The Ruling of Selling Gold on an Installment Basis

In his response to this issue, Dr. Monzer Kahf, a prominent economist and counselor, said that:

‘”it is not allowed. Gold and silver and all currencies should be sold only for cash payment that is the payment and the delivery of the gold must both be done in the same sitting of the contract. The Prophet (peace and blessings be upon him) said that in a very authentic Hadith reported by both Al-Bukhari and Muslim. Any violation of this Hadith is called Riba al Fadl and the transaction is null and void. You can make alternatives that are permissible: 1) sell cash and make delivery of the gold and the full price at the time of the contract and in its same sitting; 2) do not make a sale contract but have the purchaser pay advance payments as only advances (loans) to the buyer and once these payment become close to the amount of gold you can make a sale at that time and pay the remainder of the price. You must be careful the price of the contract must be the market price of the day the contract is made not the price of the day of the first advance given to the seller.’