Rulings on the Sale of Gold for Gold
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Question:
A listener (L. A. F.) from al-Bahah sent a message saying: We sold our gold to a seller, and the seller weighed it in front of us and informed us of its value, knowing that we did not receive anything from him. Then we informed him that we would buy other gold from him, and we actually bought the gold from him. We returned to our place, and after a period, we learned from some people that this is a type of riba, specifically riba al-fadl (usury of excess in a like-for-like exchange). After that, we went to the same seller, after a period, and sold him the new gold that we had bought from him, and we received its value in our hands. We then went to another seller and bought gold from him that was different from that. The question is: Is what we heard from people—that our action is a type of riba, specifically riba al-fadl—correct? And is our transaction valid? May Allah reward you with good.
Answer:
It is obligatory in the sale of gold and silver for gold and silver, or for paper currency, that there be immediate hand-to-hand exchange. So if a person sells gold or silver to a goldsmith, a money changer, or anyone else, possession must be taken; the sale is not completed except by possession. This is based on the saying of the Prophet (peace and blessings be upon him):Mishkat al-Masabih 2808 If the two differ, it must be hand-to-hand. Gold for silver, gold for dollars, paper for dirhams, paper for pounds, paper hand-to-hand. It must be hand-to-hand; they must not separate until they have exchanged possession; otherwise, it becomes riba. So if a woman brings gold to a money changer, a goldsmith, or anyone else to sell to him, she must receive the price. If the price is gold, for example, it must be like for like, equal in weight, hand-to-hand. If it is silver, likewise, it must be hand-to-hand. Or if it is paper currency, it must be hand-to-hand.
So the sale you performed first is not permissible; possession of the price is required. After taking possession, you have the choice. If you buy gold from him or from someone else, and so on. The sale of silver is the same: the sale of silver for silver, or for gold. If it is for silver, it must be like for like, equal in weight, with no increase of one over the other, and possession must be taken. If it is silver for gold, then only possession is required, hand-to-hand, even if it is paper currency; it must be hand-to-hand, because it is in the position of gold and silver. So they must exchange possession: a dinar for a dollar, hand-to-hand; one hundred dollars for two hundred dirhams, or three hundred dirhams; it must be hand-to-hand. Likewise, dinars for pounds, or Saudi riyals, or anything else; it must be hand-to-hand. By doing so, the believing man and woman are safe from riba.
As for selling gold for something else, such as if she sold a bracelet to Zayd, or 'Amr sold it for a car, or for existing utensils, there is no harm in separating; because it is a specific item, and it is not gold, silver, or currency. Or for land, or a house, they may separate; there is no harm. One may buy a house for thousands of dinars, or gold, or dirhams, for a known term; there is no harm. Or a car, or utensils, or clothes, or carpets, or animals, or the like. The point is that if it is for something other than currency.
As for currency, it must be hand-to-hand. Gold for any currency, or silver for any currency, must be hand-to-hand. If it is gold for gold itself, or silver for silver, two things are required: equality in weight and possession. It must be weight for weight, with no increase, not even a hair's breadth. Weight for weight, meaning: a gold dinar for a gold dinar, with no increase; a silver dirham for a silver dirham, with no increase. And with immediate exchange, as the Prophet (peace and blessings be upon him) commanded.
And so with the existing currency: dollars for dollars, it must be hand-to-hand, like for like. Ten for ten, ten dollars for ten dollars, ten Saudi riyals for ten riyals, hand-to-hand, equal in weight. Yes.
The presenter: May Allah reward you with good. Since they did this, O Shaykh, what is your guidance?
The Shaykh: As they did, they should return to their partner, annul the sale, take their goods, and return his dirhams to him; because the sale is not valid. Or they may trade with each other immediately, saying: "Now we will trade, meaning: now the dirhams are with them, and the gold is with him... now, we will trade anew for the dirhams that are with them at the current price. It will be a new sale at the current price."
The presenter: So what they did is the correct thing?
The Shaykh: Yes...
The presenter: Yes, they returned to him and sold him the gold, then bought gold from another place.
The Shaykh: Yes, they sold him their gold.
The presenter: Their gold, yes.
The Shaykh: Yes.
The presenter: Praise be to Allah, may Allah reward you with good.
A listener (L. A. F.) from al-Bahah sent a message saying: We sold our gold to a seller, and the seller weighed it in front of us and informed us of its value, knowing that we did not receive anything from him. Then we informed him that we would buy other gold from him, and we actually bought the gold from him. We returned to our place, and after a period, we learned from some people that this is a type of riba, specifically riba al-fadl (usury of excess in a like-for-like exchange). After that, we went to the same seller, after a period, and sold him the new gold that we had bought from him, and we received its value in our hands. We then went to another seller and bought gold from him that was different from that. The question is: Is what we heard from people—that our action is a type of riba, specifically riba al-fadl—correct? And is our transaction valid? May Allah reward you with good.
Answer:
It is obligatory in the sale of gold and silver for gold and silver, or for paper currency, that there be immediate hand-to-hand exchange. So if a person sells gold or silver to a goldsmith, a money changer, or anyone else, possession must be taken; the sale is not completed except by possession. This is based on the saying of the Prophet (peace and blessings be upon him):
Gold is to be paid for by gold, silver by silver, wheat by wheat, barley by barley, dates by dates, and salt by salt, like for like and equal for equal, payment being made on the spot. If these classes differ, sell as you wish if payment is made on the spot.
الذهب بالذهب، والفضة بالفضة، وزنًا بوزن، مثلًا بمثل، سواء بسواء، فإذا اختلفت هذه الأصناف؛ فبيعوا كيف شئتم، إذا كان يدًا بيدSo the sale you performed first is not permissible; possession of the price is required. After taking possession, you have the choice. If you buy gold from him or from someone else, and so on. The sale of silver is the same: the sale of silver for silver, or for gold. If it is for silver, it must be like for like, equal in weight, with no increase of one over the other, and possession must be taken. If it is silver for gold, then only possession is required, hand-to-hand, even if it is paper currency; it must be hand-to-hand, because it is in the position of gold and silver. So they must exchange possession: a dinar for a dollar, hand-to-hand; one hundred dollars for two hundred dirhams, or three hundred dirhams; it must be hand-to-hand. Likewise, dinars for pounds, or Saudi riyals, or anything else; it must be hand-to-hand. By doing so, the believing man and woman are safe from riba.
As for selling gold for something else, such as if she sold a bracelet to Zayd, or 'Amr sold it for a car, or for existing utensils, there is no harm in separating; because it is a specific item, and it is not gold, silver, or currency. Or for land, or a house, they may separate; there is no harm. One may buy a house for thousands of dinars, or gold, or dirhams, for a known term; there is no harm. Or a car, or utensils, or clothes, or carpets, or animals, or the like. The point is that if it is for something other than currency.
As for currency, it must be hand-to-hand. Gold for any currency, or silver for any currency, must be hand-to-hand. If it is gold for gold itself, or silver for silver, two things are required: equality in weight and possession. It must be weight for weight, with no increase, not even a hair's breadth. Weight for weight, meaning: a gold dinar for a gold dinar, with no increase; a silver dirham for a silver dirham, with no increase. And with immediate exchange, as the Prophet (peace and blessings be upon him) commanded.
And so with the existing currency: dollars for dollars, it must be hand-to-hand, like for like. Ten for ten, ten dollars for ten dollars, ten Saudi riyals for ten riyals, hand-to-hand, equal in weight. Yes.
The presenter: May Allah reward you with good. Since they did this, O Shaykh, what is your guidance?
The Shaykh: As they did, they should return to their partner, annul the sale, take their goods, and return his dirhams to him; because the sale is not valid. Or they may trade with each other immediately, saying: "Now we will trade, meaning: now the dirhams are with them, and the gold is with him... now, we will trade anew for the dirhams that are with them at the current price. It will be a new sale at the current price."
The presenter: So what they did is the correct thing?
The Shaykh: Yes...
The presenter: Yes, they returned to him and sold him the gold, then bought gold from another place.
The Shaykh: Yes, they sold him their gold.
The presenter: Their gold, yes.
The Shaykh: Yes.
The presenter: Praise be to Allah, may Allah reward you with good.
Source
binbaz.org.sa
The Arabic text is copied verbatim from the original source, without any edits.