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Comex gold contracts likely no good for Islamic finance plan
Gold Standard in Islamic Finance 'Almost There' for Submission
By Claudia Carpenter
Monday, April 10, 2016
Gold products used in Islamic finance would need to be physically-backed and allocated to the underlying asset, according to a draft of a standard for Shariah gold being developed.
"We are almost there" with a final proposal, said Mohd Daud Bakar, a Shariah scholar who is writing the draft for the Accounting and Auditing Organisation for Islamic Financial Institutions, the Bahrain-based industry group that sets Shariah standards in finance.
The committee, formed to develop the gold standard, will meet once more next Sunday and then submit the proposal to AAOIFI’s Shariah Board, he said in an interview in Dubai on Sunday.
A gold standard stands to boost demand for the metal as most Shariah buyers can only invest in real estate, Islamic bonds and some stocks. Because of the physical backing requirement, Comex gold futures wouldn't qualify to be Shariah-compliant while the Singapore gold contract would, according to Matthew Keen, founder of Evidens Consultancy in Dubai.
"Hundreds of tons" of new demand could be created, said Natalie Dempster, a managing director of the World Gold Council. "The standard would fill an important gap in the market." ...
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