Islamic Gold Dinar

Islamic Gold Dinar: The Historical Standard
 Ahamed Kameel

Abstract

The-inner-workings-of-eye.

Recently, inquiries have arisen regarding the specifications for gold dinar and silver dirham. As the dinar and dirham have historically represented the Shari’ah monetary standards since the era of the Prophet pbuh, our task will thus focus solely on the reestablishment of that classical standard. 

From now on, no groups or organizations are allowed to create their own standards. As the Islamic gold dinar was established only around 50 years following the Prophet's pbuh passing, history clearly indicates that the solidus of the Eastern Roman Byzantine Empire served as the financial foundation for the Shari’ah. 

Therefore, the most effective method to ascertain the standard is to examine the definition provided by its creator, the Byzantine Empire. Coins discovered by archeologists are unreliable for this purpose since they typically experience wear and potential tampering such as clipping, among other issues. 

The actual historical standard was determined to be 4.5 grams of pure gold for the dinar and 3.15 grams of pure silver for the dirham. Nevertheless, as the dinar functions merely as a value measure reliant on gold content, and if zakat is calculated based on a year's supply of food, then the 4.25gm dinar of pure gold and 2.975gm dirham of pure silver, which were in circulation during the Prophet's pbuh time, also serve as a standard. 

Introduction

Certainly, the fascination with gold dinar among the general public, scholars, business sectors, and even governmental bodies has grown recently. The unrest in the US and Europe, along with the persistent global economic and monetary crisis, has heightened this interest. 

The interest-based fiat monetary system underpinning capitalism is truly faltering, and the globe is searching for potential remedies to the crisis. One proposal from certain circles has been to revert to gold as the global monetary standard. Regarding Islamic economics, there is a movement to revert to the Islamic gold dinar, which served as the Shari’ah monetary standard throughout Islamic history until the Ottoman Caliphate's collapse in 1924. 

The gold dinar is widely recognized as a 4.25gm gold coin, derived from the Roman solidus that was in circulation during the era of the Prophet pbuh. The gold dinar establishes the monetary benchmark for the Shari’ah regulations regarding muamalat, zakat, hudud, and mahr. However, there is a variation in views among supporters of the gold dinar regarding the purity and weight of the coin – should it consist of 22K gold or 24K pure gold? Should it be 4.25 grams or greater? Twenty-four karat (24K) gold is considered pure gold, and it is 99.99 percent pure by today's standards. 

The 22K thus consists of 91.66% gold, which is why it is referred to as 916 gold. Because of the rounding, certain gold dealers designate it as 917, indicating that out of a thousand parts, 917 parts consist of gold, and the remaining parts are typically other metals, usually silver or copper. 

The question whether the gold dinar is of fine gold or not is important because it is the Shari’ah standard and even the zakat, the fifth pillar of Islam, is based on it.  The nisab for money is 20 dinars.  One who had twenty dinar in one’s possession for one year will have to pay a 2½ %  zakat on it, i.e. half-dinar.

The Purity of the Islamic Gold Dinar:  22K or 24K?

This question should not be difficult to answer because the gold dinar had been a historical standard among Muslims for centuries.  It is not a modern innovation or theoretical construction.  Hence to answer the above question, one simply has to go back to history, particularly the time of the Prophet Muhammad peace be upon him.

The Prophet pbuh is reported to have said:  The system of weights and measures is the system of the people of Medina.

History of the Gold Dinar During the Prophet’s Era in Medina

During the era of the Prophet pbuh, the Muslims had not yet begun to mint gold dinars. The Prophet pbuh acknowledged the gold solidus of the Roman Byzantine, referred to as the bezant, as the currency benchmark for Muslims. In this is knowledge. This coin circulated among the Arabs for many years prior to the Muslims creating their own currency. 

The Prophet would not have embraced it if it lacked an Islamic essence, meaning it does not advance the maqasid al Shari’ah. It must also be a standard that is fair and consistent; promoting trade and business both among Muslims and non-Muslims. Actually, the initial Islamic gold dinars were not produced until roughly fifty years after the Prophet’s passing, by the fifth Umayyad caliph Abd al-Malik ibn Marwan in the year 75H (697CE). 

The solidus, a gold coin from the Eastern Roman Byzantine Empire, was accepted by the Prophet pbuh and was in circulation among Muslims, so this is the coin that requires our research and understanding. Undoubtedly, the Islamic gold dinars produced by subsequent Muslim leaders would adhere to this standard. Prior to discussing this, let’s examine the purpose and roles of the gold dinar. 

Function of the Gold Dinar

The gold dinar served as currency in Islam. Therefore, it resolved issues typically linked to barter transactions, such as the double coincidence of wants and divisibility concerns. Yet, as currency, it allowed individuals to focus on their strongest skills, resulting in greater productivity, higher output, and expanded trade; consequently enhancing the quality of life for people. 

Consequently, one of the key roles of the gold dinar as currency was to serve as a reliable standard of value. This enables individuals to trade goods and services fairly, save for future use and investments, engage in credit transactions, and pay off debts later. Al Ghazzali and Ibn Khaldun rightly claimed that Allah SWT designed gold and silver to serve as a standard of value. Therefore, gold and silver serve as the benchmarks against which the worth of everything is evaluated. 

The existing global monetary framework centered around fiat currency has lacked this consistent measure of value since the 1971 collapse of Bretton Woods. Thus, it lacks a numeraire or an anchor that connects the monetary sector to the actual economy. I would argue this as the primary cause of the ongoing decline of capitalism. 

When something is regarded as a standard or benchmark, it must be 'pure' and straightforward for people to easily connect with it. Distance is quantified in kilometers, for instance. A kilometer is defined as the distance light travels in a vacuum in 1/299,792.458 seconds. The kilogram, conversely, is defined as the fundamental unit of mass in the International System of Units and is established as equivalent to the mass of the International Prototype Kilogram (IPK), which closely matches the mass of one liter of water. As global trade and commerce entail the exchange of products and services, what is required today is a reliable standard of value to evaluate the worth of everything. 

The Aureus and Solidus of Rome 

The aureus, a gold coin of ancient Rome, was one of the first Roman gold coins, produced from the 1st century BC until the early 4th century. The aureus of Julius Caesar was minted at a rate of 40 to the Roman libra pound. The libra pound weighs approximately 327.4 grams. Thus, the coin had a weight of approximately 8 grams. Subsequently, Emperor Nero decreased the weight of the aureus by striking it at 45 to the pound, approximately 7.3 grams. The aureus was subsequently substituted by the solidus, initially introduced by Diocletian circa 301 AD, minted at 60 to the Roman pound of pure gold, with each coin weighing approximately 5.5 grams. Because of its scarce supply, its economic impact was negligible. 

Hence, the solidus was reintroduced by Constantine I in 312 AD, permanently replacing the aureus as the official gold coin of the Roman Empire. The solidus of Constantine was struck at a rate of 72 to a Roman Byzantine pound of pure gold which equals 324gm, each coin weighing twenty-four Greco-Roman carats, or about 4.5 grams of gold per coin.  Analysis of the Roman aureus and solidus, regardless of the size or weight, shows the purity level to be near 24 carat gold in excess of 99%. Whenever the coin was taken in by the treasury, it was melted down and reissued. This maintained the evenness of the weight of the circulating solidi[2].

Hence it is obvious that the gold dinars of the Roman solidus that circulated among the Arabs during the advent of the Prophet pbuh were of fine gold, exceeding 99 percent purity.  However, since the solidi circulating outside the Roman empire including the Arab world, were not used to pay taxes to the emperor they did not get reminted, and hence the soft pure-gold coins became quickly worn[3].  The average weight of the coins in the Arab world was about 4.25gm, from the original weight of 4.5gm.  Regarding this Bernstein said the following:

Less than fifty years after the death of Prophet Muhammad (peace be upon him), the Arabs emulated the great rulers of the past with the debut of their own gold coinage – the dinar –  issued by the Caliph Abd al-Malik at Damascus in 75H.  These coins, 97 percent pure gold and minted in great quantity gradually displaced the bezant as the major international currency, circulating throughout the Arab domains and everywhere in Christian Europe as well[4].

Coins of the time of Abd al-Malik ibn Marwan, unearthed by archeologists, have the weight of the dinar at about 4.25grammes[5], matching the weight of the worn solidi that circulated in those areas.  One could attribute this slightly lower purity of the first Islamic gold dinar compared to the Roman coin to the fact this was the first attempts of Muslims to mint their own coins and hence their relative inexperience in the refining and minting technology compared to the Romans who had been doing this for centuries.  However, undoubtedly the intention was to get a coin as pure gold as possible.

However, as the Islamic empire expanded and trade flourished, it must have become apparent that the gold dinar was less in weight compared to the Roman solidus[6].  The Caliph Umar ibn Abd al-Aziz alerted that the dirhams of Abd al-Malik ibn Marwan were at 7:10.5 to the mithqal instead of the standard at 7:10.  Hence he corrected the matter and issued, in 99H/717CE[7], silver dirhams and gold dinars of weight 3.15gm[8] and 4.5gm respectively, i.e. similar weigh to the Roman solidus, i.e. 4.5gm[9]. Historical evidences show that by the time of the Fatimid Dynasty in Egypt, dinars of fine gold were already in circulation[10].

The Standard Weight of the Islamic Gold Dinar

Determining the standard weight should be easy but rather challenging.  Easy because we are dealing with something that had existed historically, and not developing a theoretical one.  One cannot totally rely on coins unearthed by archeologist in this regard because unearthed coins generally would have experienced some tear and wear depending on how long they had been in circulation and also due to some variance in the weight of individual coins themselves.  Some could have been tempered through clipping and so forth.  Hence it is best we resort to the definition of the coins as determined by the issuing authorities, like in this case the Byzantine Empire.

It is obvious that the Islamic gold dinar is based on Constantine’s Roman solidus which was struck 72 to the Roman Byzantine pound (litra) used for gold measurement.  The litra pound is recorded to be 324 gm, which gives an ounce to be 27gm[11].  Hence the weight of the solidus is 4.5 gm as recorded, equals one mithqal, equals 24 Greco-Roman carats[12].   This coin was frequently melted down and reminted to preserve the weight.  However, as mentioned earlier, the coin circulated among the Arabs with an average weight about 4.25 gm due to tear and wear.  Therefore the actual mithqal or dinar should weigh 4.5gm of pure gold.  Indeed this was corrected by Caliph Umar ibn Abd al-Aziz during his reign, by changing the weight from 4.25gm to 4.5gm.

It was reported on the authority of Jabir that the Prophet pbuh said, “The weight of the dinar is 24 qirats[13]”.  Also Ibn Khaldun asserted the following in al-Muqaddimah:

Know that there is consensus since the beginning of Islam and the age of the Companions and the Followers that the dirham of the shari’ah is that of which ten weigh seven mithqals weight of the dinar of gold… The weight of a mithqal of gold is seventy-two grains of barley, so that the dirham which is seven-tenths of it is fifty and two-fifths grains. All these measurements are firmly established by consensus.

From the above hadith and historical facts, it can be established that the Islamic dinar is of pure gold which equals one mithqal or 24 qirats or 72 grains of barley, that equals 4.5gm in modern weight.  Accordingly, a barley grain weighs 0.0625gm (4.5gm ÷ 72)[14], i.e. 62.5mg.  See Table 1 below.  Also well-known is the fact that 7 mithqals equal in weight to 10 dirhams.  Therefore, this also implies that the silver dirham is of pure silver, weighing 3.15gm (0.7 x 4.5gm) that equals 50 2/5  grains (3.15 ÷ 0.0625  or  0.7 x 72) as mentioned by Ibn Khaldun.

Diabetic-recipes-barley-and-black-bean.

Inscriptions on the Islamic Gold Dinar

Generally, the Islamic gold dinar does not depict pictures of caliphs, rulers, animals or other living things in accordance with Shariah that discourages such practice.  The first Islamic gold dinar, i.e. that of Abd al-Malik ibn Marwan, had inscription based on Quranic verses.  One could notice that the earliest coins never had full Qur’anic verses on them.  Perhaps this is because the early learned scholars could have opined that it is highly possible for people to bring coins into impure places like toilets and so forth; and also possible to lose them to the ground.  Also because coins pass from hand to hand in circulation, one cannot afford to make a mistake in Qur’anic verses inscribed on the coins.  Once circulated it would be extremely difficult to call them back, in case of mistakes.

For example the dinar and dirham of Abd al-Malik ibn Marwan had the following inscriptions:  The obverse of the coin has as its central legend the Kalima Shahada, i.e. “There is no god except Allah alone, there is no partner with Him’. Around it is the mint date formula reading “In the Name of Allah. This dirham was struck in the year 79 AH”. The reverse of the coin has the central inscription based on Surah 112 of the Quran: “Allahu Ahad, Allahu-Samad, Lam Yalid wa lam Yulad wa lam Yakul-lahu Kufu-an Ahad”‘. The marginal legend is based on Surah 9, Taubah Verse 33.  It states: “Muhammad is the Messenger of Allah, he was sent with guidance and the religion of truth to make it prevail over every other religion.”  Note that these are not full Qur’anic verses.

Softness of 24K Gold Dinars and the Issue of Tear and Wear

The original gold dinar and silver dirham were made from pure gold and pure silver respectively.  In the pure form they are soft and therefore get worn in the process of circulation.  Nonetheless, gold and silver have the highest ductility and malleability among all metals[15].  The atoms of these metals are strongly bonded among them but however can move easily around them.  Therefore even though the gold and silver coins can become worn in the process of circulation, the process is not easy though and rather is slow.

To address this issue of tear and wear, the Roman empire, as mentioned earlier, would melt down and remint the coins it receives as tax in order to maintain the standard weight of 4.5 grams.

Some quarters assert that the dinar should not be of pure gold since it would easily get worn out.  They say that in about 3 years the coins may lose enough gold to be rejected as dinar.  However, the Roman solidus that was circulating, for decades, outside the Roman empire had a weight of about 4.25 grams, with some going as low as 4 grams and people did accept them as dinars.  It is our contention that the Islamic government, as the Roman empire, should continuously remint the coins to preserve the weight of the coins.

Zakat on the Dinar and Dirham

It is important to note that the basis for the Prophet pbuh fixing the nisab for silver at 200 dirhams and the nisab for gold at 20 dinars was that either of these two sums represented, in his day, the market price of 5 camel-loads of grain or, in other words, of one year’s provision of essential food-stuffs for an average family.  Accordingly, the value of one dinar during the prophet’s time was equal to 10 dirhams.  Hence the basis for the nisab was not the physical count of the dinar but rather the purchasing power of the money.

Hence it may not matter whether the dinar is 22K or 24K because the value of each will be based on their respective gold content.  Henceforth, the nisab for silver and gold must be established on the same basis as practiced by the prophet pbuh, i.e. on the proportionate value of the year’s provision of essential foodstuffs in relation thereto, as dictated by the prevailing market price.  Therefore, nisab for gold and silver must vary from year to year in conformity with the price fluctuations of essential foodgrain[17].

The Modern Implementation of the Islamic Gold Dinar

When the gold dinar gets implemented in the modern world, it would surely rely heavily on the internet.  Gold-based interest-free electronic credit is the most desirable form of  money (using cards, internet, mobile phones, computers etc).  Here, the gold dinar would predominantly play the role as measure of value that involves only the recordings of credit transactions that are periodically net-off.  Such system is not akin to fractional reserve banking because this system does not create new money and does not involve the transfer of credits for payment purposes.  Therefore, in this system the need for physical dinars will be much minimized.  The periodic settlements can be done even using gold bars and not necessarily using gold dinar coins.  Also the system permits real-time electronic audits.

Such electronic interest-free money is desirable because it fully takes advantage of the concept of money as a measure of value, as a means for keeping score.  Hence practically there will be no situations of shortage of money that can plunge an economy into recession and thereby give hoarders of money the advantage to charge interest on borrowings.  Since the system does not create new money, it will not create inflation.

Conclusion

Islam as inherited by Muslims from the Prophet pbuh is a complete religion.  As the following verse from the Holy Qur’an asserts.

Surah AlMaidah, 5:3

This day have I perfected your religion for you, completed My favour upon you, and have chosen for you Islam as your religion

Being a religion that is complete without defects or shortcomings, it needed no human efforts to perfect it, solve or rectify any shortcomings.

As far as monetary standards in Islam are concerned, the words dinar and dirham are mentioned in the Qur’an.  These precious metals are to play the role of measure of value for just economic and business transations.  As Islam is pure, its measures of value must be pure too.  Pure makes it easier for standardization for all nations and people, without ambiguity, forex risk; simply a pure reference point, an anchor, a numeraire.

But as for all who lay up treasures of gold and silver and do not spend them for the sake of Gods  – give them the tiding of grievous suffering [in the life to come]:

With simple deductions using historical facts, we ascertained that the standard for dinar and dirham are 4.5gm of pure gold and 3.15gm of pure silver.  Hence, the correction of weight from 4.25gm to 4.5gm by Umar ibn Abd Aziz.  In the present time, we cannot mint a coin inferior to that of Abd al Malik ibn Marwan.  Hence the WIM standard of 4.25gm of 917 gold and 2.975gm of fine silver for dinar and dirham respectively are erroneous because the coins would have about 13.4% less gold and 5.6% less silver respectively than the historical standards.

The use of 22K would lower the nisab and if people were to pay zakat on it, I guess they would not be punished for lowering the hurdle, but nonetheless 24K is the standard   The value of the 22K will be based on the pure gold content of the coin, anyway.

Hence it may be trivial to argue whether the gold dinar is 22K or 24K since the gold content will determine their respective value, play the role of measure of value, and form the basis for payment of zakat based on one-years provision of food-stuff.  However since the Prophet pbuh said that the system of measure is the system of Medina, I contend that it should be perfectly alright to mint the Islamic gold dinar according to that of the time of the Prophet pbuh i.e. a 24K gold coin of 4.25 grams in weight.  Also since modern electronic payment systems are likely to be the way forward, the 24K fine gold should be the basis of a standard measure.

Reference

Bernstein, Peter L., The Power of Gold – The history of an obsession, John Wiley, 2000

Porteous, John (1969). “The Imperial Foundations”. Coins in history : a survey of coinage from the reform of Diocletian to the Latin Monetary Union.. Weidenfeld and Nicolson. pp. 14–33

Subhi

Kitab Adh-Dharaib fi as Sawad

Hunwick, John, Islamic Financial Institutions: Theoretical Structures and Aspects fo the Application in Sub-Saharan Africa, in Credit, Currencies and Culture – African Finanical Institutions in Historical Garrard Perspaectiv, Ed. Endre Stiansen and Jane I. Guyer, Elanders Gotab, Sweden, 1999. P86

Timothy, Akan, Weights and the Gold Trade, London 1980,

    Islam is complete.
    Qur’anic verse on gold and silver  – Allah must be referring to gold and gold mixed with other metals
    If dirham is fine silver, why dinar is not fine gold?
    Roy Jastram
    Rome was attacked 476AD, thereafter Eastern Byzantine empire existed.
    Byzantine emperor was Justinian who governed with his wife Theodora from 527 to 565.
    9 May 2004 – On this day in A.D. 330, Constantine founded the city of Constantinople

[1] The IPK is made of a platinum–iridium alloy and is stored in a vault at the International Bureau of Weights and Measures in Sèvres, France.  However, the weight of this alloy has been changing over time, and hence the call for a redefinition of the kilogram.

[2] Wikipedia

[3] Porteous, John (1969). “The Imperial Foundations”. Coins in history : a survey of coinage from the reform of Diocletian to the Latin Monetary Union.. Weidenfeld and Nicolson. pp. 14–33

[4] Bernstein, The Power of Gold – The history of an obsession, p67.

[5] Subhiì, 1976: p427

[6] The Roman Byzantine Empire lasted till 1416 CE.  However, the Persian Sassanid Dynasty that was responsible for the silver dirham that circulated among the Arab, ended much earlier around 644CE.

[7] Kitab Adh-Dharaib fi as Sawad, p65 as referenced in http://islamhariini.wordpress.com

[8] Abd al-Malik’s dirham was close to 3gm, but the Roman solidus weighed 4.5gm.  Hence Umar ibn Abd Aziz’s remark of the ratio 7:10.5, i.e.

[9] Archeological gold dinars of this period weighed in the range 4.4gm to 4.6gm.  To what weight he corrected the dirham and the dinars depends on what standard dinar he was comparing the dirhams to.  We contend it must be the Roman solidus, that weighed 4.5gm.

[10] All dinars are indeed of pure gold but constrained by mining and refining technologies of the time.  By the Fatimid period Muslims seem to have perfected the technology; something the Romans had known much earlier.

[11] 27gm was the old Roman-Byzantine ounce from which the original solidus standard had been derived.  See Timothy Garrard, Akan Weights and the Gold Trade, London 1980, p215.

[12] Traditionally, 1carat (the mass of a carob seed) equaled the weight of 3 barley grains or 4 wheat grains.

[13] Qirat is carat.  In today’s jargon, 24K is also used to denominate pure gold.

[14] This weight of a barley grain is computed based on the above statement by Ibn Khaldun.  Barley grains do vary in weight, that is subject to change due to moisture content etc.  The International Systems of Units set the barley grain as equal to 0.06479891 gm

[15] Ductility is a solid material’s ability to deform under tensile stress, i.e. the material’s ability to be stretched into a wire. Malleability is a material’s ability to deform under compressive stress, i.e. the material’s ability to form a thin sheet by hammering or rolling. Both of these mechanical properties are aspects of plasticity, the extent to which a solid material can be plastically deformed without fracture [Wikipedia].

[16] That is, a loss of about 5.5% to 11.1%, but we are not sure for how long the coins circulate before losing that much.

[17] Zayas, Farishta G. de, The Law and Institution of Zakat, The Other Press, 2003, p74.

Diabetic-beef-stew.