It has been some time since I last addressed jurisprudential (fiqh) issues in this column. However, the sharp rise in gold prices in recent days has brought several questions forcefully back into public discussion. One of the most frequently raised issues concerns gold- and silver-backed ETFs—exchange-traded funds such as GLDM (Gold MiniShares Trust) or SLV (Shares Silver Trust). Since these instruments do not involve physical possession, delivery, or direct transfer of ownership in the classical sense, many are asking whether investing in them is religiously impermissible.
The jurisprudential rulings concerning gold and silver were historically formulated within a socio-economic context in which these metals functioned as money. Their classification as ribā-liable commodities in classical fiqh, and the strong emphasis on immediate exchange, possession (qabḍ), and transfer of ownership (tamalluk), were natural outcomes of that historical reality. For centuries, gold and silver served as media of exchange; debts were settled in these metals, and economic life was structured around them. Islamic jurisprudence followed lived reality and derived its rulings accordingly.
Today, however, the world has undergone a profound transformation. The global financial system—shaped by digital records, legal registration mechanisms, and multilayered economic structures—operates on a foundation entirely different from the localized, physical marketplaces of the classical era. In contemporary practice, gold and silver have largely ceased to function as money. Instead, they are treated primarily as commodities, stores of value, and investment instruments. They are no longer used in everyday transactions, debt settlements, or salary payments; all such functions are now performed by fiat currencies.
To continue treating gold unconditionally as a monetary instrument subject to the strict rules of currency exchange (ṣarf), without accounting for this socio-economic transformation, risks severing jurisprudential rulings from their historical context and rendering them artificially timeless.
Contrary to common assumptions, gold- and silver-backed ETFs are neither imaginary nor purely speculative constructs. These funds are supported by actual physical reserves of gold and silver; they are legally defined, regulated, audited, and transparently reported financial instruments. An ETF investor is not merely wagering on price movements but acquires a legally and economically meaningful ownership interest in a real underlying asset.
While this form of ownership does not correspond exactly to the classical fiqh conception of tangible, physical possession, it constitutes a valid, binding, and enforceable form of ownership under contemporary legal systems. The investor has genuine disposal rights over the asset and fully participates in both its gains and losses. This necessarily entails exposure to risk as well as potential reward.
The issue of qabḍ must therefore be reassessed in light of these changing conditions. Today, even products of purely intellectual labor are recognized as property under law and protected as intellectual property. There is no physical object involved, yet a screenplay, a novel, or an invention—once recorded on paper or digitally—acquires full legal recognition as a tradable asset. This reality demonstrates that qabḍ must be redefined in a manner consistent with its underlying purpose.
In fiqh, the purpose of qabḍ is to ensure the actual establishment of ownership and to eliminate uncertainty between contracting parties. It is not an end in itself but a means to that end. In the modern world, ownership is often established not through physical delivery but through digital records, legal registration, and enforceable rights of disposition. Bank balances, shares, and fund units are not physically held, yet their legal and economic ownership is undisputed. To reject such ownership structures solely due to the absence of physical delivery would be to sacrifice the objectives of Islamic law for its outward forms.
From this perspective, gold and silver ETFs may be treated not as currency exchange contracts (ṣarf) but as commodity-based investment instruments. Under such a classification, the stringent conditions historically attached to qabḍ and immediate exchange need not be applied with the same rigidity. Otherwise, one risks attempting to transplant jurisprudential rulings developed for small pre-modern marketplaces directly into today’s global financial system—an approach incompatible with the dynamic and living nature of fiqh.
In conclusion, gold- and silver-backed ETFs that are genuinely asset-backed, transparent, well-regulated, and insulated from manipulation are, in my view, permissible under contemporary socio-economic conditions. This position does not claim absolute or binding authority; rather, it represents a reasonable exercise of ijtihād that takes custom (ʿurf), public interest (maṣlaḥa), and modern economic realities seriously.
I fully respect those who, out of personal piety and caution, choose to avoid such instruments. However, it is neither scientifically nor jurisprudentially sound to accuse those who invest in them of engaging in religiously illicit activity. This issue is not a stark halal-haram binary but a contemporary fiqh question that lies firmly within the realm of interpretation and scholarly judgment.
