Gold Dinar as Halal Money

12 Jul

By Vivy Yusof, Halal Journal

Many are aware of the concept of Halal money, but to them, Halal money is money obtained in an honest way, which means not by gambling. There is a bigger issue to be addressed regarding Halal money, and the secret lies within the currency note itself. If I told you that your RM50 note is worth nothing, would you believe me?

This all comes down to history. Let’s recap: in the 1800s, colonies robbed us by monopolising our land, taking our resources. In return, they issued a paper IOU, which is a promise to pay, signed by their companies involved. While waiting and wishing for our tangible returns, the IOUs were circulated and used by us, as a medium to trade. The paper IOUs gradually decreased in size and were beautified by pictures of the rulers.

Soon, they were accepted as a medium of exchange, and known to all of us as Money, something we all chase for to survive. This shows that while God has given Muslim countries so much richness such as oil, precious metals and fertile land, we generously hand them over to others and succumb to their manipulations. Paper money as a dishonest tool is a highly sensitive topic to touch upon, and determining the Halal aspect of it would be best left to the Ulamas to decide.

However, we can all use our common sense with this simple example. The third pillar of Islam urges Muslims to pay Zakat, which is the act of giving a proportion of our income to the poor. Zakat is only to be paid with tangible goods, such as gold, goats, and camels. Many Muslims just shake off their Zakat responsibility by paying using paper money. Considering the origins and history of paper money, being just a promise to pay, is our Zakat accepted in Islam?

Ultimately, paper money symbolises a debt, and in Islamic law, a debt cannot be used as a medium of exchange. Zakat has to be paid with honest and Halal money, and what springs to mind is the obvious; Dinar. This 100 per cent gold coin fits the requirement of Halal as it has value and is tangible merchandise.

One of the persons most passionate about Gold Dinar is Umar Ibrahim Vadillo, who wrote The Return of the Islamic Gold Dinar. He is one of those who believe strongly that any true Muslim carries the responsibility to reject paper money. To him, paper money is a form of “fraud” despised by Allah and therefore, the absolute worst thing a Muslim can do is to use it. He believes the only means of exchange allowed by Syariah law are gold Dinar and silver Dirham. He quotes the words of Imam-ad-Dean Ahmad which says, “Muslims cannot escape the fact that gold is our money. Instead of fighting the will of Allah, I propose that we embrace it. If the 1 billion Muslims of the world would use gold as their unit of account, the volatility would stabilise.”

There is another person closer to our hearts fighting for the good of gold Dinar; Malaysia’s former Prime Minister, Tun Dr. Mahathir Mohamed. In 2003, he, along with his economic adviser, Tan Sri Nor Mohamed Yakcop, proposed the introduction of Islamic gold Dinar as currency to be used for international trade among the Muslim countries. Reason for this is to suppress the overly-traded US dollars and to ensure that the US dollar’s instability does not affect our international trade. Islamic gold Dinar is more stable in the sense that it is tied to the price of gold.

The idea of using gold instead of the paper money is understandably a bizarre one to many. We might not be able to imagine people going about their everyday lives carrying bags of gold instead of thin currency notes. However, shouldn’t we be patient and open-minded so as to see the other side of the story, perhaps the better side? So, why gold?

As elaborated by Umar Ibrahim in his book, gold is an asset that is no one else’s liability. According to him, paper assets (bonds, shares etc) are promises to repay money borrowed, and its value is dependent upon the investor’s belief that the promise will be fulfilled. Gold by itself is a precious metal. No one can deny that gold is valuable and always treasured. Gold cannot be created or destroyed, whereas paper money can be easily torn, burned or created numerously. Only a fool would turn down the idea of receiving gold. Also, gold would not contribute to inflation problems.

For example, during Prophet Muhammad’s (peace be upon him) time, a chicken costs 1 Dirham (silver). Today, a chicken still costs approximately 1 Dirham. Therefore, within over a thousand of years, the effect silver had on inflation is virtually zero. On the other hand, the existence of paper money has caused prices to increase ten-folds! The value of gold is independent of the financial system, whereas the value of currencies depends on the strength of their countries. If we wanted stability, the obvious answer would be to choose gold. Gold Dinar is already used in some Islamic countries, but still very small-scaled. The World Islamic Trading Organisation, following the standards of Umar ibn Al-Khattab, established that one Dinar is equivalent to 4.25g of 22K gold and 23mm in its diameter size. In recent years, China is also showing affinity to gold, as their people are encouraged to buy and trade gold.

The Chinese government is committed to increase their gold reserves to reduce reliance on the US dollar. India is another example of a country that has a high demand of gold. The Indians find gold as a commodity of immense value in their religious beliefs, and feel that gold is the only form of protection for Indian rupees against the US dollar. Currently there are 1.3 billion Chinese, 1.1 billion Indians and 1.8 billion Muslims, together representing more than 60 per cent of the world population.

If we unite to use gold as currency, there would be a definite shift of power to the East. Imam Malik defined money as “any merchandise commonly accepted as a medium of exchange.” In the past, when people were free to choose, they chose gold and silver as their money, as their medium of exchange.

Now, we are legally forced to succumb and agree to the use of paper currency. Perhaps, if we are given the freedom to choose again, it would be a completely different scenario, and gold and silver would enter the picture again. Increasing awareness of the importance of gold Dinar is a success for the Muslims.

More people are accepting that it is more Islamic to use gold as currency. More people are believing that monetary crisis we face these days are caused by paper money, which can be printed over and over again. More people are realising that this repetitive problem will never stop unless something is changed. More people are opening their eyes, but sadly, only a handful of them are opening their mouths to make a difference.

When asked about if the introduction of an Islamic Gold Dinar could be realised, Tun Dr Mahathir replied, “This is not a dream, it can be realised.” To many, it is still a dream. Granted, the replacement of paper currency is a difficult thing to do, but with comprehensive research and meticulous planning, it can be done. All we need to do is be able to understand, accept and adapt to a new era, a Halal-certified one.

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Posted by on July 12, 2009 in Uncategorized


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