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Investwisely

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Posts posted by Investwisely

  1. I'm not part of the $3.22 crowd but I do have to question you on a couple of things. First, where do you get the figure of 50 trillion dinar? The figure I have heard is 27 trillion and the CBI and GOI are pursuing a money supply reduction strategy to bring that figure down. Second, the Bahraini dinar is not $.37 cents. It is .37 Bahraini dinar to the USD which comes to something like $2.65. Now if you're saying an RV of around $.37 is more realistic than $3.86 I would agree. But if you're going to try to set everybody straight on the facts of the IQD you had better get your facts right first.

    Scooby Doo you are right about the value of the Bahraini Dinars...my intend was basically to state that I believe the RV might be more like .37 cent to the USD and you can find the info about the amt of outstanding dinars on the CBI website under "Monetary Aggregates"....on the excel spreadsheet line 22...as of March 2010 it was 50.5 Trillion....and yes Im a "newbie" cause I just found out about the site the other day!!

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  2. Due to the recent positive developments surrounding Iraq in the past year there has been a euphoric rise in the imminent speculation of a Re-vaulation (RV) of the Iraqi Dinars. Certain groups and individuals have taken it opon themselves to promote the great aspects of investing in the "devalued" Iraq Dinars (IQD) with many and most believeing that a RV of the IQD's "has to happen" and it has to be RV close to what the pre-Gulf War pegged rate was of 1 IQD = $3.21 USD. You now have hundreds and even thousands of people on conference calls listening to how they can achieve great wealth when the current IQD's RV close to the pre war levels! It never fails that in any "get rich quick" scheme you hear the same things...."it's a groundfloor opportunity", "it's a once in a lifetime opportunity", "don't miss out you better get on board right now", etc!!! While many of the individuals telling family friends and the like about the opportunity they don't have a vested interest in benefitting from others getting involved,what they don't see and understand is that there are individuals that are making tons of money right now!

    Those selling dinars are doing exceptionally well....for at least the last year the exchange rate has remained pegged at 1170 IQD = $1 USD which means it cost about $85 to purchase/exchange for $100,000 of IQD. Just 45 days ago you could purchase 100k of IQD's for $140, not that crazy of a markup considering that there are cost involved with getting the IQD's over here and there has to be a profit margin! However, because of so many people believeing that the RV was imminent the demand for the IQD drove the price up to over $200 USD depite the wholesale price remaining constant! That's well over a 120% markup! So if you recently purchase IQD's you will need an appreciation of at least 135% when you factor in shipping fees "$24" to just breakeven! You also have individuals promoting "setting up a Trust" which will cost you thousands of dollars!

    The sad part is that like all "get rich quick" schemes (not necessarily a scam) people don't do their "homework". Despite the fact that you may not be an economist understanding basic math will let you know that an RV of the magnitude that is being promoted is absolutely absurd! Just know this if a currency goes from 1 cent to an increase to 2 cents that is a 100% increase...very simply you doubled the value, if you go from 1 cent to 10 cent that is a 1,000% percent increase, if you go from 1 cent to 1.00 that is a 10,000% increase, if you go from 1 cent to 3.00 that is a 30,000% increase....yes 30,000% increase!!! The next time you go to visit your Dr. tell him that you made an investment and you are going to "pretty much overnite" receive a 30,000% percent increase on your investment....the Dr. would probably want to admit you to an insane asylum!! Imagine seeing a bank with a sign in the window saying 3 month CD 100% percent let alone 1000 or 10,000%. You would never put your money in that bank! Common sense tells you...."if it sounds to good to be true....." you know how the saying goes!! The problem is most people hated math in school and unfortunately don't utilitze it to make sense out of things!

    In alot of ways the same way people think that the IQD's will RV close to pre-war levels and close to Kuwait is the same as people wanting to sell their house today at levels that a house sold for at the top of the real estate market. It's not going to happen you have to deal with the realities of today not 5 years ago and you have to lower the price of your home. same goes for the value of Kuwait's Dinars (KWD) and the IQD. You have to understand the history of these two countries! Iraq has been crippled by the various wars over the last 30 years and the past decade of US led sanctions....a lot of where we are today started with the Iraq/Iran war of 8 years! The war with Iran left Iraq with a lot of debt of which Kuwait was providing because of the vested interest they had with Iraq. Two main issues caused Saddam to invade and annex Kuwait - Kuwait refused to forgive debt that Iraq owed to them from the war with Iran and Saddam believed that Kuwait was taking oil from Iraq on oil fields that were on the borders of the respective countries! We all have witnessed and seen how Iraq had become a country rife with bloodshed, crime, and great challenges due to these events.

    In the meantime Kuwait has been able to flourish and is currently the 8th wealthiest country in the world...with a GDP of 117.3 billion(USD) in '09 to impressive growth of 144.3 billion for '10 versus GDP of 111.5 billion in '09 in Iraq to 117.7 billion in '10 est. Unemployment in Kuwait is 2.5% versus 15.3% in Iraq, Kuwait produces 2.5 million barrels a day of oil and despite Iraq being about 20x's bigger it produces 2.4 million barrels a day. Kuwait is one of the only countries in the world that has a surplus budget over 18 billion for '10 Iraq has a deficit of 19 billion almost the exact opposite. So while these two countries do have somethings in common...their locale, their histories, their natural resources, etc they are worlds apart from an economy stand point.

    Now Iraq will close the gap in the coming years ahead...but it will take years not days and weeks! Therefore, it is totally unrealistic to think they will be valued in a similar fashion! There is no question some sort of RV will take place but to think there will be a 30,000% increase anytime soon is foolhearty to say the least! Don't fall for the clandestine meetings, and secretive callers on conference calls....the math alone tells you that what you are being told on these calls is a bunch of BS!! Here is another bit of math for you...IQD's in circulation are currently well over 50 Trillion yes 50 Trillion! The US currently has about 4.5 Trillion in circulation! If the RV happened as everything stands today that 50 Trillion would amount to a number in the "Sextillions"! Which would be totally unprecedented and not possible! So look at history to get some answers....the new gov't of Iraq will have to take those trillions and trillions of dollars out of circulation...it's impossible to have something go up in value when its so abundant!!! It's the laws of supply and demand! The best case senario is that you will be able to exchange your old IQD's for the new ones at banks here in America, otherwise the dinar sellers will profit greatly when they charge you to exchange your old dinars for the inevitable new ones that will be issued with much lower denominations! I do believe there will be an RV but it will not be anywhere near the value of the KWD but its possible it could RV close to the Bahrain Dinar which is .3770 cents to 1USD. But it will take time and it probably won't hit that level until the old dinars are out of circulation! If you think it can happen another way you just don't understand the basics of economics, math and currencies. Also know that no currency in the world is in a vacuum, all currencies are "relative" to other currencies so when one appreciates another depreciates against it! I believe the future prospects for Iraq are very bright but it will take many years to bring Iraq into the 21st century! Think longterm (7 to 10 yrs) and you may make a gain of 10,000 or even 20,000% but not overnite.....stop dreaming and wakeup! Iraq is a special situation but it's not that special!!!

    Sources; Central Bank of Iraq, CIA World Book of Facts and Wikipedia

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