The Gold Dinar System In International Trade

In my opinion on the gold dinar system in international trade, the gold dinar system is actually a good option in order to stabilise our currency as well as international trade. When former prime minister Mahathir Mohamad had expressed the idea to use gold dinar for international trade, it is the chance for Malaysia and any other country to reduce the speculation of currency. Gold can be volatile but it has an intrinsic value rather than paper money.

Speculation and manipulation could be avoided with the use of gold and thus make the international trade would be protected from being undermined. The gold dinar system is good to be use nowadays as we have unstable currency compared to when we use the fiat money. I am not oppose the usage of

As we know gold also have their own disadvantage as it does fluctuate in price but not as fiat money. But we have to know that gold is not suitable to use for daily transactions in the domestic market. Gold can serve as a country’s reserve as it does have its own value. We cannot generally verify the amount of money a country has as reserve cannot be regarded by a country’s own currency.

There are may be some countries which are so poor that they cannot have gold dinars but we can buy some raw materials from them to be paid in gold dinars. This can helped them to build up the reserves of gold dinars. Gold will never become undervalued things as it is a precious metal and the quantity is not so limited that anybody can manipulate the price.

The value of one gold dinar will not have any different with another gold dinar in another country. The exchange rate of a currency will not affect the value of gold dinar no matter which country involved in the trade. The exporter can announce the agreed cost in dinar to the importer in another country and to the Central Bank in his country. Contingent upon the understanding achieved with the Central Bank, they will pay the exporter the current local currency that are equivalent to the gold dinar cost. Same goes to the importer’s end where he will pay the certain amount that they have agreed to their country’s Central

For example, US dollars cannot pay their imports anyway as US currency is not as stable as gold. The gold dinar cannot depreciate much against the US dollar. Gold price can be manipulated but not as easily as fiat money. Gold cannot be sell below market price and short-selling will be very difficult if not impossible.

However it is up to the concern of a country to control their exchange rate or not and prices of gold can still fluctuate if it is not examine. The gold dinar is exclusively for international trade, not to be used as local currency. Traders especially will be happy because the gold dinar prices would not be affected by changes in exchange rates of importing or exporting countries. The prices will always remain the same.

Obviously the gold dinar can be a trading currency not specifically for Muslim countries but for all countries. Be that as it may, Muslim nations are in the best position to show the reasonability of the framework. They are in a position to deal with their economies objectively and in the process demonstrate the world that they are equipped for developing with soundness and in