What is the meaning of the hadith 'Gold is to be paid by gold..."
By Faisal Amjad

Explaining the famous hadith on riba

Published in: Wealth
Date: 28 / 07 / 19

The hadith is an important reference to money in Islam. In any exchange where there is gold on both sides (or silver/barley/wheat/salt/dates/anything that is used as money in the country like coffee/sugar/rice), for examples:

(1) lending/borrowing, or

(2) exchanging different types of coins (old and new coins/coins from different regions, etc), or

(3) different quality material (like inferior quality dates with superior quality dates, or jewelry with coins, etc),

then the weight must be equal for equal.

If I borrow 20 grams of gold I must return 20 grams of gold.

If I exchange 1 basket of ajwa dates with safawi dates, then the safawi dates must also be 1 basket. People would not want to do this because they will lose if they give one basket of ajwa and take one basket of safawi in return, so they would rather sell one basket of ajwa and with the money, they could buy more than one basket of safawi. But if there is a direct exchange between ajwa and safawi, there must be equal for equal.

If I want to exchange one hundred grams of gold jewelry with a one hundred gram gold bar I will lose (assuming the purity of both is 22 carat) because the jewelry would be more expensive due to expert handicraft involved in the making of the jewelry, so I would rather sell the jewelry for silver and then buy the gold bar with the silver I would have acquired. In that case, I would get a hundred gram gold bar and some silver as well which would all amount to the jewelry including the added value to the jewelry.

This is a fundamental rule in the fiqh so that no one makes money out of merely exchanging money without any labour involved. This is the essence of Riba in the modern world. This is what the Jews did in the temple of Jerusalem. They offered to take Roman coins and gave the coins minted by the temple in return, and in the process, they would give lesser temple coins in return taking a profit from the mere exchange. That was why Nabi Isa alayhissalam went in to the temple and turned the tables and said, "You have turned the temple of God into a den of thieves!"

Faisal Amjad

About the author

A lifelong learner, avid reader and passionate writer, I am the founder of KNOW and a serial entrepreneur.
I am a huge believer in personal development and am also the co-founder of Muslim CEO.

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