[MyLeva]

Salam Alaykum,

Is there anyone who does trading of gold or silver (in a Halal manner), and who is acquainted with the market? I would like to see the possibilities of investing in such a market, if I can find the correct person to guide me.

[sicheAscems]

I do not trade in gold/silver. so my advice would be of limited value.
I'll approach your enquiry in three parts.

Regarding Silver - Silver is a very speculative product. Due to the nature of the metal, it is 'famous', this means it invites small-time investors to purchase the metal. Because small-time investors, i.e. you and I, have very little money compared with big banks and commodity traders, it means our investments can be manipulated by these traders through price volatility etc. Therefore I would exercise extreme caution in investing in this. Of course, it is dependent on your time horizon - i will tackle that in last part.
Recent article on silver, written from a short-medium term perspective - http://seekingalpha.com/article/8345...as-room-to-run

Regarding Gold - Gold is very interesting. We have had a bull market in gold for about 10 years - with prices stagnant for about a year. Gold is driven by about 3 things - rising demand in China (recent trend from last 20 years), rising demand in India (india has been the biggest buyer in gold for the last 1000 years probably lol and probably has more than half of the world's total gold outside of central banks) - and the final driver - speculation.... so tackling each in turn - China at some point is about to have an economic crash - it may not last long, but it will happen soon enough - all the indications are there - and certainly commodity prices are crashing to reflect this.. e.g. copper prices... also, there is a theory that Chinese rich people were only buying gold because they had nothing else to invest in, and now they are literally running away with their money to america etc (capital flight).. rising demand in India - this is stable, always has been, and always will be - those brides need GOLD and heaven forbid hindus turn away from Laxmi and not buy their brides ostentatious amounts of Gold!
Finally the speculation bit - this is a tricky one - gold traditionally serves as a hedge against inflation (for obvious reasons) - and as a store of value during periods of recession and economic stagnation. We are of course still in that period in the west. Furthermore, with quantitive easing, the west is awash in money - just so everyone knows, this is basically what happened.
1) Central bank magically creates money
2) uses it to purchase its own government bonds
3) that money (in excess of $1 trillion) - then has to go elsewhere
4) many of those investors then flocked to other 'safe' investments, one of these includes Gold..

as the economy recovers, my theory would be that gold prices will fall, as quantative easing is reduced, and investors seek returns in more profitable asset classes.

which brings me to part 3
Is gold suitable as an investment?
This is debateable - in the long run, it serves as a store of constant value. So, and this is blindingly obvious, 1 ounce of gold in 2012,will be 1 ounce of gold in 2112. It's actual cash value will change in that time, sometimes it will be more than expected, sometimes less - but it can be expected it will purchase roughly the same amount of goods in 100 years time as it does today.
So why do people 'invest' in it? two reasons a) they don't understand the difference between investment, and storing value. b) they think its currently undervalued, and it will recover to its long term trend.
A) - does happen a lot, but as a value storage it is fine
B) it is difficult to argue that gold is currently undervalued after having risen 7 fold in 10 years - but its possible. Some people predict a tripling of price in the next 10 years ( i don't buy it, but some people subscribe to that theory)

Finally if you purchase Gold and treat it as a store of value.. What about Zakat?
If you have 1kg of gold, and you give 2.5% of it every year in zakat, after 10 years you will have - 0.776kg of gold
23% gone.
And therein to me lies why we have zakat. if people cannot find better things to invest in, Allah swt's Qadr is for that money to be transferred to people who genuinely need it. Therefore, if we do not want to 'lose', 23% of our investment, we have to find riskier, potentially more profitable things to invest in.
I for example invest in stocks ( a very tiny amount), but with long term growth of stocks at 10%, Inshallah i feel that is enough to pay my zakat, and to deliver a return on my investment..

Regarding your gold/silver purchases - go to seekingalpha.com - read the articles - think about what you want from what you do..
and inshallah you will come to an informed decision..
and most of all - do not rush your decision.

[MightyMasd]

Salam alaykum,

I aws askinga bout Gold and Silver since one financial adviser told me that this was desirable at the moment. But if any of the members are personally involved in some other field which is Shariah compliant and can give a good return, I can look into that too.

The truth is that I am only starting to consider putting my money somewhere, so I may be somewhat conservative at this stage until I learn more about the different options available.

[Depolit]

These are Muslim and trustworthy

http://www.ayngold.com/

You do have to pay Zakaat on any gold or silver that you own, however paying Zakaat should not be looked at as 'a tax'. By paying it you may be opening up more blessings for yourself in this world before your death even.


There are products that sell gold/silver paper certificates not actual physical gold/silver. These paper certificates also determine the price of physical gold/silver and is used by people in finance to manipulate the price. So JP Morgan for example has sold lots of paper silver certificates...if the price goes very high for silver and the people holding the certificates ask for physical silver from JP Morgan, they will not be able to deliver...they will go bust...so they try to manipulate the price.

[Khcyhshq]

These are Muslim and trustworthy

http://www.ayngold.com/

You do have to pay Zakaat on any gold or silver that you own, however paying Zakaat should not be looked at as 'a tax'. By paying it you may be opening up more blessings for yourself in this world before your death even.


There are products that sell gold/silver paper certificates not actual physical gold/silver. These paper certificates also determine the price of physical gold/silver and is used by people in finance to manipulate the price. So JP Morgan for example has sold lots of paper silver certificates...if the price goes very high for silver and the people holding the certificates ask for physical silver from JP Morgan, they will not be able to deliver...they will go bust...so they try to manipulate the price.

I agree zakat must not be viewed as a tax, but certainly if one has savings, it should focus the mind on trying to achieve a profit of at least 2.5% per annum.
I also agree with you regarding these paper certificates. i think they are called ETFs, very dodgy indeed - I have a bad feeling about what they are going to do to the prices. Cause un-necessary volatility certainly.