The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.
Question:: The discussion about which kinds of companies Islamic Equity Funds should avoid includes those companies dealing in gold and silver. What is the basis for this? Surely trade in gold and other precious metals/minerals is permissible in Islam?
Answer: Trading in gold and other precious metals/minerals is indeed permissible in Islamic law. Mining and exploration operations are often financed by Islamic banks and financial institutions by means of perfectly acceptable Islamic contracts. Moreover, the DJIMI universe includes several companies involved in the mining of precious metals like gold and silver.