Tags: Gold | ETF | Sharia | Compliant

World's Largest Gold ETF Certified as Sharia-Compliant

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Tuesday, 28 Feb 2017 12:14 PM Current | Bio | Archive

State Street Global Advisors, which operates SPDR Gold Shares (GLD), the world’s largest gold-backed exchange traded fund, announced this week that the fund has been officially certified as Sharia-compliant by Amanie Advisors of Malaysia, a leading sharia advisory company specializing in Islamic financial institutions.  That opens the gold door to millions of Muslims who had been prevented by Islamic prohibitions from trading in gold.

Muslims generally avoided buying shares of gold ETFs because of the Islamic law that prohibits accepting interest or fees for loans of money.  It was unclear exactly how gold ETFs measured up against this law, so Muslims avoided them.

Recently the World Gold Council, in collaboration with AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions), developed criteria for gold trading that would be in accordance with Islamic Sharia law.  AAOIFI is a Bahrain-based nonprofit organization tasked with maintaining and promoting sharia standards for Islamic financial institutions.

The Sharia standards for gold trading were unveiled in December 2016, paving the way for certification of the SPDR Gold Shares fund for participation by Muslims.  This opens the path for other gold-backed ETFs to gain certification.

According to Nikkei Asian Review, “Joseph Cavatoni, who is in charge of ETFs at the World Gold Council, said the certification is an important step toward meeting demand for gold in the Islamic financial market, which is valued at $2 trillion, as it gives Muslims access to gold-backed ETFs.”

Central Bank Gold Buying Continues in 2017

In January, the Central Bank of the Russian Federation bought 37 more metric tons, equivalent to nearly 1.2 million ounces worth over $1.4 billion at an average price of $1,200 per ounce.  That brought Russia’s overall foreign exchange reserves to $393.6 billion worth of gold.

In the fourth quarter of 2016, Russia bought 48 tons in October – their largest one-month purchase since 1998 – adding another 31 tons in November.  Russia took a breather in December, adding no more gold that month, but for all of 2016, Russia bought 200 tons of gold, similar to their 206 tons of gold added in 2015.   Russia is now the sixth largest holder of gold bullion in the world and the third largest producer, behind only China and Australia.

Central banks have been net purchasers of gold since 2009, buying a total of over 2,800 metric tons in the last eight years, averaging 350 tons per year, or about 10% of newly-mined supplies each year.  Last year, central banks bought 383.6 tons of gold, with the most gold bought by Russia, China, and Kazakhstan, in that order.  Those three traditionally “communist” nations bought 80% of all central bank gold last year.

 

Mike Fuljenz is a member of the Newsmax Finance Brain Trust.  He is also the editor of the NLG award winning Michael Fuljenz Metals Market Weekly Report.  Discover more by Clicking Here Now. 

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State Street Global Advisors, which operates SPDR Gold Shares (GLD), the world's largest gold-backed exchange traded fund, announced this week that the fund has been officially certified as Sharia-compliant by Amanie Advisors of Malaysia.
Gold, ETF, Sharia, Compliant
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2017-14-28
Tuesday, 28 Feb 2017 12:14 PM
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