Asslam o Alaikum,
Plz advise about the online commodity trading? Is it halal or haram? e.g online commodity trading of crude oil, gold etc….
Wa alaikum us salam wa Rahmatullah
It is a new thing which did not exist at the time of the Prophet صلی اللہ علیہ وسلم, so the expert scholars have to exercise Ijtihad about it. As my specialization is risk management, so I can comment on it. In my opinion, if the purpose of a person is risk management, it is permissible but if his purpose is speculation, it is not permitted. Let me explain with an example:
A company manufactures electric cables and want to hedge against the risk of increase in prices of copper in order to avoid the risk. It can buy futures / options of copper to minimize price risk. If copper price will go up, the company can make a gain in copper futures which will offset the loss in increased cost of production, so its risk will be mitigated. If the prices go down, the company will save money in its purchases which will be offset against the loss in commodity futures. There is no harm in it, as I understand.
A person who has some extra money buys such commodity futures for speculation purpose. If the prices of copper go up, he will earn profit otherwise loss. This is speculation and very similar to gambling, so one should avoid it.
Therefore, dealing in futures, options, forwards and other hedging products is permissible based on the purpose of the person engaged in them. They are permissible for risk management but not permissible for speculation.
Don’t hesitate to share your questions and comments. They will be highly appreciated. I’ll reply ASAP if I know the answer. Send at firstname.lastname@example.org.