Investing Money in a Gold Trading Business

30-10-2025 | IslamWeb

Question:

Assalamualaikum!Shaykh, I am considering investing in a gold trading business. I will not be involved in the work; I will only provide the capital. The trader will buy and sell gold with this money, and he will give me profits every month without a fixed percentage. He will also provide guaranteed cheques for my capital, and whenever I ask, he will return my capital. Is this arrangement halal according to Shariah, especially considering the special rules for trading gold?

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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, is His slave and Messenger.

If the contract includes a condition that guarantees your capital of loss, this is forbidden in Shariah (Islamic law). Such a condition is invalid by the consensus of the scholars. The Kuwaiti Fiqh Encyclopedia states: “The jurists are in agreement that in partnerships, losses are shared by all partners in proportion to their capital, and it is not permissible to stipulate otherwise.” [End quote]

The scholars differed, however, on whether this condition invalidates the partnership altogether or whether the partnership remains valid while the condition itself becomes invalid.

Accordingly, if you want the agreement to be a valid form of Muḍārabah (profit-sharing partnership), your capital cannot be guaranteed, nor can you be promised a fixed profit. Rather, the agreement must be that you receive a share of the profit if profit is made; and if a loss occurs without negligence or misconduct, it is shared in the capital.

Allah knows best.