How do I Calculate Zakat on Gold and Silver When the Value Increased After I Invested In It?

Answered by Sidi Tabraze Azam

Question: I would like to know how to calculate the percentage of the annual zakat on an investment in precious metals. I’ve  been investing in gold and silver bars for many months now and in a few days I will have to give the zakat (2.5%?) on them. The problem is that the value of gold and silver increased by around 20% (and will continue because of the devaluation of the paper money and the upcoming great recession) and I dont know if I have to calculate the percentage on the original value (1 year ago in Canadian Dollars) or on the actual value (+20% in canadian dollars).

Answer: Wa alaikum assalam wa rahmatullahi wa barakatuh,

I pray that you are well, insha’Allah.

According to the Hanafi school, the basis is that we deal with actual gold and silver. Therefore, one would pay with the current value of gold and silver. [Mawsili, al-Mukhtar li’l Fatwa; Halabi, Multaqa al-Abhur]

Practically, one would calculate based on the rate at the time one’s zakat is due.

And Allah knows best.

Wassalaam,

Tabraze Azam

Checked & Approved by Faraz Rabbani