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Special Report: The Iraqi Dinar: Ditch The Hype And Get The Facts !


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CNN. Broadcasting A Report From An Investment Newsletter !

 

 

Special Report: The Iraqi Dinar: Ditch the Hype and Get the Facts

 

 

Investing in currencies can be wildly risky and volatile.

It can also drive massive gains from relatively small investments.

Just about every currency can be traded against another in real-time, providing tons of potential profits from most currencies in the world.

But what about the Iraqi dinar?

Why are people so crazy about it these days?

Is it really so unique and exotic?

The Iraqi dinar is a currency that has acquired quite a bit of popularity since the Iraq War began in 2003. That popularity has increased tenfold amidst speculation that it will dramatically increase in value.

Why else would the United States government be hoarding more of it than any other nation on the planet (excluding Iraq)?

Did Bush know something we didn't when he asserted that the “war would pay for itself”?

Can we, as investors, find an opportunity here?

We've created this report to make sure our readers have accurate information they can act upon.

Let's get started right when the Iraqi dinar was reborn...

Iraq War

Following the second U.S.-led war in Iraq, the dinar was in a state of limbo.

The old Iraqi dinar, featuring images of Saddam Hussein, had to be completely demonetized and a new batch had to be issued.

The U.S. Dollar (USD) became the de facto currency while the country was virtually rebuilt from scratch. Even to this day, the USD is heavily relied upon by businesses and citizens throughout the economy.

Eventually, banknotes were created in 2003 and the old bills were completely replaced in 2004. These new banknotes led to a cottage industry of sellers sending the new Iraqi dinar to oversea investors who hoped to profit from Iraq's new currency when the economy improved...

The provisional government of Iraq made this legal; the banknotes are exchanged at different rates by companies wanting to turn a profit. Virtually all of the real action has been internal or between central banks through auctions though.

The changing exchange rate comes from booming growth in Iraq and long-term devaluation of the USD...

GDP has grown at a strong pace and is expected to grow at more than 9% per year through 2016. The fiscal deficit is a modest 8% of GDP.

iraq gdp growth chart

Throughout the strong economic expansion, the Iraqi dinar has been exceptionally stable compared to the U.S. dollar.

It has gradually strengthened, but only to the tune of about 1% over the last five years.

usd vs. iqd chart

Iraq was in shambles after two wars and a decade of sanctions and neglect.

However, it still has 140 billion barrels of proven oil reserves, which puts it fifth behind Venezuela, Saudi Arabia, Canada, and Iran. Oil production is at 3.2 million barrels a day with the dream of producing 12 million bbd by 2017.

A number of the world's leading oil companies are working hard to boost production as quickly as possible, which in turn has helped boost the explosive growth rates we've seen since the last war.

The U.S. Government's Off-the-Books Stash

The U.S. Treasury does not officially list the Iraqi dinar as part of the country's Forex reserves. However, the Treasury does say it did an initial currency swap with Iraq to fund their government and ministries.

Exactly how many dinars were traded is never mentioned, but it does make reference to “billions of U.S. dollars” traded to Iraq.

Experts speculate the U.S. government received nearly 4 trillion Iraqi dinars at an exchange rate of 4,000 dinar to 1 USD.

If this is even close to true, at 1140 dinars to one 1 USD, the U.S. government would be sitting on a 350% gain — as would anyone else who speculated on the dinar over the years.

And that would give Bush’s statement — “This is a war that will pay for itself” — some weight.

Back and Forth... and Back Again

Rumors of extreme depreciation have become a complex issue. Many sources have bantered back and forth over the past year, entertaining the idea that a serious devaluation may be under way.

However, the Central Bank of Iraq recently attempted to extinguish that notion when it publicly announced an imbalance of the Iraqi dinar exchange rate while simultaneously denouncing rumors that the dinar will soon experience a sharp decline in value.

The Iraqi government planned on pulling three zeros off the end of the currency, which would make for easier math without changing the purchasing power.

Back in September 2011, Alsumaria, an Iraqi satellite television station, reported: “Iraq Central Bank said that it won’t only delete the zeros, but it will also change Iraq monetary structure in order to provide bigger currencies.”

In mid-April, the finance committee in the Iraqi Council of Representatives warned investors and Iraqi citizens how the low exchange rate of the dinar compared to the USD would be detrimental to Iraq's economy. Strict regulations were then mandated on the sale of dollars based on trade restrictions with Iran and Syria.

The Central Bank was expected to withdraw dinars from the market in masses to facilitate the change.

Two days later, everything changed....

Iraq officially suspended all previous plans of dropping three zeros off the value of bank notes of its currency, claiming that the economic climate isn't yet “suitable” for such a dramatic restructuring procedure.

To withdraw the 30+ trillion dinars currently in circulation would be an overwhelmingly tedious process that is not on Iraq's agenda, and will not be a priority “until further notice,” according to the cabinet secretary.

It's a curious story, indeed: speculating on something so volatile for which one day devaluation is imminent and the next it's not to be spoken of “until further notice”...

Since then, the plan to change the denominations of dinar bills has been quietly shelved, although it has been slightly changed.

If this ever happens, the new bills with much smaller numbers are tentatively going to be in circulation with the old notes for several years. Gradually the old notes will be phased out as old paper bills are retired.

Old notes will not magically be worth thousands of times more than they were when they were printed overnight. There is only one real benefit to any change that will occur.

“The knocking out of zeros from Iraqi paper currency will save Iraqis using massive sums of paper money in their money transactions,” said Central Bank Deputy Governor Mudher Saleh.

Buyer Beware!

There are many dinar dealers on eBay as well as sketchy websites that sell currency with no licensing.

Those dealers and resellers are usually the ones who promote the dinar as a great investment opportunity in forums and other media channels.

Don't forget the dinar is still not traded through regulated exchanges.

Any purchases you make today are unregulated and you will not have the protection that the Chicago Mercantile Exchange and other major currency markets provide.

A little bit of common sense goes a long way here. Anyone who tells you that you can make a fortune purchasing Iraqi dinars and then turns around to sell them to you is clearly betting it will never happen.

Plus, foreign exchange rates would immediately compensate for the new value. Even if this didn't happen, Iraq would effectively make its modest debt into one of the worst in the world without spending a dime.

A Real Opportunity Will Come

As we've seen with the back-and-forth currency policies and announcements, the Central Bank of Iraq is still finding its place in what is essentially a brand-new country.

Once monetary policy stabilizes and the dinar is introduced in legitimate Forex exchanges, we'll have a real opportunity on our hands.

What the Iraqi dinar will do (once it is safely and widely traded) is allow you to bet on a country in the Middle East that is seeing strong growth and constantly improving balance sheets.

The Central Bank of Iraq raised interest rates in 2007 in an attempt to allow a gradual appreciation of the dinar. The move will also fight continued use of the USD within the Iraqi economy, although progress has been very slow. Hopefully, it will continue to work on building a strong, competitive, market-based economy.

As long as oil is in high demand — which will undoubtedly be until the world runs out — Iraq will have plenty of money pouring into its borders. Don't forget that Iraq has the potential to boost exports several times over.

While Iraq is still fighting a culture of corruption, there are few oil-rich countries with more potential. Virtually every other oil exporter is either a closed economy or already highly leveraged with debt...

With the low fiscal deficit of 8% GDP, Iraq will only be slowed by global economic forces — unlike the United States.

Wealth Daily has been following news on the Iraqi dinar for years, and we will continue to keep a close eye on developments while cutting out the hype and chafe.

Keep an eye on **** for the latest updates.

There are bound to be numerous opportunities for profit ahead, and we'll let you know as soon as they present themselves.

*****

Edited by Markinsa
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Thanks Thugs, although this was originally published on December 8th 2014 it does warrant a 2nd look. What was reported back then in this article holds more merit today imo as things are much more clearer do to recent events.   :twothumbs:

*****

Edited by Markinsa
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Why else would the United States government be hoarding more of it than any other nation on the planet (excluding Iraq)?

I love it when these investment gurus try to tell us what a bunch of idiots we are for buying Iraqi dinar. Especially when they don't seem to understand their own words. Yes, why would America own more dinar than any other country in the world excluding Iraq? Seeing that according to the author it will not have the dramatic increase in value that we all believe. 

Old notes will not magically be worth thousands of times more than they were when they were printed overnight. There is only one real benefit to any change that will occur

then why did the American government buy it?

Plus, foreign exchange rates would immediately compensate for the new value. Even if this didn't happen, Iraq would effectively make its modest debt into one of the worst in the world without spending a dime.

And this is the statement that shoots everything he says down. The Central Bank of Iraq has been pulling Dinars off the streets of Iraq for several years now. The assumption that there is some 30 - 40 trillion dinar in circulation is simply not validated. Therefore,  the belief that raising the value of the currency will create massive debt for the bank is wrong.

And while this gentleman is telling buyers to beware of purchasing Iraqi dinar he is also in fact suggesting that once the Iraqi dinar becomes a foreign traded currency on Forex that you can come through his business and make money on it then. Of course you will have to pay him a fee. This very suggestion should leave The Savvy investor to ask themselves why is he suddenly interested in the dinar being internationally traded? And it's been pointed out by others here this was two years ago. How much closer do you think we are today?

 

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11 hours ago, ChuckFinley said:

Thanks Flamtap, I think and feel we are close, but not understanding what is really required ( wish we had a check list) we have to wait it out.  

You're welcome ChuckFinley, I would like to think that the only things we are actually waiting on are for the Mosul to be totally absorbed into Iraqi troops hands and the actual date of the RV. However, as you so properly stated......we have no list and will just have to gut it out. I have the feeling that there will be no real forewarning. We will wake up one day and it will just be announced. I feel we are closer than we all know. Hoping for the best to all of us here at DV.

 

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On 11/9/2016 at 7:06 AM, ladyGrace'sDaddy said:

Why else would the United States government be hoarding more of it than any other nation on the planet (excluding Iraq)?

I love it when these investment gurus try to tell us what a bunch of idiots we are for buying Iraqi dinar. Especially when they don't seem to understand their own words. Yes, why would America own more dinar than any other country in the world excluding Iraq? Seeing that according to the author it will not have the dramatic increase in value that we all believe. 

Old notes will not magically be worth thousands of times more than they were when they were printed overnight. There is only one real benefit to any change that will occur

then why did the American government buy it?

Plus, foreign exchange rates would immediately compensate for the new value. Even if this didn't happen, Iraq would effectively make its modest debt into one of the worst in the world without spending a dime.

And this is the statement that shoots everything he says down. The Central Bank of Iraq has been pulling Dinars off the streets of Iraq for several years now. The assumption that there is some 30 - 40 trillion dinar in circulation is simply not validated. Therefore,  the belief that raising the value of the currency will create massive debt for the bank is wrong.

And while this gentleman is telling buyers to beware of purchasing Iraqi dinar he is also in fact suggesting that once the Iraqi dinar becomes a foreign traded currency on Forex that you can come through his business and make money on it then. Of course you will have to pay him a fee. This very suggestion should leave The Savvy investor to ask themselves why is he suddenly interested in the dinar being internationally traded? And it's been pointed out by others here this was two years ago. How much closer do you think we are today?

 

One other thing this investment company didnt take into account is that when the dinar was devalued by the u.s. that meant that all the money that iraq had in the bank of international settlements was deemed worthless..Which means that the bis holds a massive debt from iraq because of the devaluation. So once the dinar appreciates then the bis regains what it lost and also lets not forget that many articles pointed to the fact that shabbs was shadow banking. All the banks in iraq including the central bank were all in the black and those books have not been settled yet because the dinar hasnt appreciated enough. So with the defacto dollar in play it keeps iraq going until the dinar appreciates and then all books are in the red. That is why alot of companies in iraq are still on the ofac list and as they are removed its because someone other than the government of iraq bought them and settled the books for that particular business entity. Lets remember that during saddams years almost all of iraq was owned by the government, and that included all the private banks also. So this joker in the article is basically like LGD says, a guy wanting to make a buck from us by going through him. Its funny because the BH group made the claim in their lawsuit that the u.s. treasury was holding trillions of dinars and the FBI said that they contacted the u.s. treasury and that it wasnt true. I guess they should have asked Ben at the fed that question..lol

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