Gold in Islamic finance
Gold has a long association with Islamic finance. For centuries, the gold Dinar was the currency and trading standard of the Islamic world. But as Islamic finance grew and developed, so did the need for clarity around the Shari’ah treatment of gold.
In 2016, the rules for trading gold were codified in a single Standard: the AAOIFI Shari’ah Standard on gold. This removed one of the barriers preventing the development of gold-backed products in Islamic finance.
Since then, the World Gold Council has been working with Islamic banks and other financial institutions to further develop this market. As part of our engagement, in 2018 we partnered with global research agency Kantar TNS to conduct a comprehensive survey of 4,000 retail investors in four predominantly Muslim markets – Saudi Arabi (KSA), United Arab Emirates (UAE), Turkey and Malaysia – to gauge their attitude and approach towards Islamic investing and gold.2
Islamic investment trends
Islamic finance is a large market. In 2017, total assets surpassed US$2tn for the first time. And it is growing: some estimates suggest a long-term compound average growth rate of over 9%.3
This positive outlook is reflected in the findings from our research. Two-thirds of those we surveyed would prefer their investment holdings to include Islamic products. Just under one third, on average, would prefer to hold purely Islamic investments (Chart 1).