White Paper on Islamic Bimetallic Currency
Gold and silver restore social equilibrium
The dinar and the dirham can be the world currency of all free people
Headlines
The schism that divides the defenders of gold and silver and their adversaries
is not only utilitarian but also philosophical. The defence of gold and silver
is solidly based on some fundamental considerations of political philosophy
that the defenders of artificial currency cannot ignore.
"Money is not an invention of the State" wrote Menger, "nor is
it the product of a law-making act. For its existence the sanction of political
authority is not even necessary"
Money is the product of the division of labour and of the economy of exchange
that man has established. When the traders intended to exchange their goods
and services for other more commercial goods the precious metals appeared as
the best choice and became the currency for the majority of people. Gold and
silver had value because they satisfied the needs of man. Contrary to what happened
to other useful merchandise, they were easy to fraction, could be transported
at low cost and kept safe with relative ease.
For around 2,500 years the universal currency was made up of small pieces of
gold and silver called coins. They survived for two millenia despite the numerous
attempts by many governments that tried to manipulate them and replace them
with their own medium of exchange. This perception of the very nature of currency
and the characteristic of precious metals at the service of the economic exchange
leads us to think that gold and silver will probably survive another two thousand
years, and somehow or another, the gold standard will prevail a long time after
the present eruption of artificial national currencies have been forgotten,
or only remembered in the museums of numismatics.
The choice of currency is a matter of crucial importance. Do we want a system
where the government will issue and manage the currency by means of the political
and economic process? Or do we prefer that the people's own decision makes the
choice? If we entrust it to the government and financial institutions then we
must be ready to live with an artificial currency, which is ideal to serve political
purposes. It can be expanded and contracted at will. Always according to the
policies and economical suitability of the moment. But above everything it can
be inflated at will to complement the tax income.
On the other hand if we allow people to make their own free choice, it may well
happen that they choose as a medium of exchange a great variety of trading goods.
In the past, through a selective process of several thousands of years they
chose precious metals ;gold and silver; as currency. They will probably choose
the same if the are given the freedom to do so. Imam Malik, the great Imam of
Madina in the early period of Islam, stated: "Money is any merchandise
commonly accepted as a medium of exchange". Thus through the testimony
of one of the greatest Islamic Imams, the position of Islamic Law clearly stands
in defence of the freedom to choose among all merchandise rather than the imposition
of an artificial currency.
Bimetallic currency is a natural currency as oppossed to the artificial one.
There is no need for an Islamic government to establish a bimetallic currency
by means of a deliberately legal act. In fact, the bimetallic currency, does
not need rules or regulation, laws or official control. It only needs the individual
freedom to possess and use gold and silver coins with an implicit elimination
of all taxes impossed on their use. There is no doubt that the freedom to possess
gold does not only mean the freedom to buy it and sell it for industrial purposes
but also the freedom to use it as a medium of exchange.
Using bimetallic coins means to have a healthy currency. It means that the value
of the currency is independent of the government. It is true that it can not
provide us with the unattainable ideal of an absolutely stable currency, but
it protects the monetary system from the influence of governments and financial
institutions, because the existing stocks of gold are independent of the desires
and manipulations of the political and financial system.
The bimetallic coins as international currency were in the past the product
of an evolution that occurred naturally without the need for institutions or
treaties between governments. Nobody had to take care to make them work as an
international currency. When the main nations of the world adopted it as a currency,
the world found that it had a world currency. It is true that the different
currencies had different names and various weights. But that did not matter
much, since all of them were made of gold or silver and they could be interexchanged
freely. After all, an ounce of gold is an ounce of gold whether minted in the
form of sovereign or eagles.
The bimetallic currency united the world because the payments between nations
ceased to be a problem. It facilitated trade world-wide and promoted, with it,
a division of labour on a world scale. The nations specialised in the merchandise
for which they enjoyed greater advantages in the international market. But above
everything, the bimetallic currency, stimulated the export of capital from the
industrial countries to the undeveloped areas. Without the fear of loss through
devaluation or restriction in transfers, European and Muslim capital earnestly
sought profitable opportunities in all the continents. As a result, trade and
industry improved the conditions of working and life world-wide.
Gold cannot be inflated by printing more of it; it cannot be devalued by government
decree, and unlike paper currency it is an asset which does not depend upon
anybody's promise to pay. Portability and anonymity of gold are both important,
but THE MOST SIGNIFICANT FACT IS THAT GOLD IS AN ASSET THAT IS NO-ONE ELSE'S
LIABILITY. All forms of paper assets: bonds, shares, and even bank deposits,
are promises to repay money borrowed. Their value is dependant upon the investor's
belief that the promise will be fulfilled. As junk bonds and the Mexican peso
have illustrated, a questionable promise soon loses value. Gold is not like
this. A PIECE OF GOLD IS INDEPENDENT OF THE FINANCIAL SYSTEM, and its worth
is underwritten by 5,000 years of human experience.
It may be that the return to the bimetallic currency will be an arduous and
prolonged task. Since it was lost through a gradual erosion of monetary freedom,
perhaps we ought to reconquer it slowly and painfully going upstream back to
freedom. This is the reason why we do not seek a law of reform or a law of restoration,
nor a conversion or a parity, we are satisfied just with freedom. This is a
short and direct path. It may take us years to tread this path and that will
depend upon the resistance from ignorance and public prejudice and the greed
and love of power of financial institutions. The government may for that reason
take some stages in the path, which will offer new challenges that invite the
supreme effort to restore freedom.
Headlines for an Implementation Programme:
- Issuing and minting of dinars and dirhams according to the traditional
standard weights and measures.
- Total freedom to buy, sell and possess any quantity of dinars and dirhams
within Islamic Law.
- Facilitating the transport and transferral of gold for international trading
by a network of appointed agencies throughout the world.
- And finally, changing all paper notes for newly minted dinars and dirhams,
and abolition of all paper-money privileges.Issuing and minting of dinars
and dirhams according to the traditional standard weights and measures.
The first stage is the minting of the coins according to acceptable standards.
Dinars and dirhams have already been minted under the supervision and standards
of the World Islamic Trading Organisation and are in circulation in Spain, Germany
and South Africa, soon to be followed by Switzerland, England and other Muslim
countries.
The definition of the standards of dinar and dirhams set up by WITO are based
on the same size and weight than the original ones in Madinah al-Munawwara.
The DINAR is defined as 4,25 grams of gold of 22 carats.
The DIRHAM is defined as 3,00 grams of sterling silver (or 0.925 pure SILVER).
WEIGHTS AND MEASURES
DINAR 4.25 gm. 23m/m
DIRHAM 3.00 gm. 25 m/m
WITO's standard dimensions for the dinar and the dirham:
Total freedom to buy, sell and possess any quantity of dinars and dirhams within
Islamic Law.
This has four stages:
The first stage is the complete freedom to trade in gold and to possess it.
Everybody has to be able to buy it, sell it, lend it, borrow it, import it and
export it in any quantity. This includes the elimination of all taxes impossed
on the purchase or sale of gold and silver.
The second stage will be the individual freedom to use gold in all economic
transactions. People must enjoy the freedom to use gold when buying goods or
services, without the mediation of the artificial paper currency. That is, the
law of Legal Tender by which it is obligatory to accept the artificial currency
issued by the state as payment of every debt, public or private, will have to
make an exception to all 'contracts in gold' or 'clauses in gold' that will
determine specifically that the payment will be made in gold. In summary, the
legal freedom to celebrate contracts in gold.
Once this has been attained we would have reached the "parallel currency
standard". This will not restrict in any way the official transactions,
nor will it prevent the financing of the government. The system of state finance
will continue to work. All contracts already established in US dollars or the
official currency will be satisfied in that currency, but all contracts in dinars
or dirhams will have to be satisfied in dinars and dirhams. The paper currency
issued by the govenment and the dinars and dirhams will be circulating simultaneously.
The relative supply and demand of each currency will determine its rate of exchange,
which will fluctuate constantly in response to that supply and demand.
The third stage in the way towards bimetallic currency will be individual freedom
to mint coins. The first coins were minted by jewellers and private people.
Private coins circulated freely in history throughout the whole world. Whoever
does not want to take the time and bother to weigh and test these coins or has
no confidence in the mark and stamp of the minter, he will still be free to
use the official currency of the nation.
The fourth stage will be that the goverment will decide to make its currency
freely convertible into gold. It could adopt the prevailing rate of exchange
between both currencies as legal parity and from that moment on the government
will guarantee the unconditional convertibility of its paper notes in gold.
This will be a legislation of the gold currency that will gradually lead towards
freedom.
Facilitating the transport and transferral of gold for international trading
by a international network of appointed agencies throughout the world.
It is quite obvious that in our era of artificial paper money currency, the
way to bimetallic currency seems locked because of the lack of a nation that
will take the lead. It is not realistic to think that the government of a western
kafir country will provide such a leadership. Naturally the monetary authorities
of US and the western countries will defend the present bankrupt state of affairs
that makes so much less painful their own commercial deficits and their inflation.
They would like to mantain their artificial currencies which forces creditor
countries to accelerate their inflation in order to follow their pace.
There is an alternative that allows one to attain monetary stability and economic
cooperation: the national currencies must be all convertible and redeemable
in gold, and the international balances must be satisfied in gold. But, again,
that will not happen without a nation that will take the lead.
The introduction of a gold currency in international trading will produce a
mimetic effect in other Muslim countries who have had enough of supporting western
nations' deficits and, on the other hand, it will provide a solid foundation
for a newly constituted prosperous and just trading order. In this context the
idea of Islamic Trading will rapidly gain strength and meaning.
A firm step in this direction will be the setting up of a network of selected
agencies throughout the world which will allow traders immediately to pay in
one country and receive the currency in another. The network will be regulated
by a system similar to banking clearing or "interflora" (the flower
delivery company). That will effectively allow traders to benefit from a world
currency to make international payments.
Change of all paper notes for newly minted dinars and dirhams, and abolition
of all paper-money privileges.
The final stage will take place once the rate of exchange between the paper
notes and the gold has been established and legal parity ensures the unconditional
convertibility according to that rate. The final transition to the bimetallic
currency will be achieved when the government will change all the paper notes
of different denominations for newly minted dinars and their equivalent in dirhams.
Then all paper currencies will be strictly treated as debts or promise of payment
of debt (The Bank of England will pay the bearer...), therefore subject to all
the restrictions that apply to these kind of documents in Islamic Law. Debts
and promise to pay are private contracts limited to that frame ;they can not
be used as a medium of exchange: debts can not be used to purchase gold or silver,
under the principle of "gold for gold, silver for silver, hand to hand,
equal for equal"; debts can not be used to pay in delayed terms, that is
called debt for debt which is non-acceptable transaction; they can not be transfered
except under specific circunstances that involve the guarantee and the presence
of the person who owes the money; etc.
The Free Medium of Exchange
A Medium of Exchange Freely Chosen by All
Money freely chosen is the instrument of freedom; money imposed is the instrument
of servitude.
The history of money is inseparably linked to the history of liberty. Money,
in the hands of bad governments, has always been the first victim of abuse.
The abuse of money has brought down governments and civilizations in the past;
as historians have said, it was the abuse of money that weakened Roman rule.
Monopoly, imposition, restrictions, debasement, clipping, privileges have all
caught hold first of the most precious and most important of all commodities:
money.
We live in times of so-called monetary crisis. The recent collapse of the pound,
followed by other European currencies, not only has shown the fragility of the
system but the controlling role of the speculators. The situation was very revealing.
The British government was impotent in the defence of its own currency against
the speculators. The few billion pounds spent by the government were useless
against the 500 billion pounds that the currency markets trade every single
day. The government lost against the speculators. A London newspaper wrote on
the occassion: "the government is no longer sovereign", thus recognising
that the currency is not in the hands of the government and admitting the enourmous
power reached by an undefined financial system or method. This has also been
interpreted by many as the end of a political cycle, that is, the end of the
nation state.
The question of money is primarily a question about freedom. When people were
free to choose they universally chose gold and silver as their medium of exchange.
Now we are legally forced to accept the system of artificial money, which value
is determined by a complex mechanism of relationships between political and
economic institutions. In this relationship the citizen has little to say, he
is merely a trusty and passive receptor.
States have power to declare paper to be legal tender, but they do not have
power to make that money trustworthy. As states more and more insist on paper
alone serving as money, less and less trust is placed in it. People can be fooled
for a while with artificial money, but it is inevitable that trust in the money
;something absolutely required for it to serve as a medium of exchange; will
be lost.
We propose to return to gold. Gold offers stability and order. GOLD IS THE END
OF POLITICAL MONEY. Gold is the end of the manipulation of the political parties
and the groups of pressure against the money of all. There is no way paper money
can be 'improved' as money. Political money always fails because free people
eventually reject it. For short periods individual countries can tell their
citizens to use paper, but only at the sacrifice of personal and economic liberty.
We have reached the end of that period. We want freedom to chose our medium
of exchange. We want freedom to make all our payments in gold or silver, freedom
to mint, buy, sell, lend, borrow, import or export any quantity of gold and
to use it in any commercial exchange.
Money in Islam
Freedom
According to Islamic Law, no merchandise can be imposed as the 'only money'.
Imam Malik defined money as 'any merchandise commonly accepted as a medium of
exchange. That means that people are free to chose their medium of exchange.
Artificial money is a coin or a piece of paper without value as merchandise,
and whose only "legal value" is established by the state. That is
not admitted. But even if paper money was a debt of real wealth ;gold, silver
or other specie;, which it is not, it would not be allowed either, because in
Islamic Law debts cannot be used as a medium of exchange, their use is restricted
within their own nature as private contracts. Imam Malik related to us in his
"Muwatta":
Yahya related to me from Malik that he had heard that receipts were given
to people in the time of Marwan ibn al-Hakm for the produce of the market
at al-Jar. People bought and sold the receipts among themselves before they
took delivery of the goods. Zayd ibn Thabit and one of the Companions of the
Messenger of Allah, may Allah bless him and grant him peace, went to Marwan
ibn al-Hakam and said, "Marwan! Do you make usury halal?" He said,
I seek refuge with Allah! What is that?" He said, "These receipts
[sukuukun] which people buy and sell before they take delivery of the goods."
Marwan therefore sent guards to follow them and to take them from people's
hands and return them to their owners.
(Al-Muwatta, Book of Commercial Transactions, 44)
When people were free to chose, they chose gold and silver in the past. If we
are allowed again to chose most probably we will chose gold and silver again.
The important thing is that paper money cannot be imposed on us.
Freedom gives a basket of merchandise as possibilities. That freedom to choose,
if gold goes up, silver; or if the silver goes, platinum; etc, reflects in a
different monetary culture. Let us look at the problem of artificial inflation:
A chicken at the time of the Prophet, sallallahu alayhi wa sallam, cost one
dirham, today in Europe a chicken costs approximately the equivalent of one
dirham. In 1400 years the "inflation effect" in silver is practically
zero. On the other hand, in the last twenty five years in Western Europe the
prices have at least multiplied by ten. In the next twenty five years it will
also be multiplied by ten. This is without mentioning, places like Mexico, Brazil,
Turkey, etc.
The Dinars and the Dirhams in Islam were made of gold and silver. Because of
their small weight they served perfectly for the big and small trading in the
city and the big fairs. Their weights are particularly suitable to be used as
a medium of exchange.
Dinars and dirhams have already been minted and are in commercial circulation
in Spain, Scotland, Germany and South Africa since 1992.
History of Coins in the Islamic World
When the Arabs conquered the Byzantine possessions in Syria at the end of the
seventh century they took over the "solidus" as their unit of gold,
gave it Islamic types and called it a DINAR.
The first dated coins that can be assigned to the Muslims are copies of silver
dirhams of the Sasanian Yezdigird III, struck during the caliphate of 'Uthman.
The first coinage in Islam was in the year 41 AH under the caliphate of Mu'awiya.
These new coins which bore the name of dirham established the style of the Islamic
silver coinage for the next five centuries . The side normally taken as the
obverse has as its central legend the declaration of Faith, called the Kalima
or Shahada. The reverse has a four line central inscription of the Qur'an the
Surah 112 (Al-Ikhlas).
The marginal legend, known as the Prophetic Mission formula, states, the second
Shahada and Qur'an IX, 33. "Muhammad is the messenger of Allah, he was
sent with guidance and the religion of truth to make it prevail over every other
deen, averse though the idolaters may be"
Well over 60 different mint-names appear on Umayyad dirhams.
The production of Islamic gold coins began slightly earlier than the reformation
of the silver coinage 74 AH. This type was used for the whole of the Umayyad
period, the coins being struck and carefully controlled at a standard of 4.25
gm.
The predominant coinage in much of the post-1200 Islamic world was of the Ottoman
strand. Gold Coins in denomination from 25 to 500 piastres were struck at Ankara
until 1928.
In the Ottoman Empire, paper money was first used in 1265 AH (1840 A.D.). Later
is was given up. It was used in 1268 AH for the second time and in 1279 AH for
the third time, each time being superseded some time later. Its fourth monetization
took place in 1294 AH (1877 A.D.) under the entitlement of the Ottoman Bank,
and from then on it has been in use up till now, being changed every so often.
In none of the books written or the fatwas given during that long period has
it been said or stated that the Zakat could be given in paper money. People
have always given their Zakat in gold and silver. It is written on the forty-fourth
page of 'Ikd-ul-jayyid that it is not permissible to give the Zakat in fulus
in the madhab of Shafi'i, either. This is also confirmed from the Azhar in the
Book of Fatwas by Shaykh 'Aleesh.
Money, a commodity or a symbol
We live now in a time of symbolic money, but it was not always like this. Today
money is represented by pieces of paper as non-redeemable official bills which
quantity can be increased without any effort by the monetary authorities of
the country.
Until the beginning of the twentieth century the most popular and universal
medium of exchange were gold an silver coins. Currency was considered to be
as free as any other merchandise. People responding to their own particular
needs demanded the coins and also offer them, and thus their market value was
daily established.
The symbolic money originated from private contracts or promise of payments
issued by goldsmiths and later by banks which became common among businessmen.
The private contract issued in favour of a particular person to be paid at a
particular time became increasingly more abstract until it reached today's non-redeemable
note. The private contract become payable to the bearer rather that to a particular
person, then it became payable on demand rather than at a particular time.
The next evolutionary jump took place as more governments step in the support
of their national bank's notes as national currency. This resulted in more people
becoming used to it as a 'substitute' of gold and silver. Then, in periods of
emergency, the government could suspend the obligation to redeem the notes,
effectively making them the unique money in circulation.
The final stage took place when the governments discovered the potential of
the artificial currency to cover their own financial deficit. That was achieved
through an special legislation that made their notes "legal money"
and it obliged people to accept them as payment of all officialdebts. After
many decades, the governments eliminated all the merchandise currencies &endash;gold
and silver coins- from circulation. Thus the non-redeemable promise of payment
of the government became the only available medium of exchange. A purely symbolic
and artificial money had been created.
On this issue of money many people have fought before. Paper money was defended
by the usurers and the economists, who maintained money could be substituted
with symbols which were the property of the state; and was attacked by the defenders
of freedom who maintained that money is not the monopoly of the state and therefore
was a commodity like any other one. Here are some of the arguments:
The Economists
It was a maxim of Roman Law that the value of money was fixed by Imperial decree.
It was expressly forbidden to treat money as a commodity.
"However, it shall not be lawful for anyone to buy money, for, as it
was created for public use, it is nor permissible for it to be a commodity"
(Codex Theodosianus, lib. 9, tit. 23)
Nicholas Barbon deduces the right of the state 'to raise money', i.e. to give
to the quantity of silver called a shilling the name of a greater quantity,
such as crown, and so to pay back shillings to creditors instead of crowns.
"Money does wear and grow lighter by often telling over... It is the
denomination and currency of the money that men regard in bargaining, and
not the quantity of silver... 'Tis the public authority upon the metal that
makes it money" (Barbon, Nicholas, A Discourse on Coining the New Money
Lighter. In Answer to Mr. Locke's Considerations etc., London, 1696, p.29,
30, 25).
"That, as far as concerns our domestic exchanges, all the monetary
functions which are usually performed by gold and silver coins, may be performed
as effectually by a circulation of inconvertible notes having no value but
that factitious and conventional value... they derive from the law, is a fact
which admits, I conceive, of no denial." (Fullarton, John, On the Regulations
of Currencies, 2nd edn., London, 1848, p. 21)
"Money is their (the commodities) symbol". (Forbonnais, François-Véron
de, Élémens du commerce, new edn., Leyden, 1776, Vol. 2, p.
143)
"Money is a symbol of a thing and represents it". (Montesquieu,
Charles-Louis de, Esprit des lois (1748), in Œuvres, London, 1767, Vol
2, p. 3)
"The fact that the circulation of money itself splits the nominal content
of coins away form their real content, dividing their metallic existence from
their functional existence, this fact implies the latent possibility of replacing
metallic money with tokens made of some other material, i.e.., symbols which
would perform the function of coins." (Marx, Carl, Capital (1867), ed.
Penguin, London, 1976, Vol. 1, pp. 222-3)
The Freedom Guardians
"Money is not a mere symbol, for it is itself wealth; it does not represent
the values, it is their equivalent". (Le Trosne, Guillaume-François,
De l'intérêt social par rapport à la valeur, à
la circulation, à l'industrie, et au commerce intérieur et exterieur
[1777], in Physiocrates, ed. Daire, part 2, Paris,1846, p. 910).
'Whether one of these two values is money, or whether they are both ordinary
commodities, is in itself a matter of complete indifference' (Mercier de la
Rivière, Paul Pierre le, L'Ordre naturel et essentiel des sociétés
politiques (1767), in Physiocrates, ed. E. Daire, Part 2, Paris, 1846)
'Money is the universal commodity'. (Verri, Pietro, Meditazioni sulla economia
politica (1771), in Scrittori Classici italiani di economia politica, Parte
moderna, ed. Custodi, Vol. 15, Milan, 1804, p. 16)
"Silver and gold, coined or uncoined, tho' they are used for a measure
of all other things, are no less a commodity than wine, oyl, tobacco, cloth
or stuffs". (Child, Josiah, A Discourse Concerning Trade, and That in
Particular of the East-Indies etc., London, 1689, p. 2)
"Gold and silver have value as metals before they are money".
"The coins which today have a merely ideal denomination are in all nations
the oldest; once upon a time they were all real, and because they were real
people reckoned with them". (Galiani, Ferdinando, Della Moneta, p. 72,
153, Vol.3 of Custodi's collection entitled Scrittori classici italiani di
economia politica, Parte moderna, Milan, 1803).
"The false definitions of money may be divided in two main groups:
those which make it more, and those which make it less, than a commodity".
(Wilhelm Roscher, Die Grundlagen der Nationalökonomie, 3rd. edn, Stuttgart,
1858, pp. 207).
Common False Objections to Gold
In any debate about gold and silver, certain objections are repeatedly raised
by opponents of monetary freedom, even though those objections have been refuted
many times before. Some of these objections are:
- There is not enough gold;
- Russia and South Africa, since they are the principal producer will benefit;
- Gold is subject to undesirable speculative influences;
- Gold will produce instability in prices.
The first objection, there is not enough gold, is based upon a misunderstanding
of the price of gold. It assumes that the present exchange ratio between a weight
of gold and notes is the exchange ratio that must prevail when the gold is made
a medium of exchange. Such obviously is not the case. To put it simply, lower
prices under gold currency will eliminate the necessity for larger sums. One
could buy a suit that costs 400 paper units with 20 gold equivalents at a different
exchange ratio.
The second objection, concerning Russia and South Africa is equally groundless.
It could be considered an advantage in the same way oil or a fertile soil could
be equally in comparative terms. The amount of gold already out of the earth
in the last two thousand years is already superior to the known but unminted
reserves of Russia and South Africa. The unminted reserves of Russia are estimated
in about 250 million ounces which is less than what the United States already
has in minted reserves. The total amount of minted gold in official holdings
only (without considering the privately owned) according to the IMF can be estimated
at 1,100 million ounces. The demand for gold as medium of exchange will release
the existing hoardings, a process which is already in vogue in most central
banks. The real fear should be a massive increase in the supply of paper money
which will bring us another decade like the 70's of high inflation.
The third objection, that gold is subject to speculative influence and therefore
too unstable to be used as a medium of exchange, is also false. During the 70's,
gold become a major hedge against inflation. The run-up in gold prices from
$35 to $850 per ounce came as a result of fears about the value of paper money
and developing international crises. People who object to gold because it is
speculative confuse cause and effect. The real speculation is provoked by an
irredeemable paper money system and people who logically want to protect themselves
from it.
The forth objection says that gold will produce instability in prices. Comparing
prices in gold in U.S. of 1833 with 1933, just prior to the abandoning of the
domestic gold standard, the index of wholesale commodity prices increased only
of 0.9 percent in one hundred years! Since then the index increased 350% by
1971 when president Nixon, declaring international bankruptcy, announced that
no more gold would be given in exchange for dollars. In the last twenty years
the index has gone up around 400%.
Gold is therefore stable and capable to be money. There is no money in history
more unstable or incapable than paper money.
Appendix
Minting: Basic Operations and Machinery Needed
1. Metal melting
In this first operation pure metal is melted with other metals that are of
use to form the appropriate alloy to obtain the desired standard of fineness
of gold and silver.
The dinars are made in 22-carat gold, according to the standard approved by
the World Islamic Trading Organisation, to give them enough strength as coins.
This means that in 1,000 gm. there are 917 grams of pure gold and the rest,
i.e. 82 grams are a 50% blend of silver and copper:
- 917 gm. 24-carat gold
- 41 gm. sterling silver
- 41 gm. copper Referring to silver, the dirhams are of 930 thousandth, that
is, in 1,000 grams of silver, 930 grams are pure and the rest is a different
metal.
Once the appropiate alloy is made, hardened ingots are produced and prepared
for the next operation.
Tools needed:
- Melting propane burner
- Ingot moulds
2. Rolling operations
By this process the ingots are rolled several times, that is, they pass in
between two rolls that reduce the thickness of the ingot and slowly it becomes
a long thin plate. It is advisable to anneal the metal during this process to
eliminate the accumulated hardeness produced by the strong tensions that the
metal suffers during the rolling operations. The metal has to be made red-hot
and then cooled with hydrochloric acid to attain the blanching of the metal
. The required thickness is determined by the weight and diameter of the coin.
Tools needed:
3. Disc cutting
From the rolled plate, with a mechanical press and a cutter, discs of the
desired diameter are cut, checking first that the thickness obtained determines
the weight desired of the coin.
The measurements of the coins according to the World Islamic Trading Organisation
are based on the historical standard of Madinah accepted by Muslims during centuries
The remaining material is minted and rolled anew until no metal is left.
Once discs are cut, they are annealed once more to soften the metal which
has been hardened due to previous operations cooling it with hydrochloric acid
after having made it red-hot so that the new coin is soft and clean ready to
be minted.
Tools needed:
- 15 Tons Mechanical press.
- Disc cutters (dies).
- Electronic precision balance.
4. Polishing
To restore the natural colour and brightness of the metal from previous handling,
discs are polished with a vibratory drum filled with stainless-steel balls and
soaped water, due to the vibrations, the balls polish, burnish and smooth the
edges of the discs.
Tools needed:
- Polishing drum of 12 kg. load capacity
5. Coining
Once discs are dry, definitive minting is made. With a strong pressure, the
two sides of the coin are engraved with the dies.
The hydraulic press used for this operation, is the most sophisticated of
all the machines mentioned here since it is special for minting _ small, silent,
strong and automatic. It is used with a device which activates the rings to
centre. When the piston goes down it holds the disc tight and contains it during
the minting. The disc is liberated when the piston goes up. In this moment the
minted coin is removed.
Tools needed:
- Dies
- Rings to centre
- 200 Tons automatic hydraulic press.
