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With the recent parabolic rise (and fall) in the value of precious metal, particularly gold and silver, many people fall into FOMO (fear of missing out) and make reckless investment decisions, believing they can make a quick profit. Attempting to time financial markets is foolish, especially when competing against seasoned institutional investors, hedge funds, and banks that can easily influence prices through artificial demand and market manipulation.
Many individuals are drawn into trading gold and silver through popular investment and trading apps. Trading precious metals in this manner is ḥarām, and any gains derived from it are illicit. In such apps, no real asset is being bought or sold. There is neither actual ownership nor physical or constructive possession of gold or silver. Instead, you are merely speculating on price movements, effectively betting on market fluctuations.
ETFs, CFDs, futures contracts, and similar derivatives, which are usually offered on these platforms, fall into this category. They do not represent real ownership of gold or silver and therefore constitute harām speculative activity and gambling-like transactions.
By contrast, purchasing real gold and silver and taking proper ownership, whether physical or valid constructive possession, is permissible. This distinction is fundamental: ownership of the asset itself versus merely trading its price.
Gold and silver fall into a special type of asset class in Islamic commercial law, with distinct and strict rules governing their exchange. These rules are agreed upon by all four schools of fiqh. Anyone unaware of these rules is not permitted to engage in trading or investing in physical gold and silver before learning them, as ignorance in such matters leads to engaging in ḥarām transactions.
Muhammad Kalim Misbahi
