e-dinar is an Internet payment and exchange system that facilitates online transactions 100% backed by physical gold and silver. The name of the service doesn’t imply that payments within the system are made with dinar, actually it relates to the religious views of Moslems. Abu Bakr ibn Abi Maryam reported that he heard the Messenger of Allah, may Allah bless him and grant him peace, say: "A time is certainly coming over mankind in which there will be nothing [left] which will be of use save a dinar and a dirham." (The Musnad of Imam Ahmad ibn Hanbal). e-dinar is international and accept funds in USD, Euro and AED.
How it all began
The original e-dinar company was founded in August 2000 in Labuan, Malaysia by Zeno Dahinden, of Switzerland, Dato Abdul Rahman Shariff, of Malaysia, and Fernando Vadillo, of Spain. The incorporation was purposely timed to precede a large e-dinar conference at the Islamic Arts Museum Malaysia (IAMM) in Kuala Lumpur, November 2000. At that event, both Dr. Tun Mohamed Mahathir (at that time Prime Minister of Malaysia) and his successor Datuk Seri Abdullah Ahmad Badawi received complementary sets of gold dinars and opened their e-dinar accounts publicly on stage. They were among the very first and most illustrious e-dinar account holders.
In fact the e-dinar company minted their own silver coins and gold coins in 1992. As reported by Zeno Dahinden at those times dinars and dirhams were hammered by hand. The objective of the founders was to allow common customers to possess the real value just as the mighty of this world do. The idea was prompted by the consciousness of the shortcomings associated with current monetary scheme when banks issue heaps of paper money out of nothing inasmuch as paper money is actually created from debt. Since debt is an obligation and not a value, new money draws its value from existing money and thereby devalues the currency and creates inflation says Dahinden.
Thus e-dinar team was determined to ‘help prepare the grounds for renewed monetary discipline in the face of impending financial collapse, e.g. through the ‘subprime’ fall-out’.
In late 1998 the company made the first contract with Douglas Jackson (CEO of e-gold). Then in 1999 Zeno Dahinden visited Doug Jackson in Florida where they drafted an agreement that would make e-dinar a self-contained front-end sitting on top of the e-gold database.
After finalizing a partnership with e-gold in 2000, they established their own mints in the United Arab Emirates and Indonesia. Near the end of 2003, half of the company was bought out by an unknown international corporation in the Middle East, and in July 2004 they formally separated from e-gold. The main reason for separation was the company ambition for realization of their full potential.
Under the partnership with e-gold the company depended on e-gold’s backend database and processes (e.g. bullion purchase and storage) which was found to be an obstacle in further progress. Thereby e-dinar team made a decision to separate from e-gold and in order to realize this aim they developed their own backend software and established their own bullion procurement and storage processes.
At bottom of fact
[img_assist|nid=10738|title=|desc=|link=none|align=left|width=637|height=640]The main difference of e-dinar service is that e-dinar is for the time being used primarily as a store-of-value rather than a payment system. e-dinar accounts promoted as online savings accounts which offer an alternative to Islamic banking.
Every e-dinar account holds two balances, an e-dinar balance (gold) and an e-dirham balance (silver). Each e-dinar electronic unit corresponds to an exact, fixed weight of 4.25 grams of pure 24 carat gold. Each e-dirham corresponds to an exact, fixed weight of 3 grams of .999 silver. The gold balance is displayed in e-dinar, in ounces and in grams of 24 carat gold. For silver, the balance is displayed in e-dirham, in ounces and in grams of 999 silver. Both gold and silver balances are also displayed in USD, EUR, AED, GBP, CHF and JPY.
The physical gold and silver bullion backing e-dinar and e-dirham units are always equivalent or larger than all electronic e-dinar and e-dirham in circulation. The physical gold and silver bullion is held securely in internationally renowned bullion repositories.
The value of an e-dinar and e-dirham account moves proportionally to the price of gold and silver. When a customer funds an account with e-dinar or e-dirham it means that he/she buys physical gold or silver. Thus the account balance is recorded in gold and silver (by weight). All other currencies which are displayed in the account balance fluctuate with changes in the gold and silver prices.
Customer acceptance policy
The registration procedure is not as complicated as the qualification for transactions or deposit operations. To open a new account you need to click on the corresponding ‘sing-up’ button and start filling in the registration form. But first you have to create your username and password as well as to agree to the company’s Customer Identification and Acceptance Policy.
[img_assist|nid=10742|title=|desc=|link=none|align=left|width=640|height=619]In the form you should provide your name, address, contact numbers and e-mail. Besides, you can also change your password and set up account preferences.
As a new account holder a customer is required to send e-dinar certified copies of his/her proper legal identification before wiring funds to his/her account.
The company does not publish their bank details on the e-dinar website. Hence a customer has no choice except to undergo e-dinar’s Customer Acceptance Process.
All e-dinar customers must - in addition to their contact information entered online - send e-dinar a certified photocopy of their passport or ID card before the company releases its bank contact details to them.
Small account holders who plan to buy less than 1000 USD in total gold and silver can scan and email their certified copies of passport or ID card. Large account holders who plan to buy more than 1000 USD in total gold and silver need to send their certified copies by postal mail.
Such a strict Customer Acceptance Policy and transaction control are intended to discourage unwanted elements before they enter the system. e-dinar’s Customer Acceptance Policy is based on GoldMoney’s policy which is among the strictest in the industry.
Without any verification of the customer’s identity no transaction is possible within e-dinar system.
Your e-dinar account
[img_assist|nid=10743|title=|desc=|link=none|align=left|width=640|height=640]Opening a new account is free. A customer can open as many accounts as he/she needs. Every account will have its unique account number. Once the account is created a holder can receive funds from other users.
Funding an account can be of two ways. Either a user receives an e-dinar/e-dirham payment into his/her account from another e-dinar user or he/she can buy e-dinar/e-dirham for his/her national currency. To do this a customer needs to use the "buy gold/silver" account function.
Now when you have an e-dinar account you can spend, sell and redeem you e-dinars and e-dirhams.
The Spend function allows you to make payments from e-dinar/e-dirham accounts to other e-dinar/e-dirham accounts. The spend amount will always be calculated in e-dinar/e-dirham. Yet you have option to enter the spend amount in a national currency. The amount of e-dinar/e-dirham actually spent will be calculated according to the current exchange rate.
With sell gold/silver function you are allowed to convert e-dinar/e-dirham into major national currencies by filling out the attached form and transferring the desired amount of e-dinar/e-dirham, to the e-dinar out exchange account. You will then receive a bank wire to your bank account in the national currency of your choice. The costs for the wire transfer are charged to your account.
The redeem or get coins option means that you can relinquish some e-dinar/e-dirham by taking delivery of physical gold and silver coins. As already mentioned above one electronic e-dinar corresponds to one physical gold dinar while one physical silver dirham costs approximately 30% more than an electronic e-dirham (due to proportionally higher minting costs). e-dinar will naturally send your dinars and dirhams to your postal address (additional shipping and handling fees apply).
When you buy gold or platinum you should pay the spot price and 2% spread while for silver you will pay 3% spread along with the spot price. The storage of you funds will cost you 1% a year. This fee is covering storage and insurance costs. The storage fee is calculated based on the average account balance and is deducted monthly from the account.
When you send money to another user of e-dinar you won’t be charged any fee. A processing fee is deducted from the recipient. Transaction fee is 1% of the transferred amount, but not more than 0.015 e-dinar (~ 1.90 USD) for transactions in gold or 0.5 e-dirham (~ 0.88 USD) for transactions in silver.
There is no minimum transaction size. e-dinar can be used for micro payments as well as large transactions.
Online transactions (spends) are not reversible. Once the transaction is complete, the sender cannot undo it. Accidental entry is highly unlikely. The system gives you a preview of all transaction orders prior to confirmation. Preview allows you to review applicable Exchange Rates, calculations, and other order information, to be certain the details are acceptable to you before committing the transaction. After preview, you are presented with an explicit confirming button to commit the transaction.
Wednesday, October 28, 2009
Islamic Mint
This write up of the Islamic Mint explains exactly who the Islamic Mint are and what they deal in and is well worth while reading before you decide to buy any gold or silver coins from the Islamic Mint.
As always, it is prudent to do one's own due diligence before buying gold from any gold dealer or mint.
Who are the Islamic Mint
The Islamic Mint is situated in Dubai, United Arab Emirates. It produces the Islamic Dinar and Islamic Dirham.
Castiñeira is marketing director of the Islamic Mint, a private institution dedicated to reviving as international currency the coinage described in the Koran - the gold dinar and silver dirham.
E-dinar's British COO, Yahya Cattanach, and his family share a communal condo with Castiñeira in the comfortable Jumeirah district of Dubai. The company's Spanish president, Umar Ibrahim Vadillo, is also the president of the Islamic Mint. And finally, uniting all three men, as well as e-dinar's Swiss CEO, Malaysian CFO, and German CTO, is the fact that all are high-placed members of the Murabitun movement, a modern, Western offshoot of Sufi Islam and possibly the only religious sect in history whose defining article of faith is a financial theory.
The e-dinar's primary unit of account is 4.25 grams of gold. Officially, the Islamic Mint and e-dinar are separate organizations, but they're actually the off- and online divisions of a single project, joined by ideological and personal ties.
Their website is www.e-dinar.com
They are associated with E-Dinar Ltd who actually sell the coins. E-Dinar Ltd are based in Malaysia and Dubai.
They first began minting Minted first gold dinar and silver dirhams in 1992. In 2000 they Established formal organization and incorporated e-dinar Ltd in Labuan, Malaysia with a authorized share capital of USD 1.5 million. They received permission to mint coins in Dubai and have established mints in UAE and Indonesia.
They also have a Malaysian site at www.islamicmint.com.my.
More information about the Islamic Currency & Mint
In the beginning the Muslims used gold and silver by weight and the dinar and dirhams that they used were made by the Persians.
According to the Islamic mint website:
"Umar Ibn al-Khattab (second caliph of the Muslim also known as Abu Hafs Umar ibn al-Khattab al-Adawi, reigned from 634 to 644 CE) established the known relationship between them based on their weights: "10 dirhams must be equivalent to 7 dinars (mithqals)". The weight of a mithqal of gold is seventy-two grains of barley, so that the dirham which is seven-tenths of it is fifty and two-fifths grains. In the year 75 AH (695 CE) Caliph Abul Walid Abd al-Malik ibn Marwan (reigned from 685 to 705 CE) ordered Al-Hajjaj to mint the first Dirhams and in 77 AH (696 CE), the first standard gold Dinar were minted. In the next years these coins were minted in all the regions of Islam. He ordered that the coins should be stamped with the sentence: "la ilaha ill' Allah" (Allah is Unique, Allah is Eternal). He also ordered to remove human figures and animals from the coins and to be replaced with letters. Gold and silver coins remained official currency in Islamic regions until the fall of the Caliphate in 1918. This indicates that the Islamic Gold Dinar was the currency of the Muslim community from its first years right up to the fall of the Ottoman Empire (Osmanli dynasty)."
Dr. Umar Ibrahim Vadillo, Pioneer of the Dinar's reintroduction and director of E-Dinar Ltd, is known as the designer of the current coins. He is also the author of books, written on Islamic finance and Economics. Among his books are "The Fatwa on Paper Money", "The Return of the Gold Dinar" and "The Esoteric Deviation in Islam", published by Medinah Press.
Islamic Mint Products
The wealth in these coins can be calculated directly by weight for zakah, marriage and hudud according to Islamic teaching and implementation.
Weights and Measures:
The Islamic Dinar 22K gold (.917) is equivalent to 4.25 grams 23mm diameter.
The Islamic Dirham 0.925 pure silver equivalent to 2.975 grams 25mm diameter.
Besides 1 Dirham in silver and 1 Dinar gold coins, 5 Dirhams in silver and 2 Dinars in Gold also exists. The silver coins show the Kaaba. (All the Muslims face the Kaaba during their five time prayers in a day, which is the second pillar of Islam. ) The gold coins also show the tomb of Muhammad.
The Islamic Dinar is now currently minted in four countries and being privately used in more than 22. During 1982, the Islamic Development Bank was prescribed by the IMF as a holder of Special Drawing Rights (SDR's). SDR's are a unit of IMF currency tied to gold. The Islamic Dinar, which is made of gold is a unit of account at the Islamic Development Bank, equal in value to one SDR.
It is possible to buy Dinar gold coins from the various Islamic mints such as e-dinar Ltd. You will need to open an account and provide the usual ‘Know your Customer’ proof of ID, or alternatively one could also possible purchase from the principal contact person of Islamic Mint: Mr. Thani Alromaithi. email: info@e-dinar.com. But I dare say he will also want to know with whom he is dealing.
In the beginning of 2008 the Islamic Mint introduced two more coins: 10 Dirhams in .999 Silver having 30g and 8 Dinar 22K gold having 34g. These gold and silver coins are also available for sale. Their main office is at Abu Dhabi and regional branch and private mint located in Dubai. Their functional website is at www.e-dinar.com/ and current prices can be seen at www.e-dinar.com/cgi/shop.cgi.
You might also be able to get them at gold and silver dealers.
Last Word on the Islamic Mint
The Islamic gold and silver coins are very impressive and outstanding in quality and the cost is not much above spot. But they are really designed specifically for use in the Islamic World.
When it comes to investment in gold and silver, one would be better off looking at gold bullion in the form of bars or even buying gold and silver from such places as goldmoney.com for example, for investment purposes.
More information on Islamic gold coins can be found at: Islamic Gold Coins.
If you have bought any Islamic silver bullion coins from any dealers please feel free to leave your feedback on the quality of service and products including any online complaints and special attention or service given by any dealers of Islamic gold and silver coins.
Monday, October 19, 2009
FREEDOM
The question of money
is primarily a question about freedom.
When people were free to choose
they universally chose gold and silver
Now we are forced to accept
the system of artificial money, whose
legal value is determined by the State.
"Money is any merchandise commonly accepted
as a medium of exchange."
said Imam Malik
We propose to return to gold and silver
They are part of the Revelation and the Sunna
They offer stability and order.
They are the end of political money
They are the end of money manipulation
THEY REPRESENT FREEDOM
The EFFECT of the Dinar and the Dirham on Business
Paper-money, which does not render any service except in
exchange for something productive, is made artificially
productive by interest.
On the other hand, every genuine enterprise, like the use of a
house or a manufacturing process, can only be productive by
the services rendered to society.
Interest competes and wins over genuine enterprises profitable to
society. The genuine business has to pay the interest out of the
profit from a genuine service to society, but the bank makes
profit out of the interest through the artificial expansion of the
money lent.
The final result is that the higher the interest rates the greater the
destruction of 'less competitive" businesses
The EFFECT of the return of the dinar and the dirham will be
The shift of capital investment from the most "speculative areas"
to the more productive areas.As a result a new landscape
associated with the dinars and the dirhams will re-emerge, that
is, the world of Islamic Trading
A new re-start for trading will come about through the
restoration of two of its most representative but losts
institutions:
the market-place which will replace supermarkets
and
the caravans which will replace monopolistic distribution
And the return of the guilds, that is, associated independent
intelligent workteams, in which the relationship
master/apprentice will replace employer/employee
The EFFECT of the Dinar and the Dirham on the Real Estate
Today you want to buy a house and a bank will offer you a
mortgage. This is how the ring distorts the operationthe house
The annual rent of this house is 10% of its value
but,...
the same money is offered by the bank at 5%, which considering
inflation is a bargain!
Why would the bank be so generous, when it could rent the
house and obtain the house plus a higher 10% return?
This is the paradox of the ring.
Out of that 5% interest the bank will make a 100% profit with the
mathematics of the ring.
The borrower thinks that the interest is better than paying the
rent, the bank makes a higher profit out of expanding money
who loses? All the holders of the newly inflated currency by its loss of
value (inflation).
THE HIRE-ABILITY OF MERCHANDISE
A house can be rented, it is a hireable merchandise
Money cannot be rented, it is a non hireable merchandise
Profit and rent come only from real services to society -this is the
end of speculative economy and the beginning of real
prosperity to society.
This is because investment will have to be directed towards real
services, instead of being drawn by the artificial profit of the
ring which like a parasite lives off real services.Without the
mortgage, housing prices will simply find a new stability
established by the equilibrium between the offer and a new
demand based on what people can really pay.
Imam Sahnun wrote in the great Madinan text, "Mudawwana al-
Kubra", 12:46
"Money is something which it is not permissible to hire."
The Practical Use of the Dinar and the Dirham
In the beginning, networks of shops and individuals which will
accept the gold and silver coins as a medium of exchange will be
distinguished by a sign or window sticker.
Just like Visa or American Express cards started to be introduced
in society. Each shop will have the sticker indicating that they
accept the dinar and the dirham.
The transportation of gold and silver will be facilitated by a
network of agencies that will allow money to be sent to any
corner of the world. It will operate by a simple method of
book-keeping. Just like the company Inter-flora makes available
flowers all over world without needing to send the flowers
physically.
Equally the gold and silver could be made available in different
parts of the world although only the balance between the
different agencies needs to be physically transported
A future use of cash cards would allow you to retrieve gold and
silver from your own account in any shop of the network.
Under the strong supervision of the WITO, World Islamic
Trading Organisation, companies will be able to issue cards
which let you retrieve money just like modern cashiers allow
you to collect paper money
The TRANSFERRAL of gold and silver to a third party by
means of special debit cards. This is the most delicate of all
questions, since many forms of transferral of money are not
allowed in Islamic Law and open the door to fraudulent abuse of
trust.
That is why any step in this direction will need to be strongly
monitored by WITO or some civil authority, to prevent the
account keeper from turning into a bank by lending money and
/or creating money out of nothing by expanding the credit.
MONEY, A COMMODITY OR A SYMBOL
Until the beginning of the twentieth century the most popular and
universal medium of exchange was gold and silver coins.
Currency was considered to be as flexible as any other
merchandise. People responding to their own particular needs
demanded the coins and also offered them, thus their market
value was established daily.The debate that divides the
defenders of gold and silver and their adversaries is not new, it
has been going on for more than three centuries.
Today money is represented by pieces of paper as non-
redeemable official notes whose quantity can be increased at
will.
This symbolic money originated from private contracts or
promises to pay issued by goldsmiths and later by banks.
Money is a symbol and not a commodity:
"It is the denomination of the currency of the money that men
regard in bargaining, not the quantity of silver. It is the public
authority upon the metal that makes it money" (Nicolas Barbon,
1696)
"Money is a symbol of a thing and represents it" (Charles-Louis
de Montesquieu, 1748)
"Money is the symbol of all commodities" (François-Veron de
Forbonnais, 1776)
"All monetary functions which are usually performed by gold
and silver coins, may be performed as effectively by a
circulation of inconvertible notes having no value but that
ficticious and conventional value... they derive from law"
(John Fullarton, 1848)
Money is a commodity and not a symbol:
"Silver and gold, coined or uncoined, though they are used for a
measure of all other things, are no less a commodity than oil,
tobacco, cloth or stuffs" (Josiah Child, 1689)
"Money is not a mere symbol, for it is itself wealth; it does not
represent values, it is their equivalent" (Guillaume-François Le
Trosne, 1777)
"Gold and silver have value as metals before they are money.
The coins which today have a merely ideal denomination are in
all nations the oldest; once upon a time they were all real, and
because they were real people reckoned with them." (Fernando
Galiani, 1803)
"The false definitions of money may be divided in two main
groups: those which make it more and those which make it
less, than a commodity" (Wilhelm Roscher, 1858)
Some Common FALSE OBJECTIONS to Gold & Silver as a
medium of exchange
In any debate about gold and silver, certain objections are
repeatedly raised by opponents of monetary freedom, even
though those objections have been refuted many times before.
Some of these objections are:
· There is not enough gold;
· Russia and South Africa, since they are the principal
producers, will benefit;
· Gold is subject to undesirable speculative inf- luences;
· Gold will produce instability in prices.
The first objection, that there is not enough gold, is based upon a
misunderstanding of the price of gold. It assumes that the
present exchange ratio between a weight of gold and notes is
the exchange ratio that must prevail when the gold is made a
medium of exchange. Such obviously is not the case. To put it
simply, lower prices under gold currency will eliminate the
necessity for larger sums. One could buy a suit that costs 400
paper units with 20 gold equivalents at a different exchange
ratio.
The second objection, concerning Russia and South Africa is
equally groundless. It could be considered an advantage, in the
same way oil or a fertile soil could be equally, in comparative
terms. The amount of gold already taken out of the earth in the
last two thousand years is already superior to the known but
unminted reserves of Russia and South Africa. The unminted
reserves of Russia are estimated to be about 250 million ounces
which is less than what the United States already has in minted
reserves. The demand for gold as a medium of exchange will
release the existing hoardings, a process which is already in
vogue in most central banks.
The third objection, that gold is subject to speculative
influence and therefore too unstable to be used as a medium of
exchange, is also false. During the 70's, gold became a major
hedge against inflation. The run-up in gold prices from $35 to
$850 per ounce came as a result of fears about the value of
paper-money and developing international crises. People who
object to gold because it is speculative confuse cause and effect.
The real speculation is provoked by an irredeemable paper-
money system and people who logically want to protect
themselves from it.
The fourth objection says that gold will produce instability in
prices. Comparing prices in gold in the U.S. in 1833 with
1933, just prior to the abandoning of the domestic gold
standard, the index of wholesale commodity prices increased
only 0.9 percent in one hundred years! Since then the index
increased 350% by 1971 when President Nixon, declaring
international bankruptcy, announced that no more gold would
be given in exchange for dollars. In the last twenty years the
index has gone up around 400%.
Gold is therefore stable and fit to be money, and history has
shown us that there is no money more unstable or unfit than
paper-money.
FATWA ON PAPER MONEY
Paper Money is not a legal medium of exchange
If paper money is a debt representing a merchandise (dayn):
The debt must have a definition of what is owed.
But even if it is defined as a proper debt, a debt cannot be used
as a medium of exchange. Concerning paper-money as wealth
entrusted to non-Muslims, this is not allowed.
If paper money is a tangible merchandise ('ayn):
Its value corresponds only to its weight as paper. Equally we
take the value of the dinar by its weight not by its nominal
value.
Either way, paper money cannot be accepted as a medium of
exchange.
An Instrument of tyranny
We have heard economists saying:
"We need a flexible currency"
"We need a currency that can be expanded or contracted
according to the needs of the economy"
"An increase in currency will quicken industry"
These are all fallacies to justifiy the insolvency of the issuers of
the notes in order to avoid their obligations to pay.
There is, in truth, a great charm in the idea of being able to pay
off all our needs, satisfy all the government expenses and to
make the whole communtiy prosperous, just by printing a few
characters on bits of paper. But when a man is capable of
believing that, he will believe anything.
Another fallacy to justify theft is to say:"It is an emergency"
indeed a war can influence anybody to accept what appear to be
solutions. After the emergency comes the semi-emergency of a
crisis, or an almost-emergency time or an almost-normal time.
In every case our individual rights are no longer in our hands.
Any failure to repay in whole or in part what is due by the
promissory note is but a form of theft
THE RING - The trap and decay of the Khalifate
Up until the XV century the Muslims were in total charge of
world trading. From then on the Europeans started to take over
by the power of the ring.
The ring is a simple mathematical equation, which, as mentioned
by Richard Wagner in his famous opera, gives total power to
the person who uses it, although it contains a curse: "Whoever
uses it, will never be loved". Power was not wielded by gold,
but by storing it in a guarded cave. People slaved to mine it, but
were ruled by whoever possessed the ring.
This mathematical formula attached to debt and symbolic money
destroyed the Muslim Khalifate.
This mathematical formula is what banking is all about.
The formula needs a pre-condition: the existence and acceptance
of symbolic money.
Then it consists of lending 'at interest' symbolic money they [the
banks] do not have.
By lending 20 times more than they have, all repayments of 10%
become in accounting like 200% (20x10%).
We pay 10%, but they collect 200%.
But if everyone seems to win, who is the loser?
The losers are all passive holders of the currency who will suffer
the inflation originated by the money created out of nothing.
That is it !
Once the Muslims accepted their symbolic money they
inadvertedly authorised the magical system which gave the
banks a previously undreamed of world dominion.
The ring did not just conquer the states, its power was so
fascinating, that it transformed the states into banks.
And the States became banks
This convenient method of 'coining credit', was soon discovered
by the governments and they issued their own promissory
notes in paymnet of their expenses; a resource the more useful,
because it was the only mode in which they were able to
borrow money without paying interest, their promises to pay
on demand being, in the estimation of the holders, equivalent to
money in hand.
The governments incapable of containing their own expanding
deficits then created the legal money. The law of legal tender
established that all money issued by the issuing authority must
be accepted by force in payment of any debt.
The legal money abolished the contractual law that guaranteed
the freedom of the people to choose and imposed on the citizens
an artificial currency with a legal value established by the
government.
This convenient method of 'coining credit', was soon discovered
by the governments and they issued their own promissory
notes in payment of their expenses; a resource the more useful,
because it was the only mode in which they were able to
borrow money without paying interest
In the beginning there was gold...
then paper was issued as a promise to pay in gold
and finally the issuers broke their promise and transformed paper
into a non-redeemable official note.
We should now reverse the process...
governments should freely convert their currency
and finally eliminate all paper currencies
THE IMPORTANCE OF THE DINAR AND THE DIRHAM
Ibn Khaldun wrote in his book "Al-Muqaddimah":
"The Revelation undertook to mention them and attached many
judgements to them, for example zakat, marriage, and hudud,
etc., therefore within the Revelation they have to have a reality
and specific measure for assessment [of zakat, etc.] upon
which its judgements may be based rather than on the non-
shari'i [other coins]. Know that there is consensus [ijma] since
the beginning of Islam and the age of the Companions and the
Followers that the dirham of the shari'ah is that of which ten
weigh seven mithqals [weight of the dinar] of gold. ... The
weight of a mithqal of gold is seventy-two grains of barley, so
that the dirham which is seven-tenths of it is fifty and two-fifths
grains. All these measurements are firmly established by
consensus."
The primordial uses of the Dinar and the Dirham are:
TO SAVE
Gold or silver are the most stable currency the world has ever
seen
From the beginning of Islam until today, the value of the Islamic
bimetallic currency has remained surprinsingly stable in relation
to basic consumable goods:
A chicken at the time of the Prophet, sallallahu alaihi wa
sallam, cost one dirham; today, 1,400 years later, a chicken
costs approximately one dirham.
In 1,400 years inflation is zero.
Could we say the same about the dollar or any other paper
currency in the last 25 years?
In the long term the bimetallic currency has proved to be the
most stable currency the world has ever seen. It has survived,
despite all the attempts by governments to transform it into a
symbolic currency by imposing a nominal value different from
its weight.
Reliability.
Gold cannot be inflated by printing more of it; it cannot be
devalued by government decree, and unlike paper currency it is
an asset which does not depend upon anybody's promise to
pay.
Portability and anonymity of gold are both important, but the
most significant fact is that gold is an asset that is no-one else´s
liability.
All forms of paper assets: bonds, shares, and even bank
deposits, are promises to repay money borrowed. Their value
is dependant upon the investor's belief that the promise will be
fulfilled. As junk bonds and the Mexican peso have illustrated,
a questionable promise soon loses value.
Gold is not like this. A piece of gold is independent of the
financial system, and its worth is underwritten by 5,000 years
of human experience.
TO PAY ZAKAT
Zakat cannot be paid with a promise of payment
Zakat can only be paid with tangible merchandise, called in
Arabic 'ain. It cannot be paid with a promise to pay or a debt,
called in Arabic dayn.
From the begining the zakat was paid with dinars and
dirhams. Most significant is that the payment of zakat was
never allowed in paper money during all the ottoman period
right until the fall of the Khalifate.
Shaykh Muhammad Illish (1802-1881), the great maliki cadi,
said that if you were to pay zakat with paper-money only its
value as merchandise (dayn), that is, its value as paper can be
accepted. Therefore, its nominal value is irrelevant as payment
of zakat.
Shaykh Illish wrote:
"If the Zakat was obligatory by considering its substance as a
merchandise, then the nisab would not be stipulated according
to its value but according to its substance and its quantity, as is
the case with silver, gold, grain or fruits. Since its substance
[paper] is irrelevant [in value] in respect to the Zakat, then it
should be treated as the copper, iron or other similar
substances.'
Zakat cannot be paid in paper money (American dollars for
example). This is a serious innovation (bid'ah) in one of the
five pillars the deen of Islam.
For those not familiar with the fiqh on zakat I will quote from
the Se'adet-i Ebediyye or "Endless Bliss" written by Husain
Hilmi Effendi (the founder of Ihlas Foundation) in 1956. It is
not a book of the maliki fiqh [which we use], but it is a book
supported by the people who use the name "Ahl al-Sunnah"
and it can enlighten the understanding of our "de facto" 'alims.
For those who do not know about this book, this is preface
note of the book itself: "Se'adet-i Ebediyye is a book prepared
according to the Hanafi madhhab. There is not any knowledge
or word, which contradicts the creed of "Ahl-i Sunnat and
Jama'at in this book." Here are the relevant quotes:
"the zakat of paper money is to be given in gold. It cannot be
given in paper money"
"It is haram to accept any money which is not gold or silver as
zakat or kharaj [from Harun Rashid]"
"Ignorant people say, "Paper money cannot be compared to
bonds [which are not acceptable as payment of zakat] written
out between two people. It is day's currency. It has become
attested universally. It is indispensable to give it today." They
should not be believed. Something cannot be universal,
indispensable or permissible by the word of us the populace."
"In none of the books written or the fatwas given during that
long period [the Ottoman Empire] has it been said or stated that
the zakat could be given in paper money."
The return to the payment of zakat in gold and silver is an
essential part of the re-establishment of Islam.
We must be particularly aware of those who say 'it is not
practical to pay zakat in gold and silver'. This is a false
argument, not the issue. The issue is the fulfilment of the Allah's
Law. We must work towards the establishment of the Law. The
return of the gold Dinar, like the return of the Khalifate, may or
may not appear to be practical yet no Muslim can deny that these
are our obligation.
TO BUY AND SELL
The Dinar and the Dirham are the currency of the Islamic
UmmahNo more hundreds of different paper currencies
diseased with inflation.
A piece of gold is equaly valid wherever you are in the world.
In the past, Muslims were able to travel throughout the Islamic
world and trade with dinars, as theycould at home. From the
XV century onwards the Europeans started to introduce the
banking promisory note in Muslim lands. Paper money gave
European traders an incredible purchasing power that
overwhelmed and eventually surpassed the Muslims'
superiority in world trading.
Gold was money well into this century, and for at least two
centuries before, most bonds, including govern-mental ones,
were gold bonds. But after the First World War, since the
financial demands of the war led governments to print paper
money in excess, the convertability to gold was first suspended
for the most part, and finally terminated.
How important is the dinar and the dirham to the deen of
Islam?
Al-Qurtubi (d. 1273), one of the greatest commentators of
Qur'an, wrote in his renowned Tafsir about the following ayat
of Qur'an,
."O you who believe! Obey Allah and obey the Messenger and
those in command among you. ..."
Qur'an, 4, 59
that the ayat is an order to "obey the Sultan with respect to
seven things: the minting of the dinar and the dirham, fixing
weights and measures, legal judgements, Hajj, Jumu'ah, the
two Eids and Jihad."
The minting of the dinar and the dirham is therefore the first
obligation of the Sultan to be commanded and to be followed
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