May 30th, 2005

The Return of Gold and Sudan's Role
Tehran Times Opinion Column, May 30, By Aliefudien Al-Almany

TEHRAN, May 30 (MNA) -- “Hold a piece of history in your hand” is the slogan of the company Islamic Mint, Ltd., which offers gold and silver coins for collectors in some of the main exchange banks of Dubai. They call them the Islamic gold dinars and silver dirhams.

The idea of Spanish Muslim Dr. Umar Vadillo, who is the brain behind this project, actually encompasses a broader spectrum. His aim was not to sell only collectors’ items or nostalgic gifts. The intention from the beginning was to establish a new world currency, or better, to revive a complete trade system which collapsed and died when paper money took over the Islamic homeland and the rest of the world.

Inflation, gold, and worthless paper

The dinar revivers give us arguments which are easy to understand and shed light on some long forgotten facts. They say: “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 at the time of the Prophet (SAS) cost one dirham; today, 1,400 years later, a chicken costs approximately one dirham. In 1,400 years inflation is zero.”

Could we say the same about the dollar or any other paper currency over the past 25 years?

“In the long term, the bimetallic currency has proven to be the most stable currency the world has ever seen. It has survived, despite all the attempts by governments to transform it into a symbolic currency by imposing a nominal value different from its weight.

“A piece of gold is independent of the financial system, and its worth is underwritten by 5000 years of human experience.”

It was the colonialists who introduced paper money more than a century ago in the Muslim territories which they occupied. The traditional ulema rejected it as un-Islamic. Paper money is just a promise of payment by the government which issued the bill. When we consider which countries possess hard currencies, like the euro, the dollar, and the pound, we should be more than skeptical.

They have lied to the poorer half of the world for centuries, occupied it, and exploited it only to enrich themselves. Now they present us artistic artworks on which phrases are written like: “I promise to pay the owner…” They have never kept their promises, especially with the Muslims, so why should we trust them now?

Paper money is very unstable and will definitely have no future. On a gold coin, on the other hand, you can print anything you like, be it a picture, letters, a poem, or nothing at all. It stays gold and remains free of anyone's promise. Either you possess it or not. You are independent of banks, governments, and trade organizations. Just watch out that nobody steals it.

Regulations and history

Umar Ibn al-Khattab, the second khalif of Islam, established the known standard relationship between the dinar and dirham based on their weights: “The weight of 7 dinars must be equal to the weight of 10 dirhams.”

In the year 75 AH (695 CE) the Khalif Abdalmalik ordered Al-Hajjaj to mint the first dirhams, thus officially establishing the standard of Umar Ibn al-Khattab. In the next year, he ordered the dirhams to be minted in all the regions of Dar al-Islam. Typically, throughout the history of Islam on one side of the coins was written: La Ilaha Illa Allah and Al-hamdulillah, and on the other side the name of the amir and the date.

Gold and silver coins remained official currency until the fall of the caliphate. Since then, dozens of different paper currencies were made in each of the new post-colonial national states created from the dismemberment of Dar al-Islam.

Islamic Mint, Ltd. asks, “Since paper money is a promise of payment, can it be permitted to trust the issuers while they hold the payment (our property) outside our jurisdiction?”

They continue: “History has also demonstrated repeatedly that paper money has been a permanent instrument of default and cheating the Muslims. In addition, Islamic law does not permit the use of a promise of payment as a medium of exchange.”

E-dinar and the Internet

To facilitate the circulation and transactions with the dinar, its re-inventors established the e-dinar. They explain it as follows: “

E-dinar is the name of an Internet based electronic payment (www.e-dinar.com) and exchange system that facilitates gold backed transactions backed by physical gold. Each e-dinar electronic unit corresponds to an exact, fixed weight of 4.25 grams of pure 24k gold. So if an account holder wants to send a specific amount to another account, he just does it by a mouse click through encryption. He also has the option to exchange his e-dinars into any major currency or redeem them and take physical possession of an equivalent amount of gold dinars.”

The gold itself is stored in Dubai at the Transguard Storage Company. No metal may be removed from storage except to cover out exchanges and redemption orders from e-dinar customers

At e-dinar there is no minimum amount for any transaction. If a customer wants just $5 worth of gold, they’ll execute the exchange (without hidden surcharges or exorbitant commission). The conclusion is that the e-dinar is not just another currency, it is a universal means of exchange.

So why not Sudan?

In 2003, an economic adviser to former Malaysian prime minister Mahathir Mohamed showcased the country’s readiness to establish the e-dinar system coinciding with their hosting of the Organization of the Islamic Conference summit the same year. Since Malaysia had healthy trade surpluses with most Islamic states, the scheme would mean that the country would be one of the biggest gainers from the dinar plan.

The industry-backed World Gold Council (WGC) in London said it was watching developments closely. “We would be interested if a new currency were to emerge backed with gold,” said one WGC director.

These are indeed interesting outlooks. In Granada, Spain, Muslim shopkeepers agreed to start a project in which they would accept payments with the dinar and dirham. This means that you can go to the supermarket and pay for your food in silver or even in gold. It is mostly a test, but it shows that the gold and silver currency can be established again, especially when support is forthcoming from governments and financial institutions.

Malaysia is interested but cautious. But would this system not be perfectly suited for Sudan, one of the very few countries in the world trying to practice Islamic banking, forbidding interest, and obliging the payment of zakat? Would the reintroduction of a gold currency not be a way out of the worldwide system of banking and money-trafficking? Financial advisers of the Sudanese government and the leading banks and business groups should consider this and invite the e-dinar team to the country. Gold will certainly regain its former status. This will make paper money worthless, except for starting a fire or for collectors' fun. Hopefully, Sudan will be one of the winners when the rise of gold begins and will reclaim the power.