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Currency Speculation - Iraqi Dinars

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Re: Currency Speculation - Iraqi Dinars

Postby Lightbeard » Wed Jul 28, 2010 5:41 pm

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Re: Currency Speculation - Iraqi Dinars

Postby Joanadark » Wed Jul 28, 2010 5:42 pm

Perhaps the OP was written ever-so-slightly over-dramatically. I really don't particularly expect any millionaire-overnight scenario.
What seems more likely to me is that the Iraqi economy will gain in strength and stability over long term as increased foreign investment fortifies it, and I'll be able to trade back for a fairly modest return after a few years.

In ANY investing situation, you don't ever invest money you aren't basically willing to throw away right there. I'm only playing with a small amount (500 bucks) which I wouldn't bat an eye at never seeing again. I'm a relative novice at investing, and I'm mostly looking at this as an opportunity to get my feet wet on something that seems fun and interesting to me.
Absolute worst case scenario is I have a bunch of pretty paper as a souvenir of Iraq that I can give out to all my little cousins.

I edited the OP to have a warning for readers to take with a grain of salt and read the follow-up discussion.
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Re: Currency Speculation - Iraqi Dinars

Postby Joanadark » Wed Jul 28, 2010 5:53 pm

Shathus wrote:Article about Dinar investing after reading the initial post I looked around a bit and found this. Just posting it as an interesting counter-argument for discussion's sake. I suck at investing for the most part so I can't speak one way or another if it's a good idea.


How old is this article? Because it is inaccurate. Pretty much it's only refuting point is that "no institution will buy IQD from you, even if the value rises", which is false. In fact, you can walk straight into a Bank of America with a case of 10,000 Dinar notes and trade them over on the spot.
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Re: Currency Speculation - Iraqi Dinars

Postby Shoju » Thu Jul 29, 2010 7:11 am

Knaughty hit the nail on the head.

If there is a revaluation of the currency, you are NOT going to make money. Revaluation normally comes hand and hand with new currency. What you hope for, is that the country keeps the same currency and that normal economy happens. A couple of things to read if you are considering this:

Fiat Money
Weimar Republic Specifically the parts of hyperinflation.


The difference between currency trading and speculation with the Euro, Yen, GBP, etc... is that these are established currencies in a country that isn't wartorn, and trying to get back on its feet.

Like I said, if you want to invest in IQD, you DON'T want Revaluation. you DON'T want them to make it Fiat money. You want everything to stay the same, or for them to believe that the oil backed economy that they have is able to rebound on its own.
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Re: Currency Speculation - Iraqi Dinars

Postby Joanadark » Thu Jul 29, 2010 7:30 am

The current currency IS the new currency though.
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Re: Currency Speculation - Iraqi Dinars

Postby Shoju » Thu Jul 29, 2010 8:09 am

They restructured their treasury, and have already said that the old currency is being phased out, and there are new denominations and a new structure being implemented?
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Re: Currency Speculation - Iraqi Dinars

Postby Aeran » Thu Jul 29, 2010 8:13 am

so its your contention that they will reset the currency and leave all of the foreign investors unable to trade it in when the new denominations appear at the end of 2010? That doesn't seem like good business on their part.
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Re: Currency Speculation - Iraqi Dinars

Postby Shoju » Thu Jul 29, 2010 10:30 am

Aeran wrote:so its your contention that they will reset the currency and leave all of the foreign investors unable to trade it in when the new denominations appear at the end of 2010? That doesn't seem like good business on their part.


If they reset the treasury, and issue a new base currency, they are not obligated in anyway shape or form to honor currency from the previous system that was in place. Now, they probably wont do that, and they will probably give a time frame on when they are going to be completely phasing out the currency. Plenty of countries have done this. If the base format of the currency changes then the value of the old format currency is going to be nill in an economics sense, and marginally nill in a numismatic sense. Few currencies have numismatic value for outdated currencies, especially those that have been outdated in the last 25 years.

This isn't my contention, this is the way things work. I spent a decade working in coins/currency/collections, and I learned a lot about this type of thing. There are 2 markets for currency. The open market, and the numismatic market. Numismatics generally refers to coinage, but we will use that term to describe both so that we aren't trying to distinguish multiple things here.

I will be honest, my knowledge of the IQD is very limited, but if they are changing denominations, and changing the base format of the currency, investing in the current IQD is a bad move. that would be like going back in time and investing in the pre-decimal Pound system in Great Britian. There was no amazing gold rush of free money when that happened. It has only been in the past 20 years that the pre-decimal currency system on a whole has experienced a collectible boon. Prior to that, select rarities, errors, and Gold were the only widely traded pre-decimal pieces, and this is a currency that is in the top 5 most commonly traded currencies in the world. The IQD, doesn't even register in the top 50.
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Re: Currency Speculation - Iraqi Dinars

Postby Dianora » Thu Jul 29, 2010 10:39 am

knaughty wrote:Revaluations as described in the OP happen relatively frequently. A dozen or so in the last 100 years. There have been ZERO opportunities to make a lot of money. In many cases, you just lose all of it.

Lets say the current rate is USD$1 = 1,000 Dinars and new rate will be 1 Dinar = USD$10.

If you buy 100,000 Dinars, and they do the revaluation, how much money do you make?

Two possible answers, based on historical outcomes.

(1) You lose ALL of your money, because the "old" Dinar is worthless. This is particularly frequent for non-native investors, AKA Speculators. The Reserve bank says "Fuck you, foreigners, you can't turn your old dinars into new ones."

(2) You make zero bucks. You get to turn your 100,000 old Dinars (USD $100) into 10 new Dinars (USD $100).

Revaluation cannot work by the Iraqi government saying "Our currency is worth ten thousand times as much as it used to be, just because we say so". It's just printed paper. Fiat currency has no intrinsic value other than the reputation of the country issuing it.

It would be the same as Chrysler saying "We've decided we don't want to be bankrupt, and we think our shares should be worth $100 each, not $0.01 - please buy and sell them at $100 now, KTHXBI". The market says "Get fucked, you're bankrupt."

Go read wikipedia on hyperinflation. Buying Dinars now is a horrifically bad investment if they're going to revalue the currency. As I said, either you end up with no gain, or you lose everything. There's no possible outcome where you get to increase your money 100-fold, you're misunderstanding basic economics.

The fact the the new currency and the old currency might both be called "Dinars" is meaningless. They're not the same currency.


'Bout the only way to actually make money from an appreciation of currency after this kind of adjustment is buying bonds issued in the currency. And I'm not that insane.
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Re: Currency Speculation - Iraqi Dinars

Postby Melathys » Sun Aug 01, 2010 1:13 pm

this could be interesting. I bought a stack of 10k dinar bills when I was in iraq (I liked the hologram stip that they had)...here goes to hoping I can figure out wtf I did with them.
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Re: Currency Speculation - Iraqi Dinars

Postby Arjuna » Wed Aug 04, 2010 1:23 am

hmm, I wonder what my old 250 dinar with Saddam on it is worth nowadays? :P
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Re: Currency Speculation - Iraqi Dinars

Postby hoho » Wed Aug 04, 2010 2:05 am

knaughty wrote:
Fivelives wrote:And no, investment firms do not take longshots.

Did you spend the last two years in an isolation cube?

What the hell do you think caused the Global Financial Crisis?
People just thought they can keep on borrowing money endlessly and pay it back by borrowing more. Banks didn't realize that and were happy to lend anyone everything they wanted.

The way capitalism has worked for around last couple hundred years is not sustainable long-term as only way of creating money is by banks to lend it out. There will always be similar financial crisis, only question is how when will be the next one
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Re: Currency Speculation - Iraqi Dinars

Postby Dorvan » Wed Aug 04, 2010 8:06 am

hoho wrote:The way capitalism has worked for around last couple hundred years is not sustainable long-term as only way of creating money is by banks to lend it out.


I'm not sure where you get that idea from....it's most certainly not the case.
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Re: Currency Speculation - Iraqi Dinars

Postby Brekkie » Wed Aug 04, 2010 8:08 am

Just as an update, I ended up selling my Dinars to another American speculator for about a 5% profit. Then I went and bought myself lunch with the 30 bucks profit and dreamed about one day getting rich and having a yacht.
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Re: Currency Speculation - Iraqi Dinars

Postby Nikachelle » Wed Aug 04, 2010 8:15 am

Well done good sir!
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