Answer
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:
The exchange of old gold for new gold, with a price difference, constitutes Riba and is prohibited. However, selling the old gold and then purchasing new gold with the proceeds is permissible.
Shedding more light on this issue, the late Sheikh Muhammad ibn `Uthaymeen, a prominent Saudi Muslim scholar and lecturer, states.
In all their dealings and transactions Muslims should be mindful of Allah and pay heed to His commands. We should never violate the teachings of the Shari`ah under any circumstances.
It is not permissible to exchange worn-out gold for new gold and pay the difference. This is indicated in the story of Bilal (may Allah be pleased with him) when he brought some good dates to the Prophet (peace and blessings be upon him) who said to him, “Where did these come from?” Bilal answered, “We had some bad dates and I paid two saa` (2.03 kilos) of them for one saa` [of these] so that the Prophet (peace and blessings be upon him) might have some.” The Messenger of Allah (peace and blessings be upon him) said, “Oh! Do not do that. [This is] the essence of riba (usury).” (Al-Bukhari)
The Prophet (peace and blessings be upon him) stated that giving more quantity, when exchanging goods of the same kind, due to the difference in quality, is the essence of riba, which is not permissible.
However, the Messenger of Allah, as was his habit, pointed out the permissible way. The Prophet told him to sell the bad dates for cash money and then buy the good dates with that money.
Accordingly, we say: If a woman has some worn-out gold or gold that people no longer wear, she can sell it in the market and take the money, and then buy new gold of her choosing. This is the way taught by our Prophet (peace and blessings be upon him.
Find out more through these helpful resources:
- Is There Zakah on Gold Jewelry?
- Is Gold Trading Halal?
- Should You Use Gold or Silver Nisab for Zakah?
- I Sold Gold Before Paying Zakah: What Should I Do?
Allah Almighty knows best.
Editor’s note: This fatwa is from Ask the Scholar’s archive and was originally published at an earlier date.
