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SWFloridaGuy

Adam Montana

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[b][url="http://www.****************.com/1/post/2012/12/adam-montanas-analysis-of-potential-rate-emailed-to-recaps.html"]Adam Montana's Analysis Of Potential Rate - Emailed To Recaps[/url][/b]
12/31/2012

[url="http://www.****************.com/1/post/2012/12/adam-montanas-analysis-of-potential-rate-emailed-to-recaps.html#comments"]0 Comments[/url]

[left]There’s a lot of speculation on the Iraqi Dinar, and one of the most confusing and uncertain aspects of the final outcome is: The Rate. We constantly hear people making predictions and taking guesses… but what is the Iraqi Dinar rate actually going to be?!

Hi Everyone. I’m Adam Montana, and I’m going to do something I have largely avoided for the past few years… I’m going to give you my analysis of a potential rate on the future (and pending!) ReValuation of the Iraqi Dinar.

There are plenty of theories on what the rate of the revalued Iraqi Dinar will be, and they honestly range from pennies to dollars… my friends, that is a HUGE difference in ROI if you hold several million Dinar!

Why, if the rate is several dollars, then your holdings could equal several million USD! If the rate is in the pennies, then your investment is potentially worth several tens of thousands of dollars… BIG swing there, right?

I’m going to list a couple of speculated rates and the reasons behind them, then I’ll tell you what I think is most likely.

[/left] [left] [u]Based on Kuwaiti Dinar.[/u]

It’s been said that the rate must equal their neighboring Kuwaiti Dinar rate, which would put the Dinar at $3+. Many people speculate that the Iraqi’s are a prideful people, and it would be a slap in the face to have a revalued currency be less than Kuwaits.

[u]Based on dropping the 0′s[/u]

It’s mentioned many times in the news that the 0′s could be dropped, which would mean one of two things:

1. The 0′s are dropped from the bills, which essentially puts most investors at a break even return. Nothing gained, nothing lost.

2. The 0′s are dropped from the exchange rate, which is currently .00086 (Dinars are worth about 1170 IQD per 1USD, or an exchange of .00086). This means your dinars are worth .86USD per Dinar – in other words, a 10,000 IQD note is exchanged for $8,600 minus spread and bank fees.

[u]Based on “equal to the USD”[/u]

We see articles all the time that reference the US Dollar, stating that the CBI wants the IQD to be equal to the USD. An easy assumption is to simply RV at 1:1, making a 10,000IQD note worth $10,000.

[u]Based on “they can’t RV low or investors will buy too much!”[/u]

Some people state they will not cash in for anything less than $1. They state that Iraq would be foolish to RV at a low rate, because then big money will come in and buy up a ton of Dinar before it can go higher. (I intend to prove this theory wrong, FYI.)

My Thoughts:

Keep in mind that I’m trying to keep this as simple as possible. I am going to use hypothetical figures, and I’m going to make my point as quickly as possible… we all have better things to do than listen to an old guy like me ramble on for days, right? [img]http://dinarvets.com/forums/public/style_emoticons/default/wink.gif[/img]

I agree with a few of the speculations above. I think the Iraqi Dinar should have a higher value, and I think we are simply waiting on the HCL or Chapter 7 to be finalized… then it will be “GO” time! But my opinion of the rate goes a little deeper… it includes a “business sense analysis” that I think everyone should be prepared to accept.

Iraq is a business – and the business is natural reserves. Iraq holds a majority of the worlds natural gas and also black gold, also known as “oil”. When Iraq is released from Chapter 7 and the HCL has been settled, they will begin operating their business using the same principals any other successful company uses – the goals being profit, sustainability, and success!

Did I mention profit? Yes indeed, friends!

[u]PROFIT.[/u]

The most important concept to understand today is this: The CBI makes money on every auction, and they will continue to do so forever. When the Dinar changes value, the CBI buys it at a lower rate, and then sells it at a higher rate.

The CBI will ALWAYS choose the path that makes them the most money. Keep that in mind as we continue with this paper!

Let’s move forward a few steps and talk about a ReValued dinar. I agree that a lower rate than Kuwait will be a blow to the ego’s of the Iraqis. I agree that it should be on par with the USD, or even higher. I agree that the rate WILL get there… eventually.

When the Iraqi Dinar is ReValued to a higher rate, it will become more desirable to do business in Iraq. Many people will be less hesitant to sign contracts and invest in Iraq. The current Iraqi Stock Exchange (ISX) should see some major movement… and the CBI (Central Bank of Iraq) is going to make tons of money on the exchanges!

I believe that Iraq can sustain a very stable currency at a rate of $3 or higher, but I don’t think they will immediately jump to that rate even if they ultimately desire it to be so.

Here’s why:

An instantaneous RV to $3.00 will create a ton of wealth – coincidentally, probably about the same amount of wealth that they lost when Saddam Hussein was taken out of power and the value of the Iraqi Dinar plummeted to mere pennies! What’s done is done, though, and we have to look at the situation for what it is today – not what it could have been or should have been.

When the Dinar rises in value and people are ready to “Cash In”, there is only one place that will ultimately buy the Dinar: The CBI.

Since they control the rate and they are the top of the chain, they can set their spread (the fees they charge for cashing in your Dinar) to any rate they want. I’m of the opinion that they will jack that rate up as high as possible in the beginning… and who’s going to say no? The CBI has a monopoly on this market and it is theirs to do with as they please.

A normal foreign currency exchange carries a “spread” of 2-6%. This means if you exchange $1000 worth of a foreign currency, you can expect to receive approximately $940 after the spread is taken out. Those numbers in the middle aren’t important; the only important thing is what you walk away with.

Since the CBI has complete control on the spread, which trickles down through every single banking institution that handles the Dinar, we are at their mercy. Don’t miss this next line:

If the CBI won’t buy your dinar, then you will not be able to cash in.

[u]Take a hypothetical rate of $3.[/u]

The CBI can (and probably will) put a hefty spread their buy price – I’ve heard it will be at least 25% if they RV high. This means they will sell the Dinar for $3, but they will buy it for $2.25

Personally, I’d be grateful and overjoyed to see a 25% spread on a $3 RV! Most likely, we will only see about $2.00 per Dinar at a $3 RV by the time it gets in our hands (every party involved will take a little chunk, unless you are physically able to go to the CBI. And you can’t do that. So, just accept it – you’re going to pay a spread.)

Once again, the extra numbers aren’t important right now – the only number that’s important is the $3 and the $2.25, because that’s what the CBI is worried about.

Let’s say there is a billion USD worth of Dinar out there right now, or 1 trillion IQD. The CBI pays $2.25 for every $3 worth of Dinar, then resells it the next day for $3. That’s a profit of $75 billion just on the spread. Not bad, right?

The problem is it cost them 225 billion to do that… and that 225 billion goes right into the “debt” column.

My friends, Iraq isn’t about to go into debt so we can get rich. Therefore, a $3 RV isn’t the answer, and we must look at another possibility.
[u]
Take a hypothetical rate of $0.10 (ten cents)[/u]

Again, using the same numbers we have 1 Trillion IQD that needs to be changed out to smaller denominations. The CBI announces the rate at ten cents and also announces that your large notes will be worthless in 90 days.

Every investor would love to hold out for a higher rate, but in this situation you have no choice… you cash out. The CBI will likely use the same spread, so they will buy 1 trillion Dinar at a rate of .10, minus 25% spread, which gives us about $750 for every 10,000IQD note we have… and the CBI makes 250 million in the first 90 days at an expense of only 1 billion. This puts their debt on this transaction at only 750 million… a far cry from the 225 billion in the $3 RV!!!

However, this is only the first step. Now I’ll show you how Iraq can easily wipe that debt out by ReValuing the Dinar at a lower rate initially, then making money as the Dinar increases in value over a relatively short period of time.

What about all the other investors that will now come in to buy up the lower denomination notes, speculating that the Dinar will continue to rise?

I completely agree that this will happen! And the CBI will continue to make money on it. In the above situation, the Dinar is being sold by the CBI at .10USD per 1IQD. After all of the large notes are brought in, it is reasonable to assume twice as much money will be poured back into Dinar by speculators, at .10.

Now the CBI is able to sell 2 billion at 10 cents, and they can move the peg on the Dinar up a bit – say, to 15 cents. Investors will cash in for a profit, allowing the CBI to resell at the higher rate and once again make profit.

Of course, not all investors will cash in at 15 cents. For the sake of argument, let’s say half of the investors sell out at that point. The CBI pays 0.1125USD per dinar (A profit of 12.5% for the investors!!!) and resells that billion for 15 cents – securing a profit of 375 million.

The CBI’s “debt” on the original RV is now down to 375 million… do you see how this is working? The CBI is able to make up the “loss” on the original RV simply by continuing to hold auctions and allowing more and more people to profit on the increasing value.

At this point, in our hypothetical situation of a 10 cent RV, the CBI has covered half of it’s loss with only one “repeg”. They can continue to profit all the way up to the final rate of $1, $2, $3, or higher – as long as investors are willing to buy the Dinar, they can keep moving it up.

And the way things are going over there… why wouldn’t we keep buying? I know I plan on doing so!

In conclusion, I want to caution everyone to be careful with this investment. As good as things look, we never know when some hairbrained Arab is going to pull the pin on a grenade or something silly like that. Only buy what you can afford to lose, and always consult a professional before making investment decisions. I hope you found this article to be helpful!

Best regards and WARMEST RV wishes, - Adam Montana
[/left] Edited by SWFloridaGuy
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HELP!!!! This doesnt sound like AM. Why was it not posted on DV???? Because I think too wishy washy. Nope an imposter . Lets see if he covers it on Dv . Else it is trash!
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So Let's Get That Bottleneck Maliki Out Of There ..... :butt-kicking:

And Then Let's Get This New Years Party Started ! :partyhat:

:D :D :D


Thx For The Post SWFG + For The Concise Analysis Adam ! ;)

Happy New Year DV Peeps !

B) B)
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Wasn't this releases last year? I know Adam released an article concerning his theory on the rate some time ago...and it was ten cents then. More recently, I believe he has stated that his position on that rate had changed. Not positive.
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This has been AM guess for 2 years.
Yes I said guess. No offence AM.

Thanks and Happy New Year to all.
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Thanks for the post SWFG!!!!!!!


[quote name='one2one' date='31 December 2012 - 04:19 PM' timestamp='1356992350' post='1084618']
very well thought out analysis----thanks
[/quote]


Wow one2one, you were able to read and reply to that post in 6 minutes..... :tiphat:

Sorry, I grew up in Texas. Takes me a little longer to read... :P :D
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Adam knows very well that the Kuwaiti dinar means nothing to this investment . There is NO way the financial community would support it.
The 10 cent scienario is appocalyptic ..i.e.. Take the 10 cent RV or your dinar is worthless??? The Dv empire implodes..

I await AM's responce.
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[quote name='rockfl9' date='31 December 2012 - 04:30 PM' timestamp='1356993002' post='1084620']
HELP!!!! This doesnt sound like AM. Why was it not posted on DV???? Because I think too wishy washy. Nope an imposter . Lets see if he covers it on Dv . Else it is trash!
[/quote]
It was posted first here or actually I think on Adams other blog but that was a long time ago. Its old, not saying his opinion isnt the same but this is a year or two old I believe.
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[b] [url="http://dinarvets.com/forums/index.php?/user/46906-swfloridaguy/"]SWFloridaGuy[/url], It is an older article but everyone needs a refresher now and then! No Foul! Play on! :lol:src="http://dinarvets.com/forums/public/style_emoticons/default/laugh.gif">
[/b]
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This was posted here not long after I became a member. In fact it is almost word for word. However it is good for a refresher and for newbies to read as well. Thanks SWFG.
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Yep old news But still good news. Better then no news [img]http://dinarvets.com/forums/public/style_emoticons/default/smile.gif[/img]
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The owner of this site should chime in on this thread. That's all I have to offer regarding the above posts.

Be well members. Happy New Year!
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Adam M has been talking about a .10 RV for years. I think the point he may be missing is that he is approaching the analysis from the point of view of a Western mind. He assumes that logic and reason are more important to the Iraqi psychie than pride. While they surely are motivated by money-making, they have shown little interest in making it according to the logic of the Western world. IMO, they will "make a statement" to the ME and the world when they RV, and it won't be at .10
After all, they are touting that they will be "a donor nation" by 2014. Tough to do at .10, .15, or even a buck. Maliki appears to be preventing the RV currently, but he could just as well decide that the time has come to make a splash to the world and "come out big". Just my thoughts.
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SWFlorida, it is a great reminder. And it is still good information, regardless of when the original post might have been. It is logical and simple to understand. Too many keep thinking big big big. Well, .10 is a lot better than 1186 to 1. And the way the information was broken down should be plain enough for anyone to understand.

You can read anything into any article and you can wish your life away. But this is what they call "LOGICAL" process. Only time will tell how logical Iraq will be. But I think they are going to be more logical than people want to give them. Time will tell.

Happy Holidays everyone. Be safe, be wise, and only spend what you can afford to loose. Same goes for this investment.
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Saddam Hussein tried the "pride" approach when he overvalued the dinar at $3.20 back in the 80s. It didn't work. The market always prevails over pride. As for needing a currency valued at over $1 to be a donor nation, Japan is the world's 3rd largest provider of economic aid with a currency valued at 1 cent.
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LMFAO !

Here's What That Idiot Pumper Guru Freetard Bill Said In Response To Adam's Initial Ten Cent RV ! :lol:



FREEWAY BILL -

THIS IS THE BIGGEST BUNCH OF MISINFORMATION THAT I HAVE SEEN IN THIS WHOLE INVESTMENT.... AND THIS GUY CHARGES FOR PEOPLE TO READ THIS ON HIS SITE... I CHALLENGE ADAM MONTANA TO PUT THIS INFORMATION OUT AND THEN TRY TO BACK IT UP WITH ANY FACTUAL CONTENT WHATSOEVER ON A CALL OR LIVE FORUM AND I WILL BRING IN A DOZEN ACTUAL FINANCIAL EXPERTS ON INTERNATIONAL FINANCE THAT WILL SHRED HIS INFORMATION TO PIECES.... I USUALLY JUST LAUGH AT HIS STUFF, BUT THIS IS RIDICULOUS....



Thug Note: Lol ! The Thought Of Adam Compared To This Mentally Challenged Lying Pumper Idiot -

Is Like The Difference Between Shooting A Bullet And Throwing One !

:D :D :D
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This is all confusing for me so many different opinions--all quite good and believable and explained for the reason why which one is the best!I totally understand Adams opinion of the low rate and cutting the costs of the CBI to bring the currency up to it's former value over time --that is how the CBI will make money and cut the RV debt--I think I got that part right--But what is not taken into consideration here and I do not understand at all is this only concerns the CBI--if you now take into consideration what is needed to operate the GOI for the year---please forget the corruption part for a bit --then that low a rate will not do it--Feb 23 is the last date the GOI can borrow money to pick up the short fall and they will have to start repaying the loans they already have taken out --a dime won't do it --time frame with a low CBI rate won't do it ---now some are going to say well they will get all those frozen funds ,DFI, recovered Sadmans bank accounts and so forth will be available to them---well as I see it that is true to an extent but that is only if they are released from Chap 7 and there is no guarantee that this is going to be rubber stamped at the same time---what is guaranteed is there can be no release from Chap 7 releasing those funds to Iraq without an RV---if the conditions of Chap 7 are still not met even with an RV then they will not be released ! This is how my reading has made me look at this!
Quite possibly they could not be allowed to RV without meeting ALL conditions after all it might be a total IRAQI Rv but without international support they could make the the rate 10.00 and still have a worthless currency-myreferencee is theartificiall rate Saddam put on the value ,you know the bills with his picture on it!
I would like to see a balanced picture of what MAY, COULD happen rather from the CBI side or the GOI Side--IMO this is where the true picture lies both must work together for the good of the country
Sory about being the devils advocate here but there is much more needed from the knowlegeable people here,then one opinion so diverse from the others---I guess I am just confused

Go RV, RI, float, RD,
Cliff
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This investment is nothing more than high risk speculation, this is why one should never invest more than he or she is risking to loose. No one for sure knows how this investment is going to mature or for that matter if and when it will mature. Anyone who is declaring a specific rate or time frame is doing nothing more than speculating in an arena where they have no control other than their own hopes or fear. There are likely to be many twists and turns before we know the final outcome. Enjoy the ride which seems to be like being on a slow boat to China.
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I believe that 10cents is a realistic starting point. Iraq isn't Kuwait. Far from it.
Iraq still has political infrastructure problems and hasn't released the people into free market economics. I dont think they know how. Still working with dictatorial, overbearing and bloated state govt mentality. Huge potential in Iraq but change is required to kick it into gear.

There is no way that Iraq can stand a high value IQD straight up with the current set up. There has to be a major attitude shift and corresponding action.
Iraqs political operation is a global joke. They started off by setting a new world record for the time it took to establish a govt. That says it all.

Dont despise small beginnings folks.
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BTW the donor nation part in 2014 never mentioned any rate while it did say that by 2014 Iraq WOULD BECOME A DONOR NATION ----no rate ever said only that they would be in a position to do so!
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Your theory is severely FLAWED! The ONLY way a rate of 10 cents is even possible is ONLY if the they do not release any new lower denom currency.

IF they release the new currency without the 3 zeros then just to BREAK EVEN by keeping the SAME CURRENT VALUE WITH NO CHANGE AT ALL, the new rate in relation to the new currency has to come out at .86 cents.

IF they release the new currency and came out at a 10 cent rate based on the new notes released, that will cause a MAJOR DEVALUE in their currency! They certainly do not want to cause a MAJOR DEVALUE in their currency. They want to INCREASE the value.

So the ONLY way ANYTHING BELOW .86 cents is even possible is ONLY if they do NOT release any new lower denom currency where they still continue using the current currency with the 3 zeros. THEN, AND ONLY THEN, would a 10 cent rate result in an increase in their currency value!
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