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Exchanging gold jewelery

Answered as per Hanafi Fiqh by Qibla.com

Answered by Sidi Salman Younas

In Pakistan it is common for women to exchange their old gold jewelery for new designs. In this transaction the old jewelery has more gold content than the new one, the newer one being more expensive because it includes the cost of the designing. So, for instance, the woman will give jewelery that is 10 g of gold and get in return jewelery that is 8 g with the extra 2 g paying for the cost of the designing. Is this riba?

Answer:
In the Name of Allah, Most Gracious, Most Merciful

salamu `alaykum

I pray you are well and in the best of health.

This relates to the rulings on sarf (momentary exchange). Such an exchange can fundamentally involve:

[a] Exchanging items of the same currency-type e.g. gold for gold, silver for silver, or
[b] Exchanging items of varying currency-types e.g. gold for silver,

Imam Quduri states in his Mukhtasar:
“If one sells silver in exchange for silver, or gold in exchange for gold, it would not be permitted unless it is an equivalent amount for an equivalent amount – even if they differ between each other in quality and formation.”
This is because of the clear prophetic stipulations prohibiting this practice, and it being considered akin to riba. It is narrated that the Prophet (Allah bless him and grant him peace) said, “Do not transact gold for gold except an equivalent for an equivalent, and silver for silver except an equivalent for an equivalent…” (Tirmidhi, bab maa jaa’ al sarf)

Similarly, it is narrated from Abu Bakara (Allah be well-pleased with him), “The Prophet (Allah bless him and grant him peace) prohibited [the exchange] of silver for silver, and gold for gold, unless it was an equivalent amount for an equivalent amount…” (Bukhari and Muslim; Nasb al-Raya, bab al riba).

In other narrations, the Prophet (Allah bless him and grant him peace) explicitly referred to such sales as ribawi in nature, when non-equivalent in exchange. (Ibid)

However, such a ruling does not apply when exchanging items of varying currency-types, such as gold for silver [s: as opposed to gold for gold, or silver for silver] wherein the condition of equivalency in amount does not exist.
Thus, the scenario mentioned in the question is not permissible and one must avoiding transacting in such exchanges at all costs – regardless of whether the gold one is exchanging for is of better quality or craftsmanship as the texts explicitly make clear.

An alternative way around this, to avoid the impermissible implications of direct exchange in such a sale, is to divide the sale into two parts, namely:

[1] Selling the gold one possesses at a specified price e.g. “I’ll sell this gold to you for $1000”, then
[2] Purchasing the gold one was exchanging his old gold for with that payment due.

For example, if one intended to exchange one’s 10g gold necklace for an 8g one of higher quality exchanging it directly would be prohibited. However, suppose the 8g necklace cost $1500, one could agree to sell one’s 10g necklace for this same amount of $1500 to the person with whom one is exchanging. Then, one can purchase the 8g necklace and simply write-off the money owed by the person one is exchanging with. As you can see here, the payment itself is not even a condition and it is therefore a very simple way around the whole issue. [One should note here that a person should not merely make a promisary agreement when it comes to selling the gold in such a way but ensure that an *actual* sale takes place – meaning with proper offer and acceptance]

In the end, it is crucial to learn the fiqh of transactions to avoid falling into the impermissible especially since it is an aspect that affects us on so many levels. Many of the scholars preferred to discuss the sections on transactions before those of marriage and other issues namely because of the widespread indulgence of people in it, at every juncture of life, thus showing how important it is. Insha’Allah, with the sincere intention of following Allah and His Messenger (Allah bless him and grant him peace) in all of one’s dealing a person will only see blessings entering his life, and the reward of the next world is something else that the mind cannot imagine.

Wasalam
Salman
Approved by Faraz Rabbani

This answer was indexed from Qibla.com, which used to have a repository of Islamic Q&A answered by various scholars. The website is no longer in existence. It has now been transformed into a learning portal with paid Islamic course offering under the brand of Kiflayn.

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