms is usually used as a complementary investment.

Note: Muslim investors should check the Shariah-compliance of a specific stock before investing.

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