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Published by tengkek2002
Paper titled "GOLD DINAR: THE CAPABILITY OF STABILIZING PRICE FLUCTUATION presented in 3rd International Borneo Business Conference in University Malaysia Sabah on 15-17th December 2007
Paper titled "GOLD DINAR: THE CAPABILITY OF STABILIZING PRICE FLUCTUATION presented in 3rd International Borneo Business Conference in University Malaysia Sabah on 15-17th December 2007

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Published by: tengkek2002 on Jan 14, 2009
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11/17/2011

 
GOLD DINAR: THE CAPABILITY OF STABILIZING PRICEFLUCTUATION
Dziauddin Sharif 
1
, Norliana Atan
2
1
Center for Islamic Thought and Understanding, MARA University of Technology, Johor, Malaysia
2
MARA University of Technology graduate, Johor, Malaysia*Authors to correspond should be addressed via email: dziau646@johor.uitm.edu.my
ABSTRACT
:
The word “Dinar” refers to gold coins used as a medium of exchange by Muslimsthroughout the Islamic history until the fall of the Ottoman caliphate. Islamic Dinar coinage was first issued in Damascus by Caliph Abdul Malik ibn Marwan in the year 77H. It is reported that the prophet Muhammad (saw) had said that “A time is certainly coming over mankind in whichthere will be nothing (left) which will be use save a Dinar and Dirham” (Musnad of Imam Ahmad  Ibn Hambal). The Muslim scholars Ibn Khaldun (1332-1395 C.E.) claimed that God created thetwo precious metals, gold and silver to serve as the measure of all commodities. The value of the Islamic bimetallic currency has remained surprisingly stable in relation to basic consumable goods for decades. Unlike paper money, the gold dinar cannot be inflated due to the special characteristic that it has. In addition, the Gold Dinar can be ideal currency to facilitate; increaseinternational trade and minimizing speculation in paper currency that lead to the Asian crisis in1997. By using Gold Dinar, it can regulate naturally the market in stabilizing the price fluctuation due to the demand and supply activities. This paper concentrated on the imports of major and selected commodities issued from 1996 until 2005. Gold Dinar and USD was used asindependent variable while oil, utility, transportation and commodity prices will be used asdependent variables. The analysis for the year 1996 to 2005 is based on Pearson-Product-Moment Correlation and Descriptive Analysis. This study found that Gold Dinar has strong correlation with oil and consumer products while USD has strong correlation with consumer  products and construction products.
Keywords:
Gold Dinar, Stabilize, Price Fluctuation
INTRODUCTION
The word “Dinar” refers to gold coins used as a medium of exchange by Muslims through out theIslamic history until the fall of the Ottoman caliphate. Islamic Dinar coinage was first issued inDamascus by Caliph Abdul Malik ibn Marwan in the year 77H. It is reported that the prophetMuhammad (saw) had said that “A time is certainly coming over mankind in which there will benothing (left) which will be use save a Dinar and Dirham” (Musnad of Imam Ahmad IbnHambal). The Muslim scholars Ibn Khaldun (1332-1395 C.E.) claimed that God created the two precious metals, gold and silver to serve as the measure of all commodities.
1
 
With the spread of Islam, the Dinar was minted in large quantities and gradually displaced the bezant gold as the major international currency, circulating throughout the Muslim world and theChristian Europe as well. After the two world wars that caused serious trade disruptions, the goldstandard collapsed and was replaced with the Bretton Woods system. In modern history, as aconsequence of currency crisis inAsia, in first of 1997,thenPrime Minister of Malaysia  Mahathir bin Mohamad proposed introduction of Islamic gold dinar as currency for internationaltrade in theMuslim world.It was supposed to suppress the too overly tradedAmerican dollar and ensure that dollar'sinstability does not affect international trade because Islamic gold dinar was to be tied to price of gold and thus provide stable value of the currency. Mahathir announced that Malaysia was to startusing the dinar in mid-2003, but when in 2003Abdullah Ahmad Badawireplaced him asPrime  Minister of Malaysia, this idea was halted. On the20 September  2006, Kelantanbecame the first state to launch gold dinar coins. It features the Kelantanese state crest, the date of production, aswell as the weight and purity of the gold used on its face. The coins can be bought and sold at theKelantan Corporation Bhd (Perbadanan Kelantan Bhd) and all eight Ar-Rahn Islamic pawnshopsin the state.
THEORETICAL FRAMEWORK 
Independent variables: Gold Dinar. US Dollar 
Dependent variables: Oil Price, Price of Consumer Product and Price of ConstructionProduct.
2
 
Figure 1: Schematic Diagram (Relationship Diagram)
Independent DependentDATA ANALYSIS AND TREATMENT
The statistical tool used in this study is Pearson Correlation Coefficient. In this subsection, this paper would develops the empirical method to detect possible correlation of oil price, price of consumer products and price of construction products between Gold Dinar and USD. Due toextent regression correlation analysis will show on how to determine the nature capability of therelationship. In order to determine the strongest relation, the author would construct correlationanalysis.It is follow by Pearson-product Moment Correlation by implementing the data output intocomputer. The methodology is useful in this context as it recognize to correlate dichotomous and
3
Oil PricePrice of Consumer ProductsPrice of ConstructionProducts
Gold Dinar US Dollar 
 
Oil PricePrice of Consumer ProductsPrice of ConstructionProducts

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