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:
1- It is not permissible to exchange old gold for new even if the difference in value is paid to the goldsmith.
2- If someone wants to get new gold, the best way is to sell the old gold and take the price and then buy new gold with it.
Shedding more light on this issue, the late Sheikh Muhammad ibn `Uthaymeen, a prominent Saudi Muslim scholar and lecturer, states.
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.
Allah Almighty knows best.
Editor’s note: This fatwa is from Ask the Scholar’s archive and was originally published at an earlier date.