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Gold in Islamic Finance
AAOIFI Shari’ah Standard on Gold, developed in
collaboration with the World Gold Council
Aram Shishmanian, CEO
World Gold Council
8 November, Manama, Bahrain
Gold up 20%, strongest H1 gain since 1980
Gold’s impressive price rise in a range of key currencies in 2016
Source: World Gold Council, Bloomberg as of 12 October 2016
Index Level
100
105
110
115
120
125
130
135
140
145
150
Jan Feb Mar Apr May Jun Jul Aug Sep
US dollars British pounds Euros Malaysian ringgit Indonesian rupiah Turkish lira
2 Gold in Islamic Finance AES presentation Nov 6 2016
Gold has outperformed in the past 10 years
Source: World Gold Council, Bloomberg as of 12 October 2016
* The Bloomberg Takaful Index was initiated on 16 April 2007. The performance reflects the Index’s movement since that date
117%
146% 147%
206%
229%
355%
94%
47%
12% 4%
-12% -29%
-52%
-100%
-50%
0%
50%
100%
150%
200%
250%
300%
350%
400%
Gold(USD/GCC
currencyper oz)
Gold(Malaysianringgit / oz)
Gold (Euro /oz)
Gold(Indonesianrupiah / oz)
Gold(Sterling /
oz)
Gold(Turkish lira
/ oz)
BBGTakafulIndex*
DJ IslamicIndex
DXY Index DJ SukukIndex
USDMYR USDIDR USDTRY
3 Gold in Islamic Finance AES presentation Nov 6 2016
Gold in Local Currency Terms Financial Indices Currencies
Shift from West to East:
China: rapid growth to become the world’s largest gold
market
Source: Metals Focus, World Gold Council 4 Gold in Islamic Finance AES presentation Nov 6 2016
QE and NIRP
5 Gold in Islamic Finance AES presentation Nov 6 2016
37%
38%
25%
Less than 0%
Between 0-1%
Greater than 1%
Advanced Economy Sovereign Debt Outstanding (as of 27 July 2016)
Nominal Yields
Note: Sovereign debt from Australia, Canada, Denmark, Euro area (investment grade), Japan, Sweden, Switzerland, the United
Kingdom, and the United States
Source: Bloomberg
Central banks: from sellers to buyers
6 Gold in Islamic Finance AES presentation Nov 6 2016
New Investors
7 Gold in Islamic Finance AES presentation Nov 6 2016
Pension and insurance funds
Seeking security and financial protection
Middle Eastern Investors: Under supported
Source: World Gold Council
0
200
400
600
800
1,000
1,200
1,400
1,600
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
Tonnes
India China Middle East**
*Consumer demand comprises jewellery and total bar and coin demand. **Middle East comprises Saudi Arabia, United Arab
Emirates, Kuwait, Egypt, Iran and Other Middle East
8 Gold in Islamic Finance AES presentation Nov 6 2016
Gold ETP have grown rapidly elsewhere
Middle East falling behind
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
0
500
1,000
1,500
2,000
2,500
3,000
2003 2005 2007 2009 2011 2013 2015
US/oz Tonnes
North America Europe Asia Other Gold
ETP gold holdings in tonnes by region as of 31-Aug-16
Source: Respective ETP providers, Bloomberg, LBMA, World Gold Council
9 Gold in Islamic Finance AES presentation Nov 6 2016
The World Gold Council and AAOIFI partner on the
Shari’ah Standard on Gold
10 Gold in Islamic Finance AES presentation Nov 6 2016
Gold: Ultimate safe haven asset
11 Gold in Islamic Finance AES presentation Nov 6 2016
Gold: A Powerful Diversifier for Islamic Portfolios
-0.06
-0.01
0.02
0.10
0.12
0.13
-0.5 -0.4 -0.3 -0.2 -0.1 0 0.1 0.2 0.3 0.4 0.5
Takaful Index
FTSE NASDAQ Shariah Index
DJ Sukuk Index
Axis REIT
DJ Islamic Index
FTSE World Shariah Index
Source: World Gold Council, Bloomberg. 8-year returns and correlations used due to limitations on data availability for Islamic assets
Islamic Asset Classes Correlation to Gold (8 Year)
12 Gold in Islamic Finance AES presentation Nov 6 2016
Gold: A Long-Term Wealth Preservation Tool
Gold vs. Major World Currencies (1900-Present)
Source: World Gold Council, Bloomberg
13 Gold in Islamic Finance AES presentation Nov 6 2016