Kruger coin investment
QUESTION:
Is the following investment Shariah compliant?
ANSWER:
In the queried scenario, the one ounce Kruger coin, which weighs approximately 33 grams of gold, is split into one hundred portions and sold at R394.35 per gram. The purchaser buys one portion at a time, and when he pays for the full 100 portions, he will be entitled to his Kruger coin.
Now, if the coin is sold in terms over 100 instalments, in fixed-monthly instalments over a fixed period of time, then the sale will be valid and in order. We understand that the seller keeps the coin, and only hands it over to the purchaser when it is fully paid for. The gold price fluctuating will not affect the transaction in any way whatsoever, as all the terms and payments are fixed. This option is in order.
However, if the seller sells one gram of gold at a time (without fixing the payment term and instalment amounts, etc.) then only one gram will be sold to the purchaser on every purchase. If the price of gold fluctuates, then the seller is entitled to sell the next gram at the current market rate and so forth, until the purchaser has purchased the coin in full. However, in this instance, the seller is not able to hand over the gold (that was sold) until the purchaser has purchased and paid for the entire coin (as the Kruger coin cannot be broken into portions), thus the transaction will be invalid. The Kitaabs of Fiqh states that it is necessary for the seller to be able to hand over the commodity of sale for the validity of the transaction. Since it is not possible in this instance, the sale will be invalid.
الْفَصْلُ الْأَوَّلُ: فِي حَقِّ شُرُوطِ الْمَبِيعِ وَأَوْصَافِهِ : يَلْزَمُ أَنْ يَكُونَ الْمَبِيعُ مَقْدُورَ التَّسْلِيمِ ( مجلة الاحكام الْمَادَّةُ 198)
بَيْعُ مَا هُوَ غَيْرُ مَقْدُورِ التَّسْلِيمِ بَاطِلٌ كَبَيْعِ سَفِينَةٍ غَرِقَتْ لَا يُمْكِنُ إخْرَاجُهَا مِنْ الْبَحْرِ أَوْ حَيَوَانٍ نَادِرٍ لَا يُمْكِنُ إمْسَاكُهُ وَتَسْلِيمُهُ ( مجلة الاحكام الْمَادَّةُ 209)
ALLAH TA’ALA ALONE IN HIS INFINITE KNOWLEDGE KNOWS BEST!
ANSWERED BY:
Mufti Mohammed Desai
Date:- 20 Muharram 1445 / 08 August 2023