This is iA the most comprehensive resource for this question on the internet.
We present views from Islamweb, IslamQA.info, IslamQA.org, and Seekersguidance, then our resident expert Mufti Billal Omarjee presents his views, and finally IFG present a commercial perspective on the matter.
View One: Islamweb
We have previously issued Fatwa 88034 clarifying the permissibility of selling currencies and other items, for which it is a condition that this be done on spot, on the Internet if on-the-spot payment is fulfilled virtually.
Receipt of payment can either occur physically [i.e. cash in return for the product – hand to hand] or virtually and the exchange is valid.
One form of virtual payment is a bank draft or check. This is when one party deposits the money in the account of the other immediately or by bank transfer, or submits a certified check, or the like.
You have mentioned that you deposit the money in the account of the company but what remains to be examined is how you receive the gold or coins that you purchase. If you have a safe with them and they put the gold in it or if you authorized a person to receive the gold on your behalf, or it is a trade of currencies and the monies are transferred to your account immediately, then this is permissible.
However, if direct payment is not realized [according to the two methods already mentioned above], then the transaction is not permissible because it is Riba (usurious interest) as the Prophet said in a Saheeh (sound) Hadeeth: “ Gold is to be paid for by gold with equal weight, like for like, and silver is to be paid for by silver with equal weight, like for like. He who made an addition to it or demanded an addition has dealt in usury. ” [Muslim]
Banknotes are legally the same as gold and silver. Therefore, it is not permissible to buy gold with dollars except with the condition of immediate exchange [of product and price] either physically (i.e. cash in return for the product) or virtually.
As regards purchasing gold and the like from a store and paying with a credit card, then this is permissible if the card is covered, i.e. if its owner has a balance at the source (such as the bank). But if the card is not covered, then it is not permissible to buy gold and so forth with it.
The fourth article from the fifteenth session of the Islamic Fiqh Council reads: “It is not permissible to buy gold and silver as well as monetary coins with a card that is not covered.”
View Two: IslamQA
It is well known in Islam that when buying gold for currency, the exchange should take place in the same sitting where the transaction is agreed upon, because the Prophet (peace and blessings of Allaah be upon him) said: “Gold for gold, silver for silver, like for like, same for same, hand to hand… If it is an exchange of one of these things for another, then sell as you like, so long as it is hand to hand.”
Narrated by Muslim, 1578.
I think that buying gold via the internet is not a transaction that is conducted hand to hand, because you are sending the money to them then they send that gold to you after a while. If that is the case, then buying and selling in this manner is haraam, and it is haraam for you to bring customers to this company, because Allaah says (interpretation of the meaning):
“but do not help one another in sin and transgression”
But if the money and goods are exchanged immediately in one sitting, then it is permissible for you to tell people about them and to bring customers to this company, and to receive payment for that.
We ask Allaah to make our provision halaal. May Allaah send blessings and peace upon our Prophet Muhammad and his family and companions.
View Three: IslamQA.org
In the business of online commodity, no possession takes place as per Shariah before the delivery and here the transfer of risk (the responsibility of profit and loss) is not applied as per the Shariah term of possession, hence until the purchased thing is not taken in complete possession it is not lawful to sell it as sale before possession is prohibited in Shariah.
قال فى الدر (مع الرد كتاب البيوع باب المرابحة والتولية 7:369 ط زكريا ديوبند): لا ….بيع منقول قبل قبضۃ اهـ
Allah (Subhana Wa Ta’ala) knows Best
Darul Ifta ,
Darul Uloom Deoband
View Four: Seekersguidance
[A related but different topic]
It is not permissible to buy shares of gold ETFs. The impermissibility of buying gold ETFs has two primary rationale:
the likelihood that the fund manager will manage client funds in an impermissible manner (e.g. place funds in interest-bearing money market accounts, purchase US treasuries with the funds, buy derivatives [options, currency forwards, swaps, etc] with them, etc.) and
the probability that the manager’s trade in gold will not comply with the Shari’ah principles and rules that govern money-gold transfer (sarf). Among these rules is that any money-gold exchange be strictly spot, i.e. that, with the buyer’s payment, specific pieces (e.g. bars) of gold must come into the buyer’s physical or constructive possession immediately. Investigation of the standard operating procedure (SOP) in the gold markets reveals that this does not happen.
Mufti Billal Omarjee view:
The question is vague. Thus, my answer only applies to buying gold bullion and coins via internet.
It is permissible to purchase the gold online, as payment by card creates an accounting entry in the bank account, showing the payment has been made immediately. The fact that it takes few hours or a day to have it fully transferred, will not have any impact on the shariah compliance. The same can be said if you transfer money to a digital wallet and purchase gold from the deposited fund.
Similarly, if the seller registers and allocates the gold immediately to the buyer’s name then it will be permissible. If the gold is unallocated then it will not be permissible.
My answer does not apply to shares in gold companies, shares in ETF gold, gold indices or gold jewelries etc.
As for using a credit card to purchase gold, this I believe needs further research. In the main time I would suggest to follow the opinion of the Islamic FIqh Council:
Based on the above, you can use a prepaid card to buy gold and not an uncovered credit card.
And Allah knows best!
The IFG view:
We adopt the Islamweb approach. In our times where we transact online, this is a practical approach to the issue.
The reasoning behind the Prophet’s injunction to keep gold transactions hand to hand and the same amount and at the same time, was because gold was a currency in his time and any disparity in the exchange of gold would be riba.
So the key issue is the avoidance of riba.
In our times if you buy off an online gold broker and pay via card - you pretty much instantly complete your transaction. Money leaves your account and hits theirs, and they register your purchase and allocate a portion of their gold to you.
Separately, if you are considering investing in gold - do realise that isn’t a greatly profit-yielding investment. You can compare gold vs a range of other investments here.