Is Purchasing Gold for Gold by Weight with Additional Manufacturing Charges Permissible?

Answered by Shaykh Muhammad Carr

Question

I run a gold jewelry business and often sell pieces online through bank transfers or mobile payments. When purchasing from wholesalers, I exchange gold for gold by weight, with additional manufacturing charges. In light of the hadith, “Gold for gold, equal for equal, hand to hand” [Muslim 2970], are these transactions permissible?

Answer

Thank you for your question.

May Allah reward you for ensuring that your income is permissible.

Gold is a usurious commodity; therefore, the conditions mentioned in the narration above must be strictly observed.

Selling gold pieces online through bank transfers or mobile payments is permissible.

According to the Shafi‘i School, the manufacturing aspect is not considered when exchanging raw gold for crafted gold; price equality must be maintained. [Khatib, Mughni al-Muhtaj]

The manufacturing charge must be separate.

Buying and Selling Gold

The Prophet (Allah bless him and give him peace) said: “Gold for gold, silver for silver, wheat for wheat, barley for barley, dates for dates, and salt for salt – like for like, equal for equal, and hand-to-hand; if the commodities differ, then you may sell as you wish, provided that the exchange is hand-to-hand.” [Muslim; Tirmidhi]

Thus, if gold is exchanged for silver (or another currency), their amounts may differ, but the following conditions are obligatory:

(a) that the exchange be immediate;

(b) and that the properties exchanged must be in the respective possession of the buyer and seller before they part company. [Misri, ‘Umdat al-Salik]

When the buyer pays via electronic fund transfer, the seller is deemed to have taken constructive possession of the price despite the delayed reflection of the price in his account due to common affliction. (‘umum al-balwa).

You may also benefit from Mufti Taqi’s assessment supporting the permissibility of deferred payment. According to Mufti Taqi, “As for the exchange of disparate currencies, like the Pakistani Rupee for Saudi Riyals, based on an analogy of the opinion of Imam Muhammad (Allah have mercy on him), deferment is permitted therein as well. This is because paper money (which is a constructed form of currency), if it were sold for a different currency, such as silver coins (dirhams), it is permissible for the transaction to involve both the exchange of different quantities as well as deferment in taking possession, on condition that possession of one of the two commodities is taken at the time of finalising the exchange.” [Usmani, Fiqh al-Buyu‘]

The Jeweler’s Fee

It is not permissible to add the jeweler’s fee to the gold, because adding the jeweler’s fee to one of the two items of the same kind, such as gold for gold, is considered excess usury. (riba al-fadl).

Imam Shafi‘i said: “There is no good in a man exchanging silver for manufactured silver jewelry made by the jeweler and then giving him his fee, because this is an unequal exchange of silver for silver.” [Shafi‘i, al-Umm, 3/35]

“And if the transaction entails usurious items on both sides, and the types differ, such as a measure of Ajwa dates with a dirham for a measure with a dirham, or a measure and a dirham for two measures or two dirhams, then it is invalid.” [Nawawi, Minhaj al-Talibin]

I pray this is of benefit and Allah guides us all.

[Shaykh] Muhammad Carr
Checked and Approved by Shaykh Faraz Rabbani

Shaykh Muhammad Carr has dedicated his life to studying and transmitting our beautiful deen. His studies have taken him around the globe, where he has benefitted from many luminaries. Under the guidance of his teachers – Shaykh Taha Karan, Shaykh Yaseen Abbas, Shaykh Muadh Ali, and many others – Shaykh Muhammad has grown to appreciate the beauty and benefits of diverse scholarship. He completed his memorization of the Qur’an at Dar al-Ulum Zakariyyah in September 1997 and received an Alimiyya Degree in 2006 from DUAI (Darul Ulum al-Arabiyyah al-Islamiyyah). He is also affiliated with Masjid Auwal in Bo Kaap, Cape Town (the oldest mosque in South Africa), where he serves as a co-imam, and Dar Al-Safa, where he has taught since 2018. As a teacher, he imparts the wisdom of our heritage and tradition by opening the door to students. As an imam, he has the unique opportunity to serve his community in daily life.

In addition to his roles as a teacher and imam, Shaykh Muhammad Carr has contributed significantly to the administrative and advisory aspects of Islamic institutions. Since 2023, he has served as the Administrative Director at The Imam Kurani Institute, contributing to the institution’s growth and development. He continues to pursue traditional Islamic Sciences, possessing a keen interest in Islamic Contract Law and Finance. Shaykh Muhammad has been a Shari‘a Board Member for Islamic Asset Management & Insurance Companies since 2001, aligning financial practices with Islamic principles.