Is It Permissible to Invest in Digital Gold?
Answered by Shaykh Muhammad Carr
Question
Is it permissible to invest in digital gold, where ownership is represented electronically but backed by physical gold stored by a vaulting service?
ِAnswer
Thank you for your question.
May Allah reward you for ensuring that your investments are permissible.
Investing in digital gold, where ownership is represented electronically and backed by physical gold held in storage, is permissible when the digital format is Shari‘a-compliant, such as with ETFs and mutual funds. However, investing in formats like futures and sovereign bonds is not permissible.
The rationale supporting the validity of purchasing shares in Shari‘a-compliant ETFs and mutual funds applies here as well, as there is fundamentally no difference between the two.
It would be beneficial to consult a local Islamic finance specialist with a degree in Shari‘a (Sacred Law) for detailed rulings tailored to your specific situation.
I pray this is of benefit and Allah guides us all.
[Shaykh] Muhammad Carr
Checked and Approved by Shaykh Irshaad Sedick
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 for 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’ah Board Member for Islamic Asset Management & Insurance Companies since 2001, aligning financial practices with Islamic principles.
