IslamicFinance.de

The Islamic finance industry has set sight on the gold market as initiatives are underway to establish a new standard to make the metal tradable under Shariah finance rules. World Gold Council (WGC) together with Amanie Advisors and the Accounting and Auditing Organisation for Islamic Financial Institutions in Bahrain are now developing the standard to increase transparency and harmonisation of the use of gold investments. The Islamic finance entry could shake the gold market as Islamic financial institutions hold around $2tn in assets and are expected to double that asset base up to 2020.

The World Gold Council is exploring the creation of a Shariah Standard on Gold, which will provide guidance from the Shariah perspective on the usage of gold in financial and investment transactions for Islamic financial institutions and participants. The Standard also aims to increase transparency and harmonisation regarding the use of gold in various market practices. A draft of the Standard has been prepared for the Council by Amanie Advisors, a DIFC-based consultancy and training agency specializing in Islamic finance. The World Gold Council is calling for interested parties active in Islamic financial services to submit their responses to the development of a Shariah Standard on Gold since their participation in the development of the Standard is vital. The deadline for feedback has been extended to 31st January 2016.

Peter Cooper reported on 9 April on Business 24/7 about the Sharia compliant Exchange Traded Fund (ETF) by Dubai Multi Commodities Centre (DMCC) and World Gold Council. The ETF will be backed by physical Gold deposited under the Almas Tower of DMCC. After approval of the regulatory body Dubai Financial Services Authority (DFSA) a secondary market will be operated by listing the ETF on the Dubai International Financial Exchange (DIFX).

DMCC has taken a share in London-listed Shariah Capital, which is supervising the compliance. Other Gold ETFs usually used derivatives to replicate the performance of Gold.

Source: http://www.business24-7.ae/cs/article_show_mainh1_story.aspx?HeadlineID=...