The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) and the World Gold Council have made an important decision which was announced yesterday at the World Islamic Banking Conference in Bahrain.
This decision is about one of the most important markets in the world: the gold market, an invest-able market worth an estimated $2.4 trillion and is also of significance for the world of Islamic finance.
The sharia gold standard announced yesterday allows the over 110 million investors in the Islamic world to invest in
a) vaulted gold
b) gold savings plans (such as GoldCore’s GoldSaver)
c) gold certificates
d) physical gold ETFs including “probably” the SPDR Gold Trust, the biggest exchange-traded gold (GLD)
e) gold mining shares (within certain Shari’ah parameters)
We know three things that the new Shariah gold-standard will achieve:
a) Increase diversity in the number of available Shariah gold compliant investment products
b) Greater emphasis on the role of physical gold in gold transactions
c) Islamic finance will have greater say in the setting of the gold price