Ruling on Selling Old Gold in Exchange for New Gold

Author: Dr. Muhammad Zia-ur-Rahman Azmi (رحمه الله)

Islamic Ruling on Gold Transactions:​

According to Hadith, the exchange of gold for gold is only permissible under the following conditions:

1. Equal weight – Both quantities of gold must be identical in weight.
2. Hand-to-hand (immediate exchange) – The transaction must take place on the spot, with no delay in the exchange of gold.

These conditions apply regardless of whether the gold is old or new or whether there are other differences in quality or design. The same conditions also apply to silver transactions.

Permissible Method for Buying and Selling Gold:​

The correct way to sell old gold and purchase new gold is as follows:

1. Sell the old gold – The person who wants to acquire new gold should first sell their existing gold in exchange for silver, currency, or another permissible commodity and receive the full price.
2. Use the proceeds to buy new gold – With the money received from the sale, they can then purchase new gold in a separate transaction.

Since paper currency is considered equivalent to gold and silver in modern financial transactions, it should be used as an intermediary in gold exchanges to avoid engaging in Riba (usury).

Alternative Permissible Transactions:​

• If gold or silver is exchanged for goods such as cars, equipment, or other merchandise, the transaction does not require immediate possession because Riba does not apply in such exchanges.
• If the sale is on credit (installments or deferred payment), then it must be clearly documented, as commanded by Allah ﷻ:

"O you who believe! When you contract a debt for a fixed period, write it down."
[Surah Al-Baqarah: 282]

[Shaykh Ibn Baz: Majmoo’ al-Fatawa wal-Maqalat, 19/157]