At Minted, we follow a Shariah-compliant business model.
Investing in gold is an integral part of Muslim culture, and has recently become one of the highly demanded assets in Islamic finance. Since the official Shariah Standard of Gold was set a few years ago, gold investing has become officially Shariah-compliant. In today’s post we want to educate our readers on what the Shariah standard of gold is and how we adhere to it at Minted.
What is the Shariah-compliant gold standard?
In 2016, the World Gold Council and Accounting Auditing Organisation for Islamic Financial Institutions (AAOIFI) developed and announced a Shariah Standard for gold. This meant Muslims could now add gold as an asset to their portfolio while remaining ethical.
For our non-Muslim users who are not aware, Muslim law opposes and bans certain types of investments. First of all, Islamic law prohibits loans or investments that pay interest, whether they are compounded, fixed or floating. This is because Shariah law does not allow the creation of new financial risks to gain profit, as a protection against fraud and financial misconduct. Second of all, Shariah-compliant investments are meant to be free from companies that are involved with gambling, alcohol, cloning or pornography.
These prohibitions reduce the number of investments Muslims can make, and can therefore make it harder to build a portfolio that beats inflation and increases wealth. However, with the introduction of gold as an Islamic asset, Muslims can now enjoy much healthier returns on their investments:
Interest: Gold does not accumulate interest or pay back interest to its investors, allowing it to remain ethical and compliant to the faith.
Socially responsible: Gold is not at all associated with Haram activities and is a precious metal that has been an integral part of Muslim culture for centuries.
Thanks to the Gold Standard, Muslims can buy and sell gold with the knowledge that their investments are ethical and compliant with Shariah law.
Gold is an excellent tool for Muslim investors
Gold is an incredibly powerful tool for Muslim investors and has the power to shape the future of Islamic finance. Here are a few reasons why:
Diversification: gold is an investment that is not directly correlated with other asset classes, making it an excellent tool to diversify your portfolio, reduce volatility and minimize risk in Islamic investment portfolios. As the World Gold Council says, “virtually any Islamic portfolio can be improved through some allocation to gold”.
Safe haven: gold does not rely on credit and holds intrinsic value – it was valuable centuries ago and we can be confident that it will still remain valuable in the next hundreds of years. This makes it more of a safe haven than other Islamic investments such as REITs, takaful index and Islamic ETFs. It is also a safer asset than sukuk since there is no credit risk or liabilities
Effective hedge: gold does beat inflation over time, and can even offer higher returns than many other Islamic asset classes. Gold also hedges against currency conversion rates and other market crashes or fluctuations.
New opportunities: the world of Islamic finance needed a better safe haven asset. Low risk Islamic assets (such as sukuk) are too illiquid or very limited – with gold, Islamic investors can take advantage of an asset class that is much more accessible and liquid. This offers opportunities to implement dollar cost averaging, pass on wealth to later generations and take money out in case of emergencies.
Minted is forever Shariah compliant
At Minted, we realised that the Muslim market was very much underserved when it came to investing in gold. It’s an asset class that must be part of every Muslim portfolio, and yet buying gold can be incredibly complicated in the UK.
With our gold app and online dashboard, anyone can start investing in gold with as little as £30. When you invest your money with Minted, you can remain certain that your investments are 100% Shariah compliant and ethical.
As a Muslim, gold is an essential part of your portfolio. You’ll have better access to cash, you’ll be able to beat inflation over time and your investments will remain ethical and Shariah compliant. With Minted, you can diversify your portfolio and increase your returns all while remaining ethical.
And you can start with as little as £30!