Another Suggestion for Gold/Precious Metals-backed Currency at SC-UM Visiting Scholar Lecture, 25 Jan.

25 January 2011 - I attended a Public Lecture presented by Volker Nienhaus from Germany titled "Building Blocks of Islamic Finance: Regulation & Shariah in Perspective".The talk is part of the SC-UM Visiting Scholar programme in conjunction with the Islamic Capital Market initiative.





During the Q&A Session, Rizwan (if I'm Not mistaken) from Nomura posed 2 questions...one of which is a query/suggestion. He referred to Volker's presentation which alluded to the fact that one of the main differences between Islamic Banking & Finance and Conventional Banking & Finance is the usage/backing of real assets for transactions. Hence, why can't the same principle be applied to currency/fiat money.

Rizwan's comments is one of the main arguments put forward by Dinarists in making the case for the introduction of an Islamic Gold Dinar & Islamic Silver Dirham currency. The calls made by people from all walks of life for the advent for a Dinar/Dirham can be heard repeatedly in all Conferences and Talks on IF held in Malaysia for the past couple of years.

Gold Investment Seminar at Bandar Sunway.

Attended a Gold Investment Seminar conducted by Syukor Hashim at Bandar Sunway from 12-2pm. Quite surprised to see a turnout of more than 100 people such that the presenter had to conduct another seminar from 2-4pm. Even then, those attending the earlier presentation packed the room and didn't mind standing at the back or, by the door whilst others were sitting on the "soiled" carpetted floor. Audience came from as far south as Malacca and Negeri Sembilan as well as north i.e. Tanjung Malim and Ipoh.

We were shown a video of Datuk Salleh Majid being interviewed by TV3 in the Bijakwang segment. An interesting quote "saya tidak boleh sarankan keluar wang dari ASB/ASN untuk melabur dalam emas kerna nanti orang PNB akan cari saya. Hakikatnya jika dibandingkan pulangan ASN/ASB berbanding emas dalam masa beberapa tahun, pulangan emas lebih lumayan. Tepuk Dada, Tanya Selera!"....this coming from the person responsible for setting-up the Amanah Saham Nasional/PNB. It seemed that this Bijakwang interview was conducted quite some time back as Salleh Majid mentioned the price of gold is around USD1,100 per ounce (whereas in 2011, gold is trade at well above USD1,300 per ounce)

Some of new and/or interesting things learnt:
1) Gold Auction
2) Gold Pawning
3) Gold Hedging
4) Gold Purchase at Jewellery Shops
5) Alternative Gold Investments

All in it was time well spent. TQ to Mr. Syukor Hashim for the presentation and Miss Katrina of Public Gold and Public Gold for the kind invitation.

"ISLAMIC GOLD DINAR: MYTHS & REALITY" Public Lecture at BNM

STAR Report (18 Jan. 2011): "DON: USE Paper Currency NOT Gold Dinar"
INCEIF Report: Islamic Gold Dinar



Attended a Public Lecture byProf. Dr. Murat Cizakca (Prof of Comparative Economics History)on the topic of "Islamic Gold Dinar: Myths & Reality" held at the Auditorium of BNM. Dr. Murat is also a NEW Faculty Member of INCEIF





It was from MY Weltanschauung, a thought-provoking or provocative lecture(depending on who you talked to!!!). Some of the points and/or conclusions made by Prof. Murat which I disagree with:-

1) DEBASEMENT
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Murat argued that using the ISLAMIC GOLD DINAR (IGD) can lead to "Debasement". Raising an army during times of war was cited as an example.
(Debasement is the practice of lowering the value of currency. It is particularly used in connection with commodity money such as gold or silver coins. A coin is said to be debased if the quantity of gold, silver, copper or nickel is reduced.
Refer:Internet Definitions )

AHM Counter Argument: If the IG Dinar is debased, then it wouldn't be called a Dinar anymore. The IG Dinars standards have been set during the reign of Caliph Umar al-Khatab i.e. the weight of 7 Dinars(seven mithqals) must be equivalent to 10 Dirhams i.e. 4.25gms.
Refer: World Islamic Mint and wikipedia

I believe Murat's concern is more of the coinage being adulterated. While it may be true in days of yonder, we now live in the modern age where technology are used extensively. Moreover, in this age as opposed to medieval times gadgets can easily be obtained or made which can check the content of the IGD.

2) Gresham's Law
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Gresham's Law in a nutshell means "Bad money drives out good IF, their exchange rate is set by law"
Refer: Wikipedia

He also proceeded to outline the formula used (thanking Dr.Obiyathulla Ismath Bacha of INCEIF).

AHM Counter Argument: Murat's argument can easily be debunked by NOT having a Face Value attached/stamped to the IGD or Islamic Silver Dirham(ISD). Just identify the IGD or, ISD as "DINAR" or, "DIRHAM" respectively. Why do we need to give a face value??? Murat is obviously missing the plot.
Hence, the advent of a dual-currency system in Malaysia and/or the Islamic World.

3) HOARDING
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Murat argued that introducing the IG Dinar will lead to hoarding.

AHM Counter Argument: Am a contrarian, the Zakat rate of 2.5% will ensure that hoarding DOES NOT take place. In addition, apart from being used as a real currency the IGD can also be pawned or lent by its owners...ensuring a circulation of wealth in the real economy.

All in and with all due respect to the learned Prof, there were so many "holes" in his conclusion that one wonders whether one is attending a Public lecture or, a "Kelambu"(Mosquito Net) weaving class. Having said that, kudos must be extended to Dr. Murat for the historical lessons with graphs depicting the European situation.It would be great though if a similar case study was done during the Ottoman reign.

In addition, it was really not his call to label Dinar proponents or "DINARISTS" as he labels them as Unislamic when there is a hadith - Abu Bakar ibn Abi Maryam reported that he heard the Messenger of Allah, may Allah bless him and grant him peace, say: "A time is certainly coming over mankind in which there will be nothing [left] which will be of use save a dinar and a dirham." (The Musnad of Imam Ahmad ibn Hanbal) (Akan Tiba satu zaman di mana tiada apa yang tinggal dan boleh digunakan oleh umat manusia, maka simpanlah Dinar dan Dirham. "

All in, it was a thought provoking lecture and I'm glad that I was not fast asleep.


As always, having been in the IF field since 1994 met-up with old friends like Ibrahim (VP, BSN) and Mazhar(EONCAP Islamic Bank). Also finally managed to put a face to a name when I met-up with OP Razali Ahmed of Affin Bank who'd informed me of the talk. I would also like to thank INCEIF & ACIFP for the invitation.

Amirul HM parting words: ...." IF Malaysia can become a pioneer in Islamic Banking & Finance by having a dual banking system, it can also become an INNOVATOR by having a DUAL CURRENCY SYSTEM by introducing the Islamic Gold Dinar and Islamic Silver Dirham...without any face value attached"

PS: Am not sure whether it is a coincidence or not but during the talk, my good friend TK (who was not amused at being labelled Unislamic) rcvd a SMS requesting for Dinar orders to be placed as his group is also minting Gold Dinars!!!