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This question came to my mind in a discussion.

Suppose a person asked me to lend them money over a long period (10000$. Repay after four or five years as an example).

I want to know whether this idea is permissible or not :

I convert the money amount (in that very moment) in Gold ( 120 grams for example), and lend that person the money they want on the account that in five years they will give me back what 120 grams of gold cost in that time in future.

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Gold is to be paid for by gold, silver by silver, wheat by wheat, barley by barley, dates by dates, and salt by salt, like for like and equal for equal, payment being made hand to hand. If these classes differ, then sell as you wish if payment is made hand to hand. [Muslim 1587c]

According to this well-known hadith, trading of like commodities needs to be done of equal value, but it is permissible to trade unlike commodities at any price as long as the trade is done hand to hand.

This means there is nothing wrong with buying as per your example 120 grams of gold for whatever price (say $10,000) at one time, and trading it for a different price (say $12,000) in the future.

However, in terms of giving a loan, the "like for like" rule still applies: You can loan them $10,000 cash to be repaid in kind, or you can buy 120 grams of gold yourself and loan them the actual gold to be repaid in kind (which you can then sell for the difference in value), but there's no concession to loan them $10,000 cash while claiming it is equivalent to 120 grams of gold, and ask for repayment in a different amount of cash based on what the price of gold is at the time of repayment.

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