Honest Money

The Shariah prohibits the borrowing or loaning out of precious metal

If that precious metal is money, then money can not be borrowed or loaned out under the Shariah?

Investors look for safe asset classes
Mushtak Parker | Arab News
Monday 13 July 2009 (20 Rajab 1430)
http://www.arabnews.com/?page=6§ion=0&article=124504&d=13&m=7&y=2009
SNIP
LONDON: In the aftermath of the global credit crunch and financial crisis, investors have been increasingly on the lookout for value-added and safe asset classes. In the emerging asset classes of exchange traded funds (ETFs) and commodities (ETCs), for instance, investors have tended to favor physically-backed precious metals especially gold, whose price has been appreciating over the last few months. Indeed, commodities in general including oil, gas, coal agricultural products and of course precious metals have been outperforming traditional asset classes such as real estate and equities.
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According to Tim Harvey [head of EMEA sales at ETF Securities Ltd.], ETF securities physically backed precious metal exchange traded commodities are Shariah-compliant.
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Consistent with allocated gold, no precious metal is borrowed, loaned out and nor does it earn any income.
UNSNIP

Islamic banks are not able to create money out of nothing or without the backing of real assets, as is the case in the conventional system today.
(Muhammad Ayub, “Understanding Islamic finance”, John Wiley & Sons, 2007, p. 92)

Indeed,
the Holy Koran says in Verse 161 of Surah An Nisaa’:
That they took usury, though they were forbidden; and that they devoured men’s substance wrongfully;- we have prepared for those among them who reject faith a grievous punishment.

And,
when one party gives something of value
and the other party pays him with something,
in this case paper, of no value,
and when one party’s wealth is created out of thin air,
while the other party has to slave and earn to pay off the ill-gotten credit or loan,
this is devouring of other people’s wealth.

Therefore,
all money in Islam must be something of value.

But if the Shariah prohibits precious metal to be borrowed or loaned out
then
if that something of value which is money in Islam is a precious metal,
that money, precious metal, can not be borrowed or loaned out  ?????

I am surprised by my conclusion, which conclusion is wrong, I suppose.

Comments welcome.

Ivo Cerckel
honestmoney@maktoob.com
http://twitter.com/ivocerckel/

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