Exchanging Old Gold Items for New Ones and Adding Cash for the Difference
Fatwa No: 82096

Question

I heard from the Abu Dhabi Islamic radio programme the following: It is haram to exchange your gold belongings for a new gold item with adding some difference in money. The correct way is to sell your gold belongings, get the money and then buy a new gold item. And there should not be any indirect agreement between the seller and shopman that you'll sell to him in favour of buying from his shop. To be honest I have asked and no body ever knew that this doing is haram. We do this on very frequent basis and are shocked to know that this is haram. Please explain to us if this is correct and what is the logic behind this tahrim. Wa athabakum allah khair

Answer

All perfect praise be to Allah, The Lord of the Worlds. I testify that there is none worthy of worship except Allah, and that Muhammad  sallallaahu  `alayhi  wa  sallam ( may  Allaah exalt his mention ) is His slave and Messenger.

The correct way in selling these kinds and buying similar ones - and yet avoiding Riba (usury and interest) is as follows: First, you should sell what you have and if you want to buy a similar object you pay with the money you have collected. It is forbidden for you to sell a trader the gold you have and take some other gold from him by paying the difference. This is pure Riba. It is narrated in a sound Hadeeth that Bilaal  may  Allaah  be  pleased  with  him came to the Prophet  sallallaahu  `alayhi  wa  sallam ( may  Allaah exalt his mention ) bringing some dates. The Prophet  sallallaahu  `alayhi  wa  sallam ( may  Allaah exalt his mention ) said to him: “From where did you get these dates?Bilaal  may  Allaah  be  pleased  with  him said: “We had some bad quality dates, I exchanged two Sa's (measure weighing) of it by one Sa' of a good quality date, so that the Prophet  sallallaahu  `alayhi  wa  sallam ( may  Allaah exalt his mention ) eats some of it. Thereupon, the Prophet  sallallaahu  `alayhi  wa  sallam ( may  Allaah exalt his mention ) said: O! Don't do that? It is the very Riba. But if you want to buy (the good quality date) you should sell the bad quality one and buy with its price.” The Law-Maker has forbidden selling the kinds in which there could be Riba except if they are analogous and exchanged in the same place hand by hand. If the goods exchanged are different from one another and similar in being goods in which there could be Riba, there is no objection in adding some value to one of them under the condition that they be exchanged hand by hand. The Prophet Muhammad  sallallaahu  `alayhi  wa  sallam ( may  Allaah exalt his mention ) said: “Gold for gold and silver for silver and wheat for wheat and barley for barley and dates for dates and salt for salt, the analogous by their analogous, the same amount by the same amount exchanged from hand to hand. But if these kinds are different, trade as you wish but from hand to hand.” [Muslim]

Allah knows best.

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