LOPster kryptonite

[NickMc]

Found this article from The Financial Reader (londonfunds.com). It's dated january 30th of this year. I'll make it easy for you LOPsters, pay attention to the bold and underline.

Iraqi Dinar revaluation is imminent, backed by a powerful Iraqi economy

Posted on January 30th, 2011 by Jason Masters

Iraq is expecting to undergo a interval of large financial growth supported by a rise in overseas investment in oil production and infrastructure. Iraq is a country populated by 30 million people with active and well educated workforce. Iraq is extremely enticing to overseas investors as foreigners can own Iraqi corporations outright, they’ve got a flat tax charge of 25% and also most significantly, they have the ability to repatriate earnings as they see fit.

Despite the fact that President Barack Obama formally confirmed the end of US combat operations in Iraq, it may take some time before the country comes back to a being a peaceful and stable place. Meanwhile the country stays a risky nation. There is still political unrest and violence.

Underlying this instability, Iraq is in fact a potential economic giant, and it’ll slowly but definitely return to after 30 years of flat or no development and unrest. Indicators of economic recovery began in 2009, when Iraq awarded 12 new oil production contracts to international oil production corporations. Iraq has the highest share of under exploited oil fields. Nearly all of Iraq’s oil fields are within the south of the nation in the Shia controlled area, the place there is relative stability. This is extremely optimistic for the overseas oil companies and for oil manufacturing as it will not be hampered by any political unrest or instability.

Iraq has the fourth largest oil reserves on earth after Saudi Arabia, Venezuela and also Iran. Currently, its oil production is estimated at 2.5m barrels a day, which does not make them one of the largest oil producers within the world. All these new oil production contracts will be a considerable boost to the rocky financial system and also will in addition give a considerable stream of overseas investment into the country’s overlooked oil infrastructure.

Oil manufacturing in Iraq is anticipated to rise to much more than 10 million barrels per day by 2020. By this date, it is estimated that Iraq would be 1 of the biggest oil suppliers, 2nd only to Saudi Arabia and Russia. If right now’s oil prices stayed steady, this could drastically enhance Iraq’s probable oil revenue. At this production fee they’ll anticipate revenues from oil to be $280 billion a yr, a huge rise from the present degree of $70 billion a year. Oil money from the growing oil manufacturing is underpinning the expansion in Iraq, as it is catching up to meet the pent-up need for homes and also better infrastructure.

With political stability and proper management of this massive progress charge in Iraq, the country has the potential to be 1 of the richest within the area and also to be a large player on the global oil stage. On the rate of growth in oil production, Iraq’s GDP could quadruple per capita, as the increase in revenues from oil will convert Iraq from having a financial deficit to having expected financial reserves in excess of an estimated $350 billion. This would put Iraq on an equal footing with its close oil production neighbours like Kuwait, Saudi Arabia and UAE. It can after that now not need to have a loan from the International monetary fund to maintain its stability of payments.

One of the largest factors affecting Iraq’s economic growth could be increasing its nationwide safety and also stability. Iraq’s economic development is prone to be influenced by domestic politics and also political instability. They’re anticipating a possible new oil regulation, that will imply that speculators will see changeable times in front because the legal and regulatory environment for the oil industry is absolutely changeable.

Iraq will need to beat all these problems to ensure that it supplies the proper infrastructure like highways, electricity and also water to allow the foreign international investments to produce the improvement in oil production.

The Iraqi Dinar and also Revaluation

Iraq’s currency is the Iraqi Dinar and also is traded beneath the forex code as IQD. The Iraqi central bank announced in 2010 that they were planning to redenominate the Iqd, to make cash transactions easier. They intend to drop three zeros from the nominal value, but maintaining the actual value of the dinar the same. What this means is that the one thousand IQD (pre redenomination) and the 1 dinar (put up redenomination) would be valued as the same quantity in US dollars.

Even though the announcement was made in December and was anticipated to happen by the end of 2010. There is nonetheless no indications of this going on and no extra announcements have been made by the central bank. The current rate of exchange between Iraqi dinar and also the USD is 1167 dinar to a dollar. There has been great fluctuations within the exchange rate of the Iqd, as speculators and investors have been shopping for dinars on the basis that there will be a revaluation in some unspecified time in the future within the near future.

The New Iraqi Dinar (IQD) is just not yet traded on the open foreign exchange market however you may order Iraqi Dinar via a foreign alternate forex trader or from a banking institution. Many of them will purchase it back from you however the price may be at a discount. As the IQD isn’t being actively traded, there is not much liquidity in this currency.

Foreign currency speculators have been expecting a revaluation of the Iqd for 7 years. The Iqd is expected to be revalued alongside the same foundation that the Kuwaiti dinar was revalued after the 1st Gulf War. At that point in time, the Kuwaiti Dinar fell from its pre conflict levels. When oil production restarted. The foreign currency regained all its original worth. Investors holding the Kuwaiti dinar on the time noticed profits of over 3000% on their investment. This higher anticipated profit has shaped very big expectations that on the revaluation of the Iraqi dinar and also many individuals are speculating that this shall be an asset with an extremely high profit.

With the increase in GDP, fiscal stability within the improving Iraqi economy. Economic professionals predict to see the Iraqi dinar to be revalued to more efficiently value the underlying economy. This revaluation has been anticipated for a while, but can only happen when all the nation’s issues have been overcome. In the event you mean to invest within the Iraqi dinar, just keep in mind like some other trade, the worth can increase besides fall.

[merry1]

so what's your point, that is a redenomination. they will drop the 3 zero's and at the same time revalue probably 1 to 1. In that case. unless you bought your dinar around 2003 to 2005 you will probably break even, or lose just a little on the spread and fee.

Edited September 17, 2011 by merry1

[NickMc]

so what's your point, that is a redenomination. they will drop the 3 zero's and at the same time revalue probably 1 to 1. In that case. unless you bought your dinar around 2003 to 2005 you will probably break even, or lose just a little on the spread and fee.

The article is saying 25k notes are NOT going to lose value.

[keepmwlknfny]

All your doing is proving the "lopsters" point.....

[srdedeaux]

This Article though writen one year ago seems to be spot on; and seem to explane the lop better than anthing i've ever read. It aslo explains the revalation! Sometimes History is the best Intel anyone could have;....................................................................GO RV

[swartzkaulf]

Are you kidding me! You are posting an artical from the begining of this year. At lot has changed since then and there is a number of things that are changing as I type this. Let the past go man it is time to move on.

Just saying!!!!!!!!!!!!!!!!

[R Veyron]

It's a great article and makes good sense but who is Jason Masters and who does he work for ? Is there also a link to this and where it came from ? Thank you.

[FrankieV]

Iraq’s currency is the Iraqi Dinar and also is traded beneath the forex code as IQD. The Iraqi central bank announced in 2010 that they were planning to redenominate the Iqd, to make cash transactions easier. They intend to drop three zeros from the nominal value, but maintaining the actual value of the dinar the same. What this means is that the one thousand IQD (pre redenomination) and the 1 dinar (put up redenomination) would be valued as the same quantity in US dollars.

Dropping three zeros from the nominal (face) value = lop. Sorry. If they said drop three zeros from the exchange rate, that might be an RV. 1000 IQD (pre RD) = 1 dinar (post RD) exactly describes a lop.

[Rayzur]

I found an article that essentially said the same things underlined in bold. In reasoning this out, thinking it through in terms of how both things could be true, it seems that the following is as possible as anything else I’ve read or has been put together:

Iraq re-denominates, in dropping the 3 zeros, with major emphasis upon getting lower denom notes out to its citizens. So in country you can buy a coke with 1 dinar or 1000 dinar note. I remember this same kind of process in Italy when they replaced the lira with the euro….we could buy with either currency and essentially the 1000 lira was the same as the 1 euro (not literally, but approximately the same value)… So we are talking about goods and services in country (Iraq) being adjusted to reflect a current value in both currencies. All the while the central bank is pulling in the larger notes, and only releasing the smaller notes in country.

At the same time, the face value of the larger notes maintains the same value. This is before RV.This would explain why Iraq has spent such great effort getting all the larger notes in country back to the banks. They’ve spent considerable time getting the in country 25 and 10K notes out of local circulation.

So now Shabibi is saying lets whack the zeros, and get this thing on the road. They RV ay say 1:1, and those in country who were able to midst poverty hold onto 25 and 10K notes will be able to cash in for 25X100 notes or 10X100 notes as will the international community who likewise holds these larger notes. At the same time, Iraw has introduced the lower denoms, and most of the in country holds this currency and is using it for exchange and this grows exponentially as the bank squeezes the remaining large notes out of in country circulation.

At some point, I would assume that like the lira in Italy, all the 25, 10 and maybe 5K notes will have to come and be exchanged for their smaller equivalents.

Okay, I know there are many out there who would disagree, and it would be so much more helpful if instead of simply dismissing this by bashing,….. that you would perhaps take a moment and explain why this theory of approach is moronic… If you disagree, please give me the courtesy of explaining why so we can all help each other drill down on this more, and please reserve your emotionally driven outbursts, for those who tend to make things up instead of trying to reason it out with a group of folks I really respect.

Thanks!

,

[Dalite]

The article is

saying 25k notes are NOT going to lose value.

Iraq’s currency is the Iraqi Dinar and also is traded beneath the forex code as IQD. The Iraqi central bank announced in 2010 that they were planning to redenominate the Iqd, to make cash transactions easier. They intend to drop three zeros from the nominal value, but maintaining the actual value of the dinar the same. What this means is that the one thousand IQD (pre redenomination) and the 1 dinar (put up redenomination) would be valued as the same quantity in US dollars.

They intend to drop three zeros from face value, but keep the actual value the same

1000 old dinar would be valued the same as 1 new dinar.

Which would nean 25,000 old dinar would be valued the same as 25 new dinar.

No value is lost. The new 25 dinar will be worth the same $21.50 as the current 25,000 dinar notes we hold.

This is just one of many articles that not only call it a redenomination and also include an example of how it works.

After that he goes on to describe the foreign dinar holders expectations that Iraq will go the same route that Kuwait did.

What it doesn't do is tell the reader that Kuwait never lost value, and their new currency reinstated the prior value, as the whole move was to thwart Saddam's ability to spend the money looted from their banks during the invasion.

It is a nice opinion piece, some accuracies, some innacurracies and definitely speaks to the dinar holder's wishes and ends with a caution the value could go up or down.

He also points to the improvements that would have to be accomplished prior to any substantial upward revaluation.

Taken for what it says, it is an upbeat article that points out the options in a manner that is hopeful for the future.

I will offer a friendly suggestion for you to consider. The three zero articles all definitely, without a doubt, describe a redenomination, and explain that is the CBI's intentions.

That said, the plan is meeting a lot of resistance from the Maliki camp, and may not sail through parliament.

When you take the stance that they are about large revaluation, it is 180 degrees from what Shabibi has continually indicated is the plan, and you hold yourself up for tremendous ridicule from those who are reading it correctly.

Again, it may not come to pass, but these articles are about redenomination, as clearly indicated above

In addition, there is talk of removing Maliki and triggering new elections.

There are also reports of Maliki drawing tanks and troops within the Green Zone, and the term Military Coup came up.

Things are not currently looking very good for a speedy solution, or implementation.

Trust me when I say, that plays very well for us, as any positive change in security, stability, increased production, rebuilt infrastructure will call for an increase in value. That said, it may truly be possible to see some value increase prior to a future redenomination.

But, sadly, eventually the CBI will have to address the negative aspects of those zeros.

We hope Iraq doesn't erode into civil war, as well as hoping Maliki won't attempt to use the military he still controls to keep him in power. We also hope if he is deposed that new elections will quickly be held, and the new GOI will rapidly overcome the obstructions that Maliki represented, and make all the things we want for Iraq to start happening a lot quicker.

I hope you will at least look at these things with an open mind, and learn a little about the redenomination process.

Then, you can truly look at the weaknesses as they occur and get a much better understanding of the possible outcomes.

Even with Shabibi planning a redenomination as his first choice doesn't mean he won't be forced to accept plan b, or plan c.

At this point, all resistance to the redenomination plan definitely plays in our favor.

[trooper]

Home

Dinar Revaluation

New!Dinar Revaluation

Iraq Dinar Revaluation – Exercise Caution

Executive Summary – Many people call us regarding the devaluation of the Iraq Dinar destined before the end of the year. Many feel they will make significant gains on the revaluation Below is an article from www.xe.com that discusses this authoritatively with reference links and is not encouraging at all in terms of realizing a gain.

XE.com - IQD - Iraqi Dinar

“The Iraqi Dinar is the currency of Iraq. The currency code for Dinars is IQD, and the currency symbol is د.ع .

The Central Bank of Iraq has announced their plans to redenominate the Iraqi Dinar to ease cash transactions. By the end of 2010, they intend to drop three zeros from the nominal value of bank notes. It should be noted that the actual value of the dinar will remain unchanged. That means that 1,000 IQD (pre-redenomination) and 1 dinar (post-redenomination) will both be worth the same amount in US Dollars. As stated by the Central Bank of Iraq, their mandate is to "ensure domestic price stability and foster a stable competitive market based financial system." For more information about the redenomination, read "Iraq Planning Currency Redenomination."

The refernce link is here and the material found on the page reproduced below.

Iraq Planning Currency Redenomination

BAGHDAD -- The Iraqi Central Bank is planning to redenominate the national currency in an effort to ease transactions and allow people to carry less paper money, RFE/RL's Radio Free Iraq (RFI) reports.

Mudhhir Muhammad Salih, a member of a Central Bank advisory panel, told RFI that a plan has been made to remove three zeros from the currency and phase out the current banknotes late this year.

Salih said by the end of 2010 the new banknotes will be fully introduced while the old banknotes will be gradually removed from circulation. He did not specify when the new notes would be issued.

Both will be legal tender in Iraq until the old notes are completely withdrawn.

Iraqi officials have had a long-running plan to redenominate the Iraqi dinar. In 2006, the Finance Ministry recommended to the Central Bank that it carry out such a plan.

Salih pointed out that banks are having a hard time accepting cash savings and deposits, but by dropping the zeros it will make it easier for both the banks to deal with their customers and for the general public to carry money. He said some 80 percent of Iraq's money supply is cash in circulation.

Salih added that in 1990 the value of banknotes in circulation was about 25 billion Iraqi dinars but is currently some 25 trillion dinars.

Economic analyst Hilal al-Tahhan told RFI that the bank's move is overdue. He said he expects the currency change to go smoothly because of the decision to allow both the old and new banknotes to coexist, leading to less turbulence in the economy.

The current exchange rate is 1,167 Iraqi dinars to the U.S. dollar.

On the same page it also states this.. It's all speculative

---------------------------------------------------------------------------------------------------------------------------------------------

Dinar Revaluation

Executive Summary – The dinar is not a scam. It is a highly speculative investment. It may pan out and then again it may not. It may RV at a gain or not. It may RV sooner or later. We hear from people who say they are holding dinar since 2006.

What We Suggest for Now – Do nothing. Just wait for the RV. Do not spend any money setting up a structure. You may spend thousands for something you will not need. If the RV drags on another year then you will have to renew the structure and spend more money. So for now sit tight and wait for the RV.

What to do Post RV – Well no one, repeat no one, knows what the offshore banks will do post RV. No one knows what the domestic banks will do post RV. No one really knows if any laws or policies will be invoked specifically for the RV. We have some potential solutions hovering around pending the RV. What these are is sort of irrelevant now since we do not know how the pieces will fit together post RV.

Hong Kong – This is where we want the money to reside long term. You can learn about this solution by going here:

Hong Kong Bank Accounts and Hong Kong Corporations

Interim Solutions – These will be explored post RV when we actually have facts to deal with. Once again we are looking through a foggy window right now and cannot see clearly.

Relocation – We have options to relocate with residency, citizenship etc. To properly evaluate a country you need to go there for about two weeks to get a feel for the country. This time is not to be spent as a tourist but instead mingling around as a local would. This can be costly checking out a few countries so wait.You can gather some information on the internet but a large amount of this is inaccurate, out of date and outright deceptive. There can be language barriers. With spanish speaking countries you will be able to read the street signs, store signs etc and pretty much get the idea. If you go to Thailand the language will be a big problem. Once again sit tight and wait for the RV.

Summary – I guess what it boils down to is to sit tight and wait for the RV. Sorry to be redundant but that is the reality. Thanks.

Contact Us

Edited September 17, 2011 by trooper

[FrankieV]

I found an article that essentially said the same things underlined in bold. In reasoning this out, thinking it through in terms of how both things could be true, it seems that the following is as possible as anything else I’ve read or has been put together:

Iraq re-denominates, in dropping the 3 zeros, with major emphasis upon getting lower denom notes out to its citizens. So in country you can buy a coke with 1 dinar or 1000 dinar note. I remember this same kind of process in Italy when they replaced the lira with the euro….we could buy with either currency and essentially the 1000 lira was the same as the 1 euro (not literally, but approximately the same value)… So we are talking about goods and services in country (Iraq) being adjusted to reflect a current value in both currencies. All the while the central bank is pulling in the larger notes, and only releasing the smaller notes in country.

At the same time, the face value of the larger notes maintains the same value. This is before RV.This would explain why Iraq has spent such great effort getting all the larger notes in country back to the banks. They’ve spent considerable time getting the in country 25 and 10K notes out of local circulation.

So now Shabibi is saying lets whack the zeros, and get this thing on the road. They RV ay say 1:1, and those in country who were able to midst poverty hold onto 25 and 10K notes will be able to cash in for 25X100 notes or 10X100 notes as will the international community who likewise holds these larger notes. At the same time, Iraw has introduced the lower denoms, and most of the in country holds this currency and is using it for exchange and this grows exponentially as the bank squeezes the remaining large notes out of in country circulation.

At some point, I would assume that like the lira in Italy, all the 25, 10 and maybe 5K notes will have to come and be exchanged for their smaller equivalents.

Okay, I know there are many out there who would disagree, and it would be so much more helpful if instead of simply dismissing this by bashing,….. that you would perhaps take a moment and explain why this theory of approach is moronic… If you disagree, please give me the courtesy of explaining why so we can all help each other drill down on this more, and please reserve your emotionally driven outbursts, for those who tend to make things up instead of trying to reason it out with a group of folks I really respect.

The problem is the notion that they have "spent such great effort getting all the larger notes in country back to the banks." Regardless of whether or not they've tried to get all the big notes back in, there is still roughly 30 trillion in circulation. That is direct from the CBI and can be verified on their website. 2/3rds of the notes in existence are 25,000 notes, that is a fact that has been in numerous articles.

Even if they pulled ALL the in country currency out of circulation and ran for months on nothing but the USD, there is STILL too much currency outside the country for them to RV to even 10 cents. Sonny1 says 8-12 trillion outside the country. They RV 1 to 1 and they have 8-12 trillion in liability to foreign currency speculators. This results in them giving half their oil supply away to foreigners and absolutely screws their own population. Why would they do that?

The future of the currency in Iraq can be summed up by two very simple, common sense things.

1. They're not going to do anything that's impossible. They can't. A country with a GDP of 100 billion can't have trillions of USD worth of currency. This is very easily verifiable by looking at the GDPs and currency of neighboring countries. Literally 5 minutes worth of research will give you a very clear idea of what a reasonable GDP to M2 ratio is.

2. They're not going to do anything that screws almost all of their own people and rewards foreign currency speculators. First of all, why would they, and second of all, if there was even a hint that something like that might happen, the country would immediately implode and your dinar would become completely worthless.

Just think about the actual situation in Iraq, and try to come up with reasons why their currency would increase in value by 1000x (100,000%) overnight. Here are the reasons I've seen the gurus and pumpers give:

1. The IQD is practically worthless, it doesn't make sense for their currency to be worth so little when they have so much oil. That idea completely ignores the facts. The IQD is worth so little because there are trillions and trillions in circulation, mostly thanks to Saddam. To get the value of the currency up, they need to reduce that 30 trillion down into the billions, and it isn't possible to do that by buying them up at 1170 to 1 when there are trillions held outside the country. They can't do it before an RV, because the speculators aren't selling (they're still buying, as evidenced by the fact that the dinar dealers are in business), and they can't RV until they DO do it. They can't do it after an RV because they don't have the foreign currency reserves, and it would be insane for them to give away all their oil in order to make currency speculators in North Dakota into millionaires.

2. Kuwait did it, so Iraq can too. Literally 5 minutes of research will tell you this isn't true. The situations were completely different. Kuwait never printed trillions of dinar.

3. The "powers that be" want it to happen, so it will happen. This is complete BS. In order for a currency to have a stated value, everyone has to agree on that value. Iraq can say their currency is worth 3 dollars, no one is going to believe it (for the 100% factual reasons stated above), and you won't be able to exchange your dinar for anything. Saddam was still trying to say the dinar was worth 3 bucks when it was actually being exchanged for 1/3000th of a dollar. And if the Rothschilds (or the illuminati, or the white hats, or the red dragons, or the space aliens, or whoever) can do whatever they want with any currency on the planet, why bother messing with the dinar? Why didn't they do it with Turkey? And no, Turkey is not poor and worthless. Their economy, GDP, per capita income, and everything else crushes Iraqs, and has the added benefit that it's not entirely based on oil, which is a finite resource. If Iraq is LUCKY and everything over there settles down, MAYBE in 5 or 10 years they'll have a GDP that is half what Turkeys is right now.

Even if you're convinced oil changes everything, and the Rothschilds can do whatever they want and everyone on the planet will agree with them, Iraq still doesn't make any sense. Why not do it with Venezuela? Their currency is worth even less than Iraqs, and they have even more oil. The "powers that be" argument makes no sense and only conspiracy theorists buy into it. If they could do it, it would have happened before, and it hasn't, because it can't.

4. The bible says so. Religion is great, Christianity is great, the bible is great, but I would not recommend taking investment advice from a 1500 year old book. I think that's really all that needs to be said about that.

5. The Iraqis need money, they need money to rebuild, they need money to jump start their economy, etc, etc. First of all, this applies to all the countries on the planet, and since when has a need for something ever dictated reality? Every country has poor and homeless and problems, so every country needs more money. That doesn't mean you can wave a magic wand and make it so. Second, the things that they need have to come from OTHER countries. They don't have the metal resources in production or the manufacturing capabilities to make practically ANY of the stuff they need to rebuild the country. That means they need USD and Euros and Yen, not an overvalued and hyperinflated dinar. If an RV to 1 to 1 were to happen, and the foreign treasuries were to end up holding 8-12 trillion USD worth of dinar (as sonny1 says they will), why on earth would they want MORE of it? They wouldn't. They'd want USD and Euro and Yen, and Iraq doesn't have anywhere near enough of it. If the UST is holding 5 trillion USD worth of dinar, they already own 1/4th of Iraqs total known oil reserves, that will take decades and decades to get paid back for. It would be absolutely RIDICULOUS to think they'd accept more of it. They'd be literally throwing money away.

A straight RV to even 10 cents per Dinar can not and will not happen. There's zero legitimate reasons to think it will and a million legitimate reasons to think it won't.

[MrDinarman]

Ya gotta do better than that to convince me!! :lol:

[Rayzur]

FrankieV.... thank you so much for the work and thought you put into your response ! I really appreciate it. I don't like it, necessarily.... and I nonetheless appreciate that you took the time to go through it line by line.... You reflect that which is great here at DV, and thanks Adam for giving us a place and space to have meaningful dialogue and helpful disagreement in drilling down on what all of this may or may not mean.

And I still want an RV before RD..... so I guess we will see....

Thanks FrankieV