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Is It Permissible To Invest in Gold/Silver ETFs (Exchange-Traded Funds)?

Answered as per Hanafi Fiqh by Seekersguidance.org

Answered by Shaykh Faraz A. Khan

Question: Are gold and silver ETFs permissible to buy through an online brokerage?

Answer: Assalamu alaikum wa rahmatullah,

I pray this finds you in the best of health and states.

Investing in gold/silver ETFs that are not sharia-compliant is most likely impermissible.

According to Islamic law, a condition for monetary exchange (sarf) is immediate transfer. [Maydani, Lubab]

This would not seem to be fulfilled with the allocation of gold/silver in conventional ETFs, where one’s investment is not directly related to specific bars of precious metal.

Also, conventional ETFs often transact in speculative derivatives market (futures, options, etc) to hedge against price fluctuations, and they have money parked in debt instruments. These are deemed unlawful.

One could instead seek sharia-compliant alternatives, in which one’s investment is backed by physical, allocated gold held in safe-keeping.

And Allah knows best.

Checked & Approved by Faraz Rabbani

This answer was collected from Seekersguidance.org. It’s an online learning platform overseen by Sheikh Faraz Rabbani. All courses are free. They also have in-person classes in Canada.

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