Tuesday, October 28, 2008

Muslim Gold Standard

http://www.worldfutures.info/Analysis/Islamic-World/Islamic-World-Wither-a-Muslim-Gold-Standard.html
Islamic World: Wither a Muslim Gold Standard?
Written by Kazi Mahmood
Saturday, 25 October 2008


The last few times we heard of the Muslim world using Gold to replace currency was during the time of Prime Minister Tun Mahathir's reign. He was sure and certain that Gold cold bring the downfall of the paper money era.
Since then, the idea fizzled amid a few attempts at promoting Gold itself as a currency and as a means to make payments internationally. The business of gold minting in Malaysia, which started with a few companies minting gold for sale locally, went bust.



A type of Gold Dinar from UK

One wonders how doing business with gold can go bust but it is a reality in Malaysia since the people involved in the business were after the quick profit, not after the long haul of becoming rich and solid after years of patience and perseverance.

Though it is relevant to sell gold coins, it must be done with much publicity and the right approach. Trying to impose gold as the currency to be carried around does not work in the modern age. People need cards, gold cards that can help carry thousands of dollars around like in credit cards. We are in the age of the digital money too, and the gold coins providers could shift their businesses more into the cyberspace.

Now what about the gold as Islamic currency?

During that period, writing for Islamonline.net, I suggested that we use gold as the standard, not as the currency necessarily and that this will mean backing the currency we use with pure, existing gold stocks. This idea did not take up since it does not bring ready, quick bucks to any of the would be investors in this business.

Now let me tell you about the US. The much hated and much criticized US governments over the years did one right thing. They used gold as the standard and created a unique type of gold currency investment.

This gold currency investment sores in price after gold prices rise. The profit can be huge and dramatically turn the investments into windfall gains, unexpected and much wanted.

How do they do it?

Everybody knows that gold is a safe investment in times of economic chaos--that's why the U.S. mint recently ran out of gold bullion coins to sell to investors (source: The Los Angeles Times).

The US print money, paper money, to pay for its follies and yet the more it prints, the better it is for Gold prices. In that case, you do not need to own gold itself to earn the benefits of the current US policies. What you need is follow the price of gold on the market and invest in gold currencies that exists for decades in the US.


What about the Islamic world?

What the Mahathir followers in the gold coins business failed to understand is how to use a gold standard system to back the Muslim world's currencies. What the US did was to back their currency with gold standards = the US remains one of the major gold hoarding nations on earth.

Simply follow the US principle and integrate gold in the modern currency system by backing one's entire currencies on gold would have created support for gold currency standards but no one will do that since there is no 'profit' to be made by 'brokers'. That is the real problem faced in the Muslim world and it has escaped the promoters of gold currencies in countries like Malaysia.

The question is will there be a gold standard for the Muslim world? There can be such a standard only if the Arab world with the Asians and Africans in the Organization of Islamic Conference (OIC) pushes for gold to become the standard currency to be used to back the existing paper money.

Its a long shot and it may not see the light not with this generation of Muslims anyway.

6 comments:

Anonymous said...

Brother Prof.

Take time to read Dr Habib Dahinden and Dr Umar Ibrahim's papers.


It looks as if most of Muslims senior professors from our local universities, have joined INCEIF and perpetuate what the Jewish Bankers have created for the Muslim world, Riba-based banking and finance.

To legitimize it, the great profesors who have very little Islamic Fiqh, let alone deeper philosophy and metaphysics of Islam, "Islamize" the riba-based banking simply by importing Arab soundign terms to make it 'kosher'.

On the other side, the ustadz and so called "fuqaha" knows little about modern banking and finance, and they simply "pass" thru' most of the financial transactions and securitization instruments as beign "legitimate" syariah complaint.

Yes, indeed, what both the professors and ustadz do are to "cut & paste" or "select from buffet" of verses and hadiths to legitimize "riba-based" banking.

They do this in the name of reform, islamization, progress, ijtihad etc etc.

Few bother to understand the history and events before, during and after the prophet period.

He was using gold dianr and dirham and Umar al khattab INSTITUIONALIZE the gold dinar and silver dirham as syariah currencies.

They were being used for oevr 1000 years until the fall of Uthman Sultanate and the rise of Jewish Banking into the Muslim lands during colonization and continue by ignorant Muslim professors and ustadzes.

Anonymous said...

Interesting post. This is the first that I've heard of the Islamic world seeking a gold standard.

You I've seen reports of runs on gold in Dubai though as investors there were seeking to get out of dollars. So this is indeed interesting news.

You and your readers might find a free widget by Lear Capital useful for tracking the gold market price in real time. Here's the link: ExactPrice.

Mohamad Ali Hassan said...

Thanks hal. Actually there are many such articles on the Muslim quests for the use of gold as a currency that are available on the internet.

Mark Herpel said...

I prefer e-dinar.com which is the electronic version of gold dinar and silver dirham.

Mark
editor@dgcmagazine.com

Anonymous said...

"2. Matematik Kewangan

Semasa menghadiri salah satu seminar matematik anjuran INSPEM tahun lalu
saya dikejutkan dengan pendedahan seorang ahli matematik kewangan bahawa
sistem perbankan Islam sebenarnya tidak memiliki model matematik bagi
sistem kewangan tanpa-riba. Sebaliknya model yang digunapakai sekadar
diciplak daripada model sistem riba dan diubah sana-sini secara ad hoc
demi memodelkan sistem tanpa-riba. Sepatutnya, setelah berlalunya sekitar
empat dekad sejak penubuhan sistem perbankan Islam, ahli matematik Islam
sudah pun membina dan mematangkan secara tersusun-atur model kewangan
tanpa-riba, tapi itu tidak berlaku, hal mana jelas mendedahkan kemuflisan
ilmiah para pendokong perbankan “Islam” itu sendiri. "

Rencana Penyelidikan Matematik Huluan: Huraian dan Contoh Ringkas

(atau Pengislaman Matematik)

Adi Setia
Penyelidik Bersekutu
Institut Penyelidikan Matematik
Universiti Putra Malaysia
adisetiawangsa@gmail.com

Anonymous said...

watch and listen to this lecture by Imran Hossein.


http://in.youtube.com/watch?v=apr4Wju62XY&feature=related