The Curse of Saddam: Iraqi Dinar Deals
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Thread: The Curse of Saddam: Iraqi Dinar Deals

  1. #1

    The Curse of Saddam: Iraqi Dinar Deals

    This article was sent to me.

    Of course this Forbes writer doesn't know what he's talking about, right?

    It's all part of the barrage of "bad news" that's supposed be arriving just before our blessing, right?

    Note that the links in (and to) the article did not work for me, so I added ones that did.

    I also note that DB is an MSB; of course we knew that all along, right?

    As always, I am interested in relevant, logical and informed replies.

    Oh, and humor, too.



    ------------------------------------------The Article---------------------

    (link) The Curse of Saddam: Iraqi Dinar Deals or alternate link

    Saddam Hussein may be long gone from Iraq, but speculation in his currency persists like a poltergeist.

    The Iraqi dinar has been the recent object of desire of foreign currency operators selling mostly on the Internet. The pitch goes something like this: “Buy dinars because the current government will revalue the currency and you will get rich.”

    As with most other hyperbolic pitches, the promise of wealth is couched in language like “sure to appreciate” and “virtually guaranteed.” There’s absolutely nothing guaranteed in the foreign currency world, which is absurdly speculative and nearly unpredictable.

    Certified Financial Planner Bryan Hancock of Timberchase Financial in Birmingham, Alabama, tipped me off to this scheme:

    “Apparently, there are those who are selling Iraqi paper Dinar in the US. From what I can gather, they convince people that the exchange rate will be `reset’ as some point in the future so the value in USD will go up 100 fold,” Hancock emailed me. “Their “basis” for this argument is that this is what happened with the Kuwaiti currency after the first gulf war.”

    I have a client who fell for this at the insistence of her son in law,” Hancock continues. ”I have had two people call me for advice on how to invest their windfall — both convinced that they would gain in excess of a $1 million — money coming to them at a date in the future when the currency reset. All three were people who have little to no financial knowledge. All three had stuffed a local safe deposit box with the paper currency. Best I can tell, the currency is being sold at a 40% premium over its market rate.

    What the victims don’t realize is that, in this case, if a reset of the Iraqi currency were a sure thing, the person selling it would be hoarding it, not giving away this special information. The victims don’t realize that this known information has already been reflected in the current price. If the market price did not move, then the market collectively does not believe that the price will be reset.”

    There are some more nasty wrinkles to what’s behind the dinar curtain. It’s illegal for U.S. dealers to market investments without securities licenses, although currency operators can often get around this by signing a form with the U.S. Treasury Department calling them “money service businesses” and marketing the currency as if it was a collectible. This is far from a rigorous securities brokerage license; it’s little more than a piece of paper.

    There’s also no active market for dinars, nor does it trade on a highly regulated exchange such as the one operated by the CME Group. So while you can probably buy plenty of dinars, you’d have a difficult time selling them. And to make money, you’d have to exceed the steep commissions charged by the operators.

    What about the ongoing crisis that the Iraqis face in trying to keep their government together and rebuilding the country after more than a decade of war and internal strife? In most developing countries, it’s unlikely that their currency will rapidly appreciate. Most of the time their biggest problem is inflation, which devalues currencies. And since the dinar is valued so low relative to other major currencies, it may be demonetized, meaning the government may start over and issue a new currency at new values. That would make the dinar worthless.

    As is usually the case, regulators are slow to catch up with these dealers. The best alert I could find came from the Washington State Dept. of Financial Institutions ( his link ... and the one that worked for me )

    Consumer Alert: Iraqi Dinar Scams

    “Several websites have recently begun advertising investment opportunities in Iraqi dinars. These websites are asking the consumers to send a check, wire, money order, or pay cash upon delivery of the dinars. What consumers are not told is that the dinars can be redeemed only in Iraq, as most of the established currency exchange houses and banking institutions cannot convert the dinar to US dollars. Since no exchange exists for the Iraqi dinar, dealers can charge whatever they want to sell and buy back the dinars.

    These dealers often register with the U.S. Treasury as a Money Services Business (MSB). An MSB registration is nothing more than a form they file; it does not reflect any experience in trading currency nor entail any qualifications on the part of the dealer, other than basic anti-money laundering requirements. The reason dealers seek this registration is to lend legitimacy to their scam and avoid more stringent regulation.

    In addition, most of these websites are operating illegally in Washington State, without a currency exchange or money transmission license issued by the Washington State Department of Financial Institutions. Make sure you only deal with licensed, legitimate companies when making financial decisions.”

    That’s not to say the Iraqis can’t pull things together and use their oil wealth to build a functioning market-based democracy of some kind. Financial stability is key to any currency’s market value. After all, the country embraces the fertile crescent that was the cradle of Western Civilization. But it won’t take much of a history lesson to tell you that the world is littered with illiquid currencies from troubled countries and Iraq is a royal mess right now, so your dinar investment may be as viable as a flying carpet.

  2. #2
    And a little more at this site

    From the page/link above, I found this interesting as well:

    Dealers can, and do, set their own price, the trick is finding the right price. You have to eliminate the dealers that have multiple sites all referring to one another and look at unique dealers in order to compare prices. When looking at dealers on this site, focus on owners that have one site (a rating of 10).

  3. #3
    Mia_Pename, thanks for bringing the article in. I try to be as positive as I can be, but I can't put my head in the sand and avoid discussion of alternative views. Besides, dinardeb brought the link into the chat Thursday (Part 4) and I'm sure she would love to discuss it too!.

    I have no credibility to speak of in commenting on this article, but will put my foot in mouth anyway.*I have read several articles that discourage the idea of investing in dinar. This particular article, although it may be new, sounds a lot like the ones written years ago. As a matter of fact, one statement specifically reminds me of the older articles:

    "What consumers are not told is that the dinars can be redeemed only in Iraq, as most of the established currency exchange houses and banking institutions cannot convert the dinar to US dollars."

    By this statement alone, I suspect that this is an older article reprinted .. or a new article authored by someone who is ignorant of the process.

    Sounds almost like Maliki's Media Motto: Don't Write, Repost

    I did scan the linked article, which summarizes by stating, "Make sure you only deal with licensed, legitimate companies when making financial decisions." Excellent advise, and I notice also that the article is specific to Washington State.

    I also scanned the link in the reply you posted below. It seems to be another warning by Washington State, who again states, "What consumers are not told is that the Dinars can be redeemed only in Iraq."

    Obviously, until I have cash in hand I can't be an authority on the absolute surety of this investment. The best I can do is learn and continue to learn from those who have studied this as investors, not authors.
    Last edited by Mona Lisa; 01-20-2012 at 05:54 AM.
    If you think today is good, just wait til tomorrow!!

  4. #4

    You're probably right about it being either an old article or an uninformed author. Two statements stood out to me in the article.

    "Saddam Hussein may be long gone from Iraq, but speculation in his currency persists like a poltergeist."

    "And since the dinar is valued so low relative to other major currencies, it may be demonetized, meaning the government may start over and issue a new currency at new values."

    The dinar is no longer Saddam's because it WAS demonetized when the current bills and coins were reissued. I would doubt they would reissue the dinar AGAIN.

    My $.02...
    Last edited by hurricane; 01-20-2012 at 02:03 PM.

  5. #5
    ML & H,

    "Don't write; repost" LOL - love it...

    I agree that the author has probably not immersed himself into ~all things Iraqi~ as much as those here have. The original article even showed an image of the old dinar (with SH's portrait on it). Therefore, I'd bet he doesn't know as much about subtleties as well as bigger issues. As is all too common with all media, he reaches for the dramatic headline, however irrelevant. If we can get through the translation abominations, we can certainly get past a dramatic headline and theatrical reach for a poltergeist connection.

    Also, the references to only being able to trade dinar in Iraq are in error since it appears that some banks have sold dinar here in the US at very wide and profitable profit margins. Perhaps "trade" is the wrong word since that might include being able to sell as well as buy. I know for a fact that dinar can be purchased here....(I have a little)

    The second link (post #2) had much more information, and yes, it is from Washington State. I'd speculate that there is similar information posted by other states. Here is another link, and another one here. These are not from a governmental agency. The second one claims to provide "facts" as answers to the "hype" and is posted by the Better Business Bureau. I have heard some of the popular rebuttals circulated which attempt to answer the "facts" there. Most sound quite believable, especially if one has a tendency toward "selective believing" or even blind faith.

    For the record, just because information is from a governmental agency, a trade organization like the BBB, or from the media (domestic or foreign), and/or from some "expert" - well, please understand that I do NOT ~automatically~ trust ANY of these sources out-of-hand. I understand a little about PR, spin, motivation, psychology, gambling, logic and am, frankly, just not that gullible. Color me the definition of the Open-minded Skeptic (with a sense of humor).

    Personally, since I do not have current connections so high that they cause nosebleeds just talking to them, (our family as only met two US Presidents, and we only knew one well [RR]), and since I believe just about anything is possible, I am unable to doubt or believe that they would "reissue the dinar AGAIN."

    Finally, unless the articles claim to be fresh-off-the-press fresh (which they do not), the line or reasoning that information is null-and-void because it seems like it was published some time ago baffles me. I have published things a year ago that are still true today. In fact, I published something else a decade ago; it's still true.

    I wonder what material part "of the process" the author is ignorant of? What factual, relevant piece of the puzzle that is real and not a well-thought-out justification that just seems so convincingly true?

    Yes, I do wonder...

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