Bogie

Makes common sense to me too. This is absolutly the most realistic thread I have been involved in during my short few months of following my 2 yr "investment". Thanks to all of you over here at DV that are willing to open your eyes, and to those that don't for not bashing us for the buzz kill

New over here but I'm glade to see I'm not the only one that wants to use hard numbers to put my mind at ease. My currency in circ figures were about half yours - for both countries-but based on oil reserves comparisons and outstanding currency issued, for Iraq and Kuwait, I max this out at $ 0.0124 / IQD assuming a stable and funtioing gov and society.... now that may be a stretch....... but it is the only target return I expect or need to make the rest of the BS unimportant

Not surprized at all, feel my days are numbered after this weekend's BS pump job

When I posted an extensive financial analysis on his sight showing the rate could not be more than 1.25 cents/ IQD without a LOP, I got shut down so fast by Dan himself my head was spinning. I am not looking forward to the point that we have to go through these same sharks to get new bills when it does LOP!!

Thanks, I have not seen that number but at the rate IQD are being thown around I would believe it! I think Legolas is right, an RD followed by an RV... and if I were wispering in Shaby's ea,r I'd do a two stage RV, one buck after the RD then a second to 3+ a year later after all the 25K notes were pulled in from the US and abroad to get the" weak of heart" out of the investment before the real value is realized.... just MHO

But remember, the over night drop in value was from an artifically valued currency under UN sanctions and not legally accepted outside Iraq. Also compare how much was in circulation at that time to the 27 trillion in circulation today.... apples to apples.... as they say

Legolas, great post. As I said on your message board, I joined DV today because of it, and the positive and open minded reponse I see you have recieved on it. I was not given such a warm welcome on my former site last week when I posted the following realitly check on the wild "intell" on expected rates....plese forgive my self-serving piggy back on your post....but you and your fellow realists over here may find it of some interest ..........Keep it real! Bogie (sorry again, I realized after the fact I could have included this as an attachment over here on the DV site) EYES WIDE OPEN.... Ok, many of us have been on an emotional roller coaster ride together, as the highs and lows keep getting more severe over the past couple of months. I cannot take putting my head in the sand anymore and just trust the conjecture / rumor / and "Intel" being thrown around like a Frisbee at a picnic. So, yesterday I decided to do a little home work for myself (not really wanting to know the answer) so I could stop second guessing my investment and start hoping (or healing) from a position of reality... I do not intend to offend anyone here and was not going to post this but a friend asked me to, so here it goes....I truly hope that if anyone can offer corrections / additions / or advice to my analysis that this thread may offer a source of "grounding" to us all I have no special contacts, skills, insight or "Intel" but I will try to explain my logic and clearly state any assumptions or estimates used to prepare this GUESS of what my IQD may realistically be worth at some point in the future (a whole other can of worms). Why do we all believe that Iraq's currency will be more valuable than that of Afghanistan when this mess is all said and done-- one word OIL. ASSUMPTION: The total value of any countries currency must be LIMITED by the sum of its resources, assets, liabilities (tangible or intangible), and if traded on the world market, cannot be arbitrarily in excess of this limit without valid justification How many times have we heard- “look what happened to the Kuwait dinar after the Gulf war, it has to happen in Iraq!”…..so let’s run with that…… ASSUMPTION: Two countries with similar cultures, histories, and assets can be used to model each other and predict outcomes (within reason) within the flux of a global market Since I was sold on this investment on these two assumptions, I feel justified in proceeding with my analysis using them to quantify my expectations. I will welcome any inputs on some of the numbers I found in my search for an answer: (the logic will not change, just the numbers) Kuwait’s proven oil reserves are reported at just under 100,000,000,000 bbls – and their economy is dominated by a single asset- OIL Kuwait has approximately 41,000,000,000 dinar (Kd) in circulation (this number was not well documented but the logic will hold if we update later with a firm value) ASSUMPTION: Government revenue for a bbl of oil is $100/bbl fixed - (a liberal assumption for Iraq if intel is correct) So let's do the math on the relative value of our model (the Kd) to Kuwait's known assets 100,000,000,000 (bbl of oil) divided by 41,000,000,000 Kd = 2.439 bbl of oil resvs / Kd in circulation …now let's put this into $ of assets per Kd...........2.439bbl x $100/bbl = $244 of assets/ Kd in circulation (note: THIS IS NOT THE EXCHANGE RATE FOR THE KD!) At last check today (7/13/11) the Kd rate vs. the US $ was $3.64/Kd..... so now we use our model assumption...... How does the fair market value of a globally traded petroleum based currency compare to the value of the underlying assets that support it..........or more simply, what is the asset to exchange rate multiplier for a real life oil based currency in today's market $244 of assets / $3.64/Kd exchange rate = 67.03 ... meaning, Kuwait holds 67 times more value in oil than the world markets value it's Kd!! Ok now for the climax.....let's apply the math to Iraq (I could shoot myself for not doing this 2 years ago) The very highest estimate for oil reserves I could find for Iraq were 230,000,000,000 bbl (less than 150 B reported by OPEC- but let’s shoot as high as we dare) NOW THE KICKER how much IQD in circulation.......27,000,000,000,000......yes folks that's trillions So what is Iraq's bbl oil assets to IQD ratio 230,000,000,000 bbl / 27,000,000,000,000 IQD = 0.00851852 bbl resvs/ IQD in circulation (WOW! This seems diluted compared to our model) now let's convert this to ($ of known assets in Iraq) per IQD....... 0.00851852 bbl / IQD x $100/bbl = $0.85 assets /IQ (looks familiar) This is the absolute top value one dinar could be with today’s known oil reserves! Unless you are willing to believe Iraq can sell dinar to the world for more than their entire net worth--- $.85 is the limit!!! But wait ...... we forgot to apply the multiplier we developed from our Kuwait petro dollar model......... If we want to be fair, Iraq will need to hold 67 times the value of its IQD in circulation in oil reserves .......so......... $0.85 assets / IQD divided by 67 = $0.0126866 / IQD (about 1.25 cents per IQD) or about 79 IQD/$ on cash in Assuming recent IQD purchase prices, we buy today at 860 IQD/$ and sell later at 79/$ Please prove me wrong.....but I think we are looking at a very realistic 11x return on our investments........ still not bad, but I’m not risking a reserve on it again! This is still a real opportunity........., but I feel much better about it now that I have opened my eyes and closed my ears. This is why congress is still struggling with the debt ceiling issue, it will help, but it will not be the life changing event it's been hyped up to be................please just think about it