and indexed to these basic real money reference commodities. That is,
one can use U.S. dollars, British pounds, and/or the euro, but such cur-
rencies must be referred and indexed to a reference commodity to be
fair to all by keeping fair pricing and free and balanced markets with-
out deception (gharar).
&When basic commodities—that is, gold, silver, and food staples like
wheat,rice,corn,salt,dates,andthe like—change hands, they must
be exchanged for the same amount if they are of the same element.
That is, gold is exchanged for the same amount of gold, and corn
for the same amount of corn. The exchange must be done on the
spot, hand to hand. If the exchange involves two commodities that
are different but used for the same purpose—for example, gold and
silver, which are used as a pricing reference (real money), or corn
and wheat, which are used as a food staple—the exchange can be
made with an increase but it must be done on the spot. For exam-
ple, it is allowed to exchange one ounce of gold for seven ounces of
silver because both are used as pricing commodities, or one bushel
of wheat for three bushels of barley because both are used as a food
staple. The exchange must be done on the spot. No delayed delivery
is allowed. If the two commodities are different in element and in
use, they can be exchanged for an excess amount, and the exchange
can be done on the spot or for delivery at a later date for a different
price. However, if delivery is notcompleted at the agreed-upon date
for a legitimate reason, such as a change in the economic environ-
ment or climate conditions, no increase over the agreed future
exchangeratioisallowedtocompensate for the delay in payoff, be-
cause it is considered riba. For example, an ounce of gold can be
exchanged for seven bushels of wheat hand to hand; subject to
agreement between the two parties it can be exchanged for fifteen
bushels of wheat after one year. If the wheat is not available after
one year for reasons that are consideredforce majeure,nofurther
increase is allowed. This concept was introduced in Chapter 5 as
thecommodity indexation rule.
&In case one wants to exchange an item for another item of higher
quality—for example, exchanging small oranges for larger, higher
quality oranges—the exchange must be done in equal quantities.
However, to perfect the exchange, the small oranges should be first
exchanged in the market for a different element, such as gold or corn;
then the gold or corn can be used to buy the larger oranges. This way,
markets are kept fair and fair pricing is achieved without deception
(gharar). This concept, calledmarking to market, was introduced in
Chapter 3.RF Banking Model for the 21st Century 229