Sunday, February 26, 2006

Islamic Gold Coins

Not very well known in the west is the Islamic Gold and Silver coins available for collecting, saving and trading.

The history of Islamic coins and the laws relating to them may be found at Islamic Gold Coins and it is a very interesting piece of history not generally known in the west.

According to Islamic Gold Coins.
"In the beginning the Muslims used gold and silver by weight and the dinar and dirhams that they used were made by the Persians."

"The first dated coins that can be assigned to the Muslims are copies of silver dirhams of the Sassanian Yezdigird III, struck during the Khalifate of Uthman, radiy'allahu anhu. These coins differ from the original ones in that an Arabic inscription is found in the obverse margins, normally reading "in the Name of Allah". Since then the writing in Arabic of the Name of Allah and parts of Qur'an on the coins became a custom in all mintings made by Muslims."

"Under what was known as the coin standard of the Khalif Umar Ibn al-Khattab, the weight of 10 dirhams was equivalent to 7 dinars (mithqals)"

These would perhaps be some of the oldest minted coins in existence and, it is said, are still being minted today.

Strict Islamic Law does not permit the use of a promise of payment as a medium of exchange therefore does not permit, within its circle, paper money but only gold and silver.

It is considered that gold and silver are the most stable currency the world has ever seen. From the beginning of Islam until today, the value of the Islamic bimetallic currency has remained surprisingly stable in relation to basic consumable goods:

A chicken 1400 years ago, cost one dirham (a silver coin). Today, it still costs approximately one dirham. The inflation in terms of the value of silver therefore has been zero unlike the paper currencies prevalent today. The same applies to gold.

Gold cannot be inflated by printing more of it. It cannot be devalued by government decree. Unlike paper currency it is an asset which does not depend upon anybody's promise to pay.

Portability and anonymity of gold are both important, but the most significant fact is that gold is an asset that is no-one else’s liability.

All forms of paper assets: bonds, shares, and even bank deposits, are promises to repay money borrowed. Their value is dependent upon the investor's belief that the promise to repay will be fulfilled. As junk bonds and the Mexican peso have illustrated, a questionable promise soon loses value.

Gold is not like this. A piece of gold is independent of the financial system, and it's worth is underwritten by 5,000 years of human experience.

The Islamic Dinar is a specific weight of 22k gold (917.) equivalent to 4.25 grams and the Islamic Dirham is a specific weight of pure silver equivalent to 3.0 grams.

The coins are used principally for savings as they are considered wealth in themselves. They are also used to pay for dowry and used to buy and sell or trade as a legitimate medium of exchange.

These coins are very hard to come buy. There is a lot of speculation going on with Dinar paper money from Iraq but that is more concerned with cashing in on war and human suffering than promoting the value of gold coins.

If you ever come across any genuine Islamic gold coins such as the gold Dinar, buy them, they are worth more than their weight in gold!

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