Ads by Muslim Ad Network

Is Commodity Trading Halal?

13 July, 2023
Q As-salamu `alaykum. I would like to know whether trading of commodities such as wheat, rice, soybean, gold, silver, crude oil, etc. via the Internet or online trading services is halal or haram. Is the ruling different whether the trade is done through a brokerage house or self-trading?

Answer

Wa `alaykum as-salamu wa rahmatullahi wa barakatuh.

In the Name of Allah, Most Gracious, Most Merciful.

All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.


In this fatwa:

Future commodity trading is not allowed in Islam, whereas spot commodity trading is permissible either delivering in on the spot or guaranteed in the very near future.

Ads by Muslim Ad Network


In his response to your question, Prof. Dr. Monzer Kahf, Professor of Islamic Finance and Economics at Qatar Faculty of Islamic Studies, states:

Commodity trading may be either spot or future. Future commodity trading is not permissible on the ground that both payment of the price and delivery of the commodity are deferred. This is not permitted in the Shari`ah as the Prophet (peace be upon him) prohibited the sale of deferred (commodity) for a deferred (price).

The OIC Islamic Fiqh Academy also ruled against such a transaction in its Seventh Annual Full Meeting 1412 A.H./1992 (Resolution No.63/1/7).

Spot trading is trading, with delivery and payment within three days, of commodities that either exist in the hands of the seller or that are described and can be obtained immediately by the seller under the guarantee of the exchange management.

Spot trading is permissible (the same Islamic Fiqh Academy’s resolution mentioned above) as long as the availability of delivery and payment are within the spot period, i.e., three days.

This is based on the ground that the period of three days is considered similar to delivery and payment at the time of the contract.

It does not matter whether trading is done through a brokerage house, directly by a trader who works for her/himself, or via the Internet.

It must be noted also that trading of currencies, gold, and silver is permissible by spot only, and if there is any time span between the contract and delivery of both or either price or purchased gold, silver or currencies, it enters under the domain of riba that is very strongly prohibited in the Shari’ah.

Allah Almighty knows best.

Editor’s note: This fatwa is from Ask the Scholar’s archive and was originally published at an earlier date.