Name: Nur Aminah Syafiqah Binti Ahmad Azam

Matrix no: D1420129

Course: Diploma In Islamic Finance (sem2)
Title of essay: gold is more valuable than money

Rightly or wrongly, gold is often compared to money. This is in part because gold has been used
as money for thousands of years and often it trades like a currency although it also has some of
the traits of a commodity. Regardless of how you choose to categorize it, gold is often considered
a currency. Many people still arguing about which one of the two is most valuable. Most people
think money is most valuable thing in this world. But, to some people, gold is more valuable than
money.

If you deposit allocated gold with an institution, you own the gold. You can turn up to the bank
and demand your gold to be delivered to you. It is like holding it in your own safety deposit
box.Cash on deposit, on the other hand, is not owned by you. It is owned by the bank and
therefore if your bank went into bankruptcy, then all cash on deposit with the bank would be
shared amongst its creditors unless it is bailed out by the government or through insurance.
Having cash on deposit means that you rank as an unsecured creditor of the bank. Furthermore, if
everyone demanded all their cash from the bank at the same time, there would not be enough
cash to pay people. In small amounts, you can usually demand your cash, however even in
modest amounts, cash cannot be paid on demand.

Investors holding gold in an allocated gold account are provided with the exact identification
numbers of each gold bar they own: manufacturer, purity, and bar number. This gold is
physically segregated from other gold in the vault and this gold can be insured. Cash on deposit
is not physically segregated. Your cash is mixed with other people's cash and you rely on the
bank's accounting system to record details of your cash balance correctly. You are not provided
with individual serial numbers of every note held on deposit for you and often the cash is not
insured - do you insure your cash in the bank? Have you asked for proof (identification numbers)
of your cash on deposit? And have asked the bank manager to keep your cash physically
separated in an individual safety deposit box?

It is not surprising that gold has been accepted as a form of payment for thousands of years: gold
is indestructible, fungible, easy to store, liquid and secure. More importantly, gold is more
valuable than money.