lynnejanet Happy Holly Days
| posted 06 August, 2006 07:42 PM
I was talking to my brother today and he mentioned that a guy from work was going around saying that he had some "inside information" that the Iraqi dinar was a great investment, because it's currently devalued, and IF Iraq emerges from the present turmoil as a strong independent state, then people who own dinars will make a huge return on their investment.
My brother did some cursory research, and decided to buy $300 worth. He was smart enough to go to a chartered bank, rather than through an internet broker, so he's reasonably certain that his dinar are not counterfeit. He said that he considered it like a night at the casino, and if he makes some money, great, and if not, he considered it a lesson learned. Nothing ventured, nothing gained, I suppose.
I did some googling, and found some information both pro - Bet On Iraq - and con (kind of) - Iraqu Dinar.org . It seems that the idea has been floating about since 1993, when the new currancy was issued.
I have no interest in "investing" myself (I'm not a gambler!), but I'm curious as to how wide-spread and risky this scheme is.
Has anyone else come across this UL? What do you think are the chances that there is any money to be made? Are there any other world currencies for which similar claims are being made?
-------------------- lynne"insert appropriate punny phrase here"janet
Posts: 1460 | From: Ontario, Canada | Registered: Dec 2003 | IP: Logged | |
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FullMetal I'll Be Home for After Christmas Sales
| posted 06 August, 2006 08:50 PM
there's a lot of money to be made on the foreign exchange market. heck look at the canadian dollar, a few short years ago, it was at 60 cents now it's at 90. that's a 33% increase. say you had invested $1000 US into it back then, and sold it back now, it would haev cost you roughtly $700 and you'd get back around 900 now. that's a $200 profit
Posts: 153 | From: Edmonton, Alberta, Canada | Registered: Dec 2004 | IP: Logged | |
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Honey Bunching Oats I'll Be Home for After Christmas Sales
| posted 07 August, 2006 12:08 AM
Back in 1862, a lot of people probably thought that confederate dollars were a good investment.
-------------------- "When we talk about democracy, if the people's stomach is empty, democracy is also empty. Democracy cannot be installed by fiat; it must be achieved by the people themselves." Y.C. James Yen (1893-1990)
Posts: 146 | From: San Jose, California | Registered: Oct 2005 | IP: Logged | |
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CitizenAim I'll Be Home for After Christmas Sales
| posted 07 August, 2006 01:42 AM
I have a vague memory of my dad investing some money into Iraqi currency a couple of years ago.
I've always kind of laughed at it behind his back but I can't really laugh all that hard because he's 45 and retired and has a ton of money and has always done stuff like this.
Posts: 146 | From: Columbia, SC | Registered: Jul 2005 | IP: Logged | |
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Delta-V Xboxing Day
| posted 08 August, 2006 06:03 PM
quote:
Originally posted by FullMetal: there's a lot of money to be made on the foreign exchange market. heck look at the canadian dollar, a few short years ago, it was at 60 cents now it's at 90. that's a 33% increase. say you had invested $1000 US into it back then, and sold it back now, it would haev cost you roughtly $700 and you'd get back around 900 now. that's a $200 profit
That looks good, but it's really only a 29% return over 42 months, or 7.2% APR. (the last time it was that low was January of 2003). A simple index fund (say, S&P500) beats that easily over the same period (52% return), with a lot less risk.
With the Dinar, you're gambling. If Iraq suffers inflation, or worse, hyperinflation, you're the proud owner of worthless currency that no one will buy from you. You're also gambling that the US Dollar (or your currency of choice) won't be stronger. I'd consider it a very high-risk investment.
-------------------- "My neighbor asked why anyone would need a car that can go 190 mph. If the answer isn't obvious, and explaination won't help." - Csabe Csere
Posts: 1225 | From: Wichita, Kansas | Registered: Nov 2003 | IP: Logged | |
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Delta-V Xboxing Day
| posted 09 August, 2006 03:14 PM
quote:
Originally posted by DemonWolf: You're also gambling that Iraq won't dissolve into civil war and the Dinar won't plummet further.
Peter Maas wrote in his book that during the Balkans war a hotel cost over a million in local currency, but that it was only about $50 USD.
That's hyperinflation at work. It's not a pretty sight. Post-WWI Germany is the classic example. At one point, prices were doubling twice a day, people were getting paid twice a day and would hand their pay to their wife or kids so they could buy food before prices went up again. The German government ended up printing 100 Billion Mark notes. That only ended when they issued 'new' Marks, replacing the old ones (but, of course, still paid reparations in the old currency). The other solutions to stop or prevent it is to freeze prices or convert to a stable foreign currency (usually US Dollars). In any case, your investment ends up as a novelty item (I've got a 100M Mark note I bought for 1 Mark).
-------------------- "My neighbor asked why anyone would need a car that can go 190 mph. If the answer isn't obvious, and explaination won't help." - Csabe Csere
Posts: 1225 | From: Wichita, Kansas | Registered: Nov 2003 | IP: Logged | |
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DemonWolf Ding Dong! Merrily on High Definition TV
| posted 09 August, 2006 03:25 PM
Oops, sorry. I honestly don't understand economics too well.
It's all "blah, blah blah" to me.
-------------------- Friends are like skittles: they come in many colors, and some are fruity!
IMJW-052804
Posts: 7224 | From: Massachusetts | Registered: Apr 2002 | IP: Logged | |
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skeptic Deck the Malls
| posted 09 August, 2006 06:49 PM
It's funny that this is posted now as I was about to put up a similar question in the next few days. But I have heard the opposite, someone warning not to have anything to do with the Iraqi dinars. The reasoning given is that they will become worthless when either,
1/ Civil war breaks out. (Officially it hasn't yet. Those bombs are imaginary) or 2/ The US pulls out its troops.
-------------------- I like free speech. It lets me know who the idiots are.
Posts: 407 | From: Ireland | Registered: Jul 2005 | IP: Logged | |
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Publius Happy Holly Days
| posted 09 August, 2006 09:45 PM
There's money to be made in Iraqi dinars--if you're one of the unscrupulous retailers trying to pass them off on novice American "investors."
Conditions in Iraq being what they are, the trade in Iraqi dinars is a wonderful piece of foreign exchange nostalgia. There's no fancy electronic transfers or anything like that. Retailers get their Iraqi dinars by knowing someone (who knows someone, who knows someone...) who has a contact in Iraq. That contact smuggles Iraqi dinars out of the country in suitcases as cold, hard cash, and passes the physical bills on down the supply chain with all the risk and markup that this implies. That's a lot of markup.
In fact, when this bundle of Iraqi dinars reaches you, the novice prospective investor (i.e., the mark), it typically does so at a markup around 30 percent. That's absolutely ridiculous. This extraordinary markup really can't even be explained by all the risk of carrying physical cash out of Iraq or all the middlemen that that involves; it's simply a rip-off passed off on unsuspecting buyers who have little or no experience in foreign exchange.
And then, supposing you buy these Iraqi dinars, you're left with little pieces of paper with numbers and Arabic writing on them. They also have pretty pictures of men in turbans and minarets and trees. And they're totally worthless outside of Iraq.
Since banks won't exchange your Iraqi dinars for real money, the idea is that you simply put the physical bills away in a vault somewhere until, one day far off in a magical future when Iraq is a shining paradise that has reached the Second Stage of Democracy, your bank decides to start exchanging your Iraqi dinars for hard currency at some rate more favorable than the outrageous price at which you bought your dinars in the first place. Right.
For comparison's sake, most other Middle Eastern currencies are totally worthless and unconvertible outside of their countries of origin. They show every indication of remaining so indefinitely. And those currencies come from countries that aren't completely falling apart.
The trade in Iraqi dinars is basically a pyramid scheme. You can make money in it, all right, but only if you're one of the middlemen who keeps passing the worthless notes on to gullible investors at an outrageous price.
Posts: 1640 | From: New Haven, CT | Registered: Dec 2002 | IP: Logged | |
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strange_little_girl The First USA Noel
| posted 09 August, 2006 10:39 PM
I've got friends who bought some Iraqi dinars a few months ago. They were convinced to do so by a financial investor who seems like a really dodgy character. They used him to get their first mortgage because the banks wouldnt touch them because of bad debts and he messed about so much arranging their second mortgage they almost lost the house they were going to buy.
They say they're prepared to lose the money invested but I think they are waiting for a huge pot of gold to come their way when it is time to sell.
-------------------- I tried to get in touch with my inner child, but she isn't allowed to talk to strangers.
Posts: 674 | From: Scotland | Registered: May 2004 | IP: Logged | |
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RBCal Deck the Malls
| posted 09 August, 2006 11:57 PM
One easy way to become a millionaire is to buy Zimbabwe dollars (Z$). With one dollar you can buy 300,000 Z$. Thus buying twenty dollars worth will make you a multi-millionaire. Too bad that a loaf of bread costs about a million Z$ though.
-------------------- "The women who embraced in the wagon were Adam and Eve crossing a dark cathedral stage—no, Eve and Eve, loving one another as they would not be able to once they ate of the fruit and knew themselves as they truly were." - Lynn Cheney, Sisters.
Posts: 289 | From: California | Registered: Apr 2005 | IP: Logged | |
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