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2012 October
23
news

The price of gold and its effect on the Gold Dinar

Some people are concerned that the fact that the price of the material, gold, is manipulated in foreign artificial markets this will be detrimental to our efforts to restore the Gold Dinar as currency of the Ummah. We would naturally prefer to live in a world in which speculators do not manipulate all the commodities -not only gold-and all currencies. We know that the dollar is overvalued; we know that gold and silver are hugely undervalued. We know that international institutions of great influence such as IMF forces our governments into policies that reinforces the US dollar overvaluation and deprives gold of its historical role and the currency of the world. We know central banks are institutions of capitalism infiltrated in Muslim lands by the secular constitutions which still rule our lives. We know a new constitutional Islam which has surrendered to capitalism has become the dominant trend of Islamic thinking for the last 90 years –Islamic banking and so on-. We know all that.

Is the fact that gold is priced in dollar a problem? Yes, but it is the least of our problems. There are many others of much greater importance that require our urgent intervention. Anyone who would genuinely cares about price manipulation should abandon paper fiat currencies instantly. Gold is nowhere near as manipulated as paper currencies are The independence of the Dinar from the US dollar value is rather a mathematical question which has to do with the volume of transactions that occur between gold and USD relative to the amount of transactions between gold and other goods and services. Thus, the solution to the problem depends on continuing doing what we are doing: monetarizing gold. Every time we use a gold Dinar we untie gold from the US dollar. We already have some shops in Malaysia that price their goods in Dinar and Dirham only without any conversion to local currency.

How does it affect us in practical terms? We have to change prices everyday. In Malaysia we have created a larger band of exchange that stabilizes the prices of the Dirham. We have done that because the prices in Dirham are more important for us. Thanks to our price band we only change prices every few months.

What we do is that we price goods in local currency and then we apply the conversion rate which is updated daily in our WIM Malaysia website. Shops as well as individuals subscribe to our sms price service and they receive every day at 6 am the new prices. We also have electronic boards that update prices in special locations, such as markets and government places. We are expanding that. We also are about to introduce local digital payment systems which complement the e-dinar website which is use as a world clearing house for all digital payments based on Dinar and Dirham.

Overall we manage with the price changes and we are getting better. Eventually what we want is to ignore the US dollar and base our prices entirely on commodities and services. We will arrive there.

There are things that can be done at a macro level to change the control of gold prices. The key to that is to monetarize gold at a macro level. We want to create an exchange of gold against physical commodities, including oil. It is challenging but we are working on it. New ideas are always welcome.