Gold and Silver
"Those who hoard up treasures of gold and silver and spend them not in the way of Allah; give them the news of a painful punishment, on the Day when that (wealth) will be heated in the Fire of Hell and with it will be branded their forehead, their sides, and their backs, (and it will be said to them:) 'This is the treasure which you hoarded for yourselves. Now taste of what you used to hoard.'" [Al-Quran 9:34-35]
Further, Asma bint Yazid reported: "My aunt and I, while wearing gold bracelets, went to the Prophet (peace be upon him). He asked: 'Did you pay their Zakat?' She related that they had not. The Prophet (peace be upon him) said: 'Do you not fear that Allah will make you wear a bracelet of fire? Pay its Zakat." [Al-Quran -Narrated by Ahmad (6:461) with a good chain, as Haythami declared in Majma` al-zawa'id (3:67)]
Furthermore, Aisha narrated: "The Messenger of Allah came to me and saw me wearing silver rings, whereupon, he asked: 'What is this, Aisha?' I replied: 'I made them to adorn myself for you, O Messenger of Allah.' He said: 'Did you pay their Zakat?' I said: 'No, or what Allah wishes.' Then he said: 'Their punishment in Hell is enough for you.'" (Narrated by Abu Dawud in his Sunan with a strong chain, Daraqutni in his Sunan, and Baihaqi in his Sunan (4:140))
Gold and silver, whether in the form of jewelry otherwise, will always be subject to Zakat provided their respective weights exceed the nisab amount. According to scholars, nisab for gold is 20 mithqal (~ 87.49g), and the nisab for silver is 200 dirhams (~613.35g).
Table 1: Nisab determination
The prices of gold and silver vary everyday in international markets. On August 15, 2012 the price of gold was approximately $51.54/gram and for silver was $0.89/gram, hence the nisab for gold is approximately $4509.31($51.54 x 87.49 grams) and the nisab for silver was approximately $548.80 ($0.89 x 613.35 grams).
*Gold and silver prices have been (and can be) obtained from http://www.goldprice.org/
The value of gold content in jewelry depends on the gold's purity, as well as its weight. Gold purity is measure on a scale of 1 to 24 karats (kts).
||pure gold, very soft and very easily bent, too soft for jewelry, therefore the gold is alloyed with silver, copper, nickel or zinc.
||still too soft for most jewelry
||for fine jewelry, the best for beauty and durability
||OK for jewelry but the gold is of a duller color
||not OK for most western jewelry
||legal limit for 'real' gold in USA
Table 2: Lookup table for Gold Purity
Zakat on the gold will be according to the gold content in the jewelry (i.e. karats) and its value in the international market. Hence when calculating the value of your gold, you must consult a jeweler for the correct value (depending on the content and weight). Similarly, any stones in the gold are not Zakat-able when for personal use.
To calculate the value of your gold, based on the karat, this formula can be used:
Note: In this regard, jurists have ruled that that whatever contains more than 50% gold will be treated all like gold and Zakat will be paid on its value. Therefore, anything more than 12 karats will be Zakat-able to its value.