First part of the article may be found here.
As expected the standard jointly developed by The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) and the World Gold Council was approved on 05 December during the World Islamic Banking Conference in Bahrain. The significance of this event for non-Muslim world is two-fold:
- 25% of the world population now have clear guidelines as to what types of gold investment shari'ah-compliant instruments they can invest (namely: vaulted gold, gold savings plans, gold certificates, physical gold ETFs and certain gold mining shares) and will have a greater say from now on in gold pricing.
- All investment instruments must be 100% backed up by physical gold as must offer physical delivery option, which will inevitably increase demand for physical gold and add more positive dynamics to it. Thus, according to World Gold council estimates, a mere one percent reallocation of Islamic institutions assets into new gold instruments would create an additional demand for 500-1000 tonnes of gold annually.
Alexey Podkolzin for Aquarium Investments, sources: WGS, AAOIFI, Zero Hedge