I would like to know if there is any islamic way of saving our cash savings from inflationary devaluation of currency.
One possible avenue of saving your cash from devaluation and inflation is to purchase gold or silver. These two precious metals have always been used as a stable form of currency whose purchasing power remains stable despite fluctuations in other currencies. In relation to gold and silver, at times currencies gain value and at other times, they lose their value; thus, the element of risk remains in regards to possible profit. It is important to bear in mind that investing in gold or silver is merely an avenue to safeguard against devaluation and not financial advice for financial gain.
If the currency with which you are purchasing gold, e.g. dollars, happens to increase in value, the price of gold will decrease respectively. In contrast, if the dollar decreases in value, the price of gold will increase. If, for example, you have $100,000 and then purchased gold at $850 per ounce (roughly 117 ounces); then, if the dollar loses its value, the price of gold will increase e.g. $900 per ounce. If you sell the gold after the devaluation, you will have $105,882. The extra $5,882 will offset devaluation of the currency.
And Allah knows best
Ml. Yusuf bin Yaqub,
Student Darul Iftaa
Checked and Approved by:
Muhammed Zakariyya Desai,
Assistant Mufti
Darul Iftaa, Madrassah In’aamiyyah