Is it Practical to Collect & Distribute Zakat in Gold?

In the book ‘Zakat - Raising a Fallen Pillar’ the key elements that were identified as being necessary in restoring the proper collection of Zakat included; a) the Gold Dinar (for monetary wealth), b) Local Distribution, and c) Muslim Authority (Amirate).

In the first few years of implementing this policy all these elements were duly combined. Islamic Gold Dinars were obtained and someone appointed to act as a Wakil in terms of selling them to those who needed them to pay Zakat and redeeming them (at the same price) from recipients if they wanted paper money to spend. In practice some people already had dinars or got them from other sources and some recipients preferred to hold on to the gold or sell them elsewhere, but at least the option to redeem was made readily available.

Several cities, not just in the UK but also other parts of the world, have followed this Norwich example, and one of the results has been more people contacting local amirs in order to participate, in that they want to pay Zakat properly and see it distributed locally.

However, in many situations we find that the previous system of supplying Islamic Gold Dinars is not necessarily sustainable as both the demand for dinars increases, and the realities of the fluctuation of the gold price plays its part. I’m not unduly worried that the payer might buy a dinar for one price and the recipient redeem it for a little less. I think that is a situation people will readily understand and accept if it is made clear as we do when changing pound into Euros or dollars at any Bureau de Change. A good example of making this clear is the Dinar Exchange website.

My concern is that not insisting on any one of the three elements listed above may mean us edging towards the slippery slope that begins with accepting the use of paper money in Zakat for the sake of expedience and ends somewhere else much too far down the line.

Despite this, I must accept that collecting and distributing Zakat in paper money at this time may indeed be what we have to do in some particular and very specific circumstances, but I also believe that even in these situations we must insist that Zakat is at least valued, assessed and stated in Islamic Gold Dinar value.

Then we have to make it clear to payers of Zakat that they must also make the effort to locate and obtain the appropriate amount of gold in order to fulfil their obligation, just as they would do somthing to establish the prayer should the local mosque close down. We should also not forget that there are many other gold coinages being minted around the world which would all be acceptable as payment for Zakat and indeed may be more readily available. These include the Chinese Panda, South African Krugerrand, American Eagle, Candian Maple Leaf and British Sovereign. The Krugerrand in particular is almost perfect as an 8 Dinar coin meaning the nisab would be the equivalent of 2.5 krugerrand.

Additionally we have to continuously push the boundaries in terms of widespread usage of the Islamic Gold Dinar by shopkeepers, other traders, currency dealers, jewellers and savers, and of course we have to continue striving to make the redemption of gold for paper money as easy as possible for Zakat recipients.