Can One Invest in Land That Has Gold and Other Precious Metals?


Hanafi

Answered by Shaykh Faraz A. Khan

Question: There is a mining company stock which I would like to buy. The company owns some land on which there is known to be gold and other precious metals, however the mine has not been developed to the point that the gold can be easily extracted. The estimated worth of the gold in the ground based on mining surveys is about three times as much as the worth of the company based on its stock price.

(1) Would this stock be considered halal to own?
(2) Would the estimated gold in the ground be considered an asset in the companies possession or would only the land and its value be considered an asset?

Answer: Assalamu alaikum warahmatullah,

I pray this finds you in the best of health and states.

(1) It would be permissible to own such a stock, as long as the general conditions of permissibility for purchasing stock are met. For those conditions, please see the following:

(2) I’m not sure of the exact context of your second question. If it is with respect to zakat, you simply pay zakat on the market value of the shares. This value reflects all the company’s assets, including land and gold.

For the purpose of zakat, the gold would not be considered an asset until it is actually extracted from the ground, after which its value would already be incorporated in the market value of the stock at the time.

To reiterate, you need to pay zakat only on the market value of the shares. This is the ruling for an investment in which one’s intention at the time of purchase is capital gain. If one’s intention when purchasing shares, however, is to receive annual dividends, one may deduct the company’s non-zakatable assets, such as land or machinery, from the stock value when calculating zakat.

[Maydani, Lubab]

And Allah knows best.
wassalam
Faraz

Checked & Approved by Faraz Rabbani