Are lower denominations better insurance, REALLY?

[F-16Pilot]

I just joined yesterday, but have been trolling for a little while. I'm not a pumper, just an invester, like yourselves...I have one observation, however:

Based on eBay pricing of 1,000,000 IQD:

$25,000 IQD x 40 = $1220

$500 IQD x 2000 =$3580

Essentially you could buy 3 million of the $25,000 IQD notes for every 1 million of the $500 IQD notes.

Let’s assume that you have $3600 USD you want to spend on dinar. It has been asserted by various individuals that we should buy lower denominations for insurance. So the question really comes down to whether it is smarter to spend your money on the lower denominations and get fewer or spend it on the larger denominations and get more.

Using the scenario that I keep reading around here, if the RV occurs with a 30 day turn in window at $1USD/dinar (as stated here multiple times), the person who spent his (or her) money on larger denominations would cash in for $3,000,000 and be done. The person who spent his (or her) money on the lower denominations can wait for the float (18 months??), hypothesized to be around $3USD/dinar, and would also take in around $3,000,000. Which do you think looks like the better insurance? I for one believe in cash in hand. I know there are few around here who believe the RV may float to $3+, but they are a minority. Yes, if that happens, the lower denomination holders hit the jack pot (assuming they hold out for it). But, if the RV occurs and it is a single revalue (i.e. no float), you just gave up $2,000,000. And what if you die during the 18 months while you’re waiting…?

The only way lower denominations are good insurance is if you can swap your higher denominations 1 for 1 or purchase the lower denominations at the set exchange rate for dinar/USD, not the inflated price.

JMHO, Lets Go RV!

[hardmoney1]

I just joined yesterday, but have been trolling for a little while. I'm not a pumper, just an invester, like yourselves...I have one observation, however:

Based on eBay pricing of 1,000,000 IQD:

$25,000 IQD x 40 = $1220

$500 IQD x 2000 =$3580

Essentially you could buy 3 million of the $25,000 IQD notes for every 1 million of the $500 IQD notes.

Let’s assume that you have $3600 USD you want to spend on dinar. It has been asserted by various individuals that we should buy lower denominations for insurance. So the question really comes down to whether it is smarter to spend your money on the lower denominations and get fewer or spend it on the larger denominations and get more.

Using the scenario that I keep reading around here, if the RV occurs with a 30 day turn in window at $1USD/dinar (as stated here multiple times), the person who spent his (or her) money on larger denominations would cash in for $3,000,000 and be done. The person who spent his (or her) money on the lower denominations can wait for the float (18 months??), hypothesized to be around $3USD/dinar, and would also take in around $3,000,000. Which do you think looks like the better insurance? I for one believe in cash in hand. I know there are few around here who believe the RV may float to $3+, but they are a minority. Yes, if that happens, the lower denomination holders hit the jack pot (assuming they hold out for it). But, if the RV occurs and it is a single revalue (i.e. no float), you just gave up $2,000,000. And what if you die during the 18 months while you’re waiting…?

The only way lower denominations are good insurance is if you can swap your higher denominations 1 for 1 or purchase the lower denominations at the set exchange rate for dinar/USD, not the inflated price.

JMHO, Lets Go RV!

First of all, Welcome to the site!

One thing for sure, if you die in 18 months, well - that changes things rather quickly. Unless you have briefed your family on what to do in that event, then I guess the old adage "a bird in one hand is better than $3+ in the Iraqi bush" (or something like that!). You won't have to worry, someone else would be making that decision!

I, for one, originally had only 000 notes - thinking this was the cheapest way to go. For sure, that makes sense unless they force a time frame on the larger denoms at a 0.10 or the like rate. Who wants to cash in everything (and you will be forced to with large 3 zero notes -1000,5000,10000,25000) at a low rate?? IF this is all you have then you will not be able to "float" with the increasing rate. Global politics being what they are, Iraq could still spiral back into oblivion, if Iran gets control, etc, etc. - Nobody has been good at predicting the future in the Middle East!

If you have 50,250,500 notes, and they indeed float to $3+, then the additional 300% higher you paid for the lower notes, AND you WAIT for $3.22 -you get a 90,000% Return on Investment, whereas the 1 million you paid at $1220 yields an 8,097 % Return on investment IF YOU ARE FORCED TO CASH IN at 0.10 (I found where you can buy 1 million Dinar in 500 Dinar notes on ebay at $3600+ and it is registered with the treasury) . That is a 10 bagger difference!!!!

I suspect that many people would lose sleep over this kind of "woulda coulda shoulda paid for the lower denominations WHEN I HAD THE CHANCE!!!". Remember, the problem here is all FUTURE ORIENTED - WHAT SHOULD I DO??? And, what is going to happen??

The thing I had in mind was the lower notes could be held back and gifted to family whenever you wanted to (Gift tax limits are $13k per year). A 500 Dinar note could perhaps fetch $1,670.00 - great gift or "Walking around" money!If you had a brick of these (100 notes), thats great appreciating currency. Changing something you paid $1.8 for (a 500 Dinar note) into $1,670.00 whenever you want!! 90,000% ROR.

Again, Welcome, and Hope that helps!

[F-16Pilot]

First of all, Welcome to the site!

One thing for sure, if you die in 18 months, well - that changes things rather quickly. Unless you have briefed your family on what to do in that event, then I guess the old adage "a bird in one hand is better than $3+ in the Iraqi bush" (or something like that!). You won't have to worry, someone else would be making that decision!

I, for one, originally had only 000 notes - thinking this was the cheapest way to go. For sure, that makes sense unless they force a time frame on the larger denoms at a 0.10 or the like rate. Who wants to cash in everything (and you will be forced to with large 3 zero notes -1000,5000,10000,25000) at a low rate?? IF this is all you have then you will not be able to "float" with the increasing rate. Global politics being what they are, Iraq could still spiral back into oblivion, if Iran gets control, etc, etc. - Nobody has been good at predicting the future in the Middle East!

If you have 50,250,500 notes, and they indeed float to $3+, then the additional 300% higher you paid for the lower notes, AND you WAIT for $3.22 -you get a 90,000% Return on Investment, whereas the 1 million you paid at $1220 yields an 8,097 % Return on investment IF YOU ARE FORCED TO CASH IN at 0.10 (I found where you can buy 1 million Dinar in 500 Dinar notes on ebay at $3600+ and it is registered with the treasury) . That is a 10 bagger difference!!!!

I suspect that many people would lose sleep over this kind of "woulda coulda shoulda paid for the lower denominations WHEN I HAD THE CHANCE!!!". Remember, the problem here is all FUTURE ORIENTED - WHAT SHOULD I DO??? And, what is going to happen??

The thing I had in mind was the lower notes could be held back and gifted to family whenever you wanted to (Gift tax limits are $13k per year). A 500 Dinar note could perhaps fetch $1,670.00 - great gift or "Walking around" money!If you had a brick of these (100 notes), thats great appreciating currency. Changing something you paid $1.8 for (a 500 Dinar note) into $1,670.00 whenever you want!! 90,000% ROR.

Again, Welcome, and Hope that helps!

hardmoney, yes, using the scenario of initial RV @ .10 and a float to 3.00+ changes the value of having lower denominations quite a bit. I was trying to stay with the more main stream opinion that the initial RV would be closer to $1 and float would be near $3, in which case, I see there being no value added and a greater potential for loss. Personally, I have trouble believing there will be a float, unless Iraq is actually trolling for big money speculators after the initial RV. I honestly don't know if that is in their best interest or not. There is no doubt, however, that if a window is established for 000 turn-in/cash-in, the speculators are going to come out of the woodwork to hop on board the "triple your investment in 18 months" train. Thanks.

[Tropics]

The insurance policy he was mentioning was assuming you bought 1 million in the lower denoms compared to the 1 million in 3 zero notes. Yes you pay $7k for those lower denoms which are basically 7 times what we pay for the higher notes. But in your scenario if you have to cash in within 30 days at 1 to 1, you made a million and you are done. With the lower denoms, there is no cash in requirement because that will be every day money in Iraq. So you can sit on that money and wait as long as you want. With all the oil still undiscovered, it will definitely go up in value over the next few years. So if it goes up to 3 to 1 in two years you made $3 million off of 7k. Not a bad investment if you can afford it. You are comparing 1k for the large notes and 7k for the small notes and then yelling rip off. Investing is all about choices. If you want to cash out as soon as possible then by all means go ahead. Breitling was offering you a solution on how you could possibly make more money, but requiring more outlay on your part. I don't consider that pumping at all but an option for a possible higher return. It is your decision to decide to take his advice or not. I would if I could afford it.

[F-16Pilot]

The insurance policy he was mentioning was assuming you bought 1 million in the lower denoms compared to the 1 million in 3 zero notes. Yes you pay $7k for those lower denoms which are basically 7 times what we pay for the higher notes. But in your scenario if you have to cash in within 30 days at 1 to 1, you made a million and you are done. With the lower denoms, there is no cash in requirement because that will be every day money in Iraq. So you can sit on that money and wait as long as you want. With all the oil still undiscovered, it will definitely go up in value over the next few years. So if it goes up to 3 to 1 in two years you made $3 million off of 7k. Not a bad investment if you can afford it. You are comparing 1k for the large notes and 7k for the small notes and then yelling rip off. Investing is all about choices. If you want to cash out as soon as possible then by all means go ahead. Breitling was offering you a solution on how you could possibly make more money, but requiring more outlay on your part. I don't consider that pumping at all but an option for a possible higher return. It is your decision to decide to take his advice or not. I would if I could afford it.

Tropics, I'm not yelling "rip off" 'cause I don't anticipate anything worse than a break even on my investment. Anything above that is gravy. IMO, I don't think it makes sense to compare 1 million in high denom to 1 million in lower denoms, because they don't cost the same. If you could buy both at the same rate, it would be a fair comparison. But as it stands, you have to compare what you could potentially buy with the same investment. In this case, you have to compare 3 million big denom to 1 million low denom pre-RV. Unfortunately, the great unknown is the RV and if there is a float. If the initial RV is very low (i.e. <.50) and the float is $3.00+, then the low denom insurance paid off. I also like the idea of having the $100 IQD walking around/Gifting notes. However, if there is no float or the float is only 3x higher than initialRV ($1 initial - $3 float), then you at best break even or stand to loose a fair amount. Of course the bottom line here is we win regardless. Either you get all of your bills paid off or your filthy rich...I'll take whatever I'm given.

BTW, I don't give any advice and I am a sponge to everything you guys say on here. I simply had an opinion about the lower denom insurance topic and thought I'd share my thoughts. Certainly this is the forum for that, is it not? Even your advice has merit.

[Laney]

So are all the 000 notes basically the same then? I see most people holding a majority of 25k notes over 5k notes and am wondering why. Wouldn't it be easier to cash in the 5k notes - i.e., offer more choices for tax reasons, etc.?

[phazedoubt]

Unless the Iraqi govt. does something that no one has ever done before, all of the currency will be affected the same. With today's electronic banking systems, it would be almost impossible to give one type of hard currency one value while not doing the same across the board. Can you imagine how many people with bank accounts will go in and demand smaller denominations, just so that they could re-deposit the money and instantly make more money? Over half of Iraq's money exists electronically. This negates the ability of changing the value of some currency but not others. IMO it would cause a run on the banks in Iraq.

[Dinariana]

Unless the Iraqi govt. does something that no one has ever done before, all of the currency will be affected the same. With today's electronic banking systems, it would be almost impossible to give one type of hard currency one value while not doing the same across the board. Can you imagine how many people with bank accounts will go in and demand smaller denominations, just so that they could re-deposit the money and instantly make more money? Over half of Iraq's money exists electronically. This negates the ability of changing the value of some currency but not others. IMO it would cause a run on the banks in Iraq.

It's not that the currency would be valued differently. They would be revalued the same. It's just that if there is a time limit to cash in so that the govt can phase out the large denoms, the lower denoms might not be subject to that time limit. Therefore you could hold them longer and ride the wave as it increases in value over time.

[sandfly]

yes it is, with the lower dem. u can watch it rise, and cash it out when u r ready

[TQueezy]

How can they say there will be a time limit to cash-in the 1000,5000,10000, and 250000 notes and not the smaller ones? That doesn't make any sense. Like the posts before say, if half of their money is represented electronically, then changing the value goes for all of them, as does rules applying to international trading. Doesn't anyone else see this? How can they force people with only high denominations to cash them in when those with small denominations can hold their and wait for the float to rise and make three times as much as those with the higher denominations? If you say you have to cash-in foreign currency in possession outside Iraq so the US Treasury can return them for oil, then they would require ALL investors in the United States and internationally to cash in ALL Iraqi Dinar in possession. I don't see them making an only high-denominations rule. Wouldn't be fair.

Can anyone argue the opposite for some perspective please?

[radar12354]

From what I understand there is a limited supply of small bills, get them were you can..........most of the west have large bills.....try the secondary markets(small bills). If there is a window for large bills we have no choice.......remembering that Iraq wants to get back to some pass amount and smaller demons adding value as they destroy the larger bills upon collection....just saying.....if they don't put a time limit on the smaller demons you can hold them as long as you like......just saying

[radar12354]

From what I understand there is a limited supply of small bills, get them were you can..........most of the west have large bills.....try the secondary markets(small bills). If there is a window for large bills we have no choice.......remembering that Iraq wants to get back to some pass amount and smaller demons adding value as they destroy the larger bills upon collection....just saying.....if they don't put a time limit on the smaller demons you can hold them as long as you like......just saying

No matter what we need a international recognized currency.........finger cross for the WTO....just saying

[wicked93gs]

And then reality strikes when it RD+RVs at 3:1 and you realize you lost money due to the LOP(RD) that no one believes will happen. I personally dont know why anyone buys cash more than once anyway, its really just too risky. I bought some cash before I realized a Warka account is much more versatile and has none of the drawbacks. I am not saying it will LOP+RV for sure...but it is a good possibility, and anyone who doesnt take that into account is being naive.

[.netnodoubt]

I have no clue where the time limit to cash in started, but that makes absolutely no sense, currency is currency, wether it's high or low denoms, it's legal tender. I have always likened it to the phasing out of $1000 notes, $2 notes.....they were phased out and to this day if you find one of those notes in your old sock drawer you can turn them into the bank at face value. Same with the dinar notes, they are phasing out the higher denoms.

[zul]

I believe lower denom and high denom (25k, 10k, 5k and 1k), will be treated just the same comes RV. I dont believe there will 2 tier (or more) RV. They will announce 1 rate..and that's it. So no diff...it you hold a lower denom or a higher denom here.

However..they could be a window for the higher denom ..because logically, they would want to put the larger denom to 'sleep' as these currencies will no longer be practical once RV.

IQD may continue to rise after that....but you have to cash in your higher denom within that window period..this is where you can lose out. So it all depends.

I have some lower denom currency myself....and the only reason i have them is because i could easily change a 50 dinar x 10 pcs at any money changer while others Q at banks with millions IQD.

i hate queing at the bank. LOL!

[keepmwlknfny]

Either way your wasting your money paying so much more for lower denoms......If there is a straight up RV, it wouldnt make sense for there to be a timeline on ONLY the bigger bills....the majority of all the physical currency is in country anyway so what we hold outside the country of Iraq is peanuts and wont really matter in the grand scheme of things.....If they do phase out the bigger bills naturally like soooo many gurus claim is how its going down, then it would be like the US right? They didnt demand all the larger bills in immediately, they were just naturally turned in over time because they were useless for everyday purchases.....Now if they do RD, then instead of breaking even or possibly making some kind of profit, you will lose money because of how much more you paid for those lower denoms......so to answer your question, NO!

[JoeB]

IMO The theory about some "time limit for cashing in big notes" is probably invented by the dinar dealers to get people to buy lower denoms at ridiculous prices.

Edited May 24, 2011 by JoeB

[The Machine]

IMO The theory about some "time limit for cashing in big notes" is probably invented by the dinar dealers to get people to buy lower denoms at ridiculous prices.

Well said mate ..... stick that in your Oakie pipe and smoke it pumpers !!!

GO BIG RV