"I'm always a fan of buying the currency [Dinar] as a play."
– Jim Cramer (October 2009)
My cousin Harvey called me last week. He said he had one heck of an opportunity but he wanted to run it by me first. What was getting Harvey all jacked up?
Iraqi Dinars.
Here's what he told me: The Iraqi government is planning to revalue its nearly worthless currency any day now. The Dinar is going to spike. You can make millions of dollars. All you have to do is buy Dinars now at their current price, about 1,000 Dinars to the dollar, and sell them a little later when the Dinar's new exchange rate is approved.
I told Harvey that it sounded too good to be true. But I promised him I'd look into it. I've already given Harvey the scoop. Now I'm going to share my findings with you...
The Iraqi Dinar Scam Is Back... and Bigger Than Ever
No need to pull punches here: The only ones making money off the rumors that the Iraqi government is hours, days, or weeks away from redenominating the Dinar are the half-dozen sites that sell this currency to you. They make about 20%-25% on each sale. A very good deal for them. A very bad one for you.
Hard numbers are impossible to get. But CNBC interviewed the owner of one of these Dinar sites back in October 2009. He said his company got more than 1,000 orders a day. For the year, it sold over $100 million worth of Dinars.
Given an 18% spread between the buying and selling prices (according to what this person told CNBC), the company made $18 million that year.
Make no mistake about it, this scam is BIG BUSINESS.
Potential Dinar buyers (like my cousin Harvey) get lured in by the daily deluge of breathless rumors on these websites. Here are some recent examples I found...
"Last week two individuals informed me that the Warka Bank will not allow any withdraws / deposits.... I was also informed that they now can buy the new IQD [Dinar], BUT at 1 dinar to $3.45. I did not say it the other way around... the employee informed them that there was going to be a big announcement on the 25th of Jan."
"I was told from a friend who has a contact in the U.S. government that the RV [revaluation] was finished January 11th and would be made public within two weeks..."
"Confirmed by at least five different [Iraqi] banks that they are gearing up by having ordered 4 times the regular cash reserves for the end of this week and next week.... Unconfirmed report that it has been the U.S. government suppressing this..."
"Our personal banker said that our bank, Wachovia/Wells Fargo, had begun to issue memos and information regarding the upcoming RV [revaluation] of the Iraqi Dinar throughout its branches. He did not have a date, but he wanted the information to get Dinar for himself..."
"OK, the real truth from the people that know EXACTLY what is going on. I was told there are still a few hoops that Iraq must jump through to do the RV [revaluation]. I was told that at the outside it would take 3 weeks and there would be a lot of smoke and mirrors..."
You get the idea, don't you? These rumormongers do a better job of staying on message than our politicians do. And the message is that an Iraqi Dinar revaluation is going to happen any day now... and you need to get on board NOW.
The funny thing is, these same "it's gonna happen any day" rumors have been circulating since the New Dinar was introduced in 2003.
Separating Fact From Fiction
The truth about Iraq? It is rebuilding its oil industry, economy, and government.
The fiction? To do this, it has to resuscitate the Dinar. And as I said, right now, it takes about 1,000 Dinars to buy one dollar.
The Dinar websites make a big deal of the Kuwaiti Dinar. After the first Gulf War, it rose considerably. But the Kuwaiti Dinar wasn't free-floating. It was tightly managed by the Kuwaiti government. The Iraqi Dinar is free-floating and heavily influenced by economic factors outside of the government's control.
Counting on the Dinar going up is dangerous. Remember, no matter how low a currency is valued, it can always keep going lower until it's worth absolutely nothing. Zimbabwe simply let its worthless currency lapse into disuse in 2008.
So who is spreading these rumors? I put this question to my good friend "GD," who has worked at the highest levels of the CIA and State Department. He said to simply follow the money. Who benefits from a rising Dinar? Mostly, it's the thousands of American soldiers and contractors who have been stationed in Iraq. They have had access to the Dinar, and GD thinks many of them took pocketfuls of the currency back home, even though it was against the rules.
Not All Scams Are Illegal
The Dinar sites themselves aren't illegal. Most are registered with the Treasury Department as money service businesses (MSBs). That doesn't mean much (any company can fill out a form and become an MSB), but it does make them legal.
MSBs don't sell investments. But these Dinar sites are very much in the business of selling Dinars, even with their lame disclaimers. Here's how a typical one begins... "None of the information I share on this site is my own unless I create a post where I share my own opinion or personal experience. I simply try to collect the best rumors and information I feel applies to a given day's news and information that I heard or read on the Internet about the 'New Iraqi Dinar.'"
And these sites are all over the Net, even popping up in articles exposing them as scams!
An article on the Dinar Scam shows Google ads urging readers to buy Iraqi Dinars.
How do I know this is a scam? Because even when you win, you lose. If the improbable happens and the Dinar doubles in value, there's no way to cash in. Dinars can be redeemed only in Iraq. A thriving unofficial Dinar-selling market has been generated by these sites. But who's buying? NOBODY. So, even if the Dinar appreciates, you're stuck.
So Why Doesn't the U.S. Government Do Something About This?
It is doing something. Several Dinar scams are under investigation and are part of the U.S. public record. Here are a few of them...
State of Idaho v Jack Lee Smiley (Smiley "guaranteed that an investment of $1,000 would return $1,000,000.")
The Arkansas Securities Department's investigation into the currency exchange activities of Dartmouth Capital, LLC, d/b/a Safedinar.com
Illinois Attorney General Lisa Madigan's lawsuit alleging that selling Iraqi currency (Dinars) on the Internet but failing to fulfill orders is a violation of Illinois law
But it's going to be tough to slow down the Iraqi scam freight train.
Don't become a victim of this fraud. Buy lottery tickets instead. You have a much better chance of winning.
Respectfully,
Andrew Gordon
Editorial Contributor
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5 comments:
Thanks for the article.
Was helpful, a friend of mine was approached with one of these scams. Dodged that bullet.
Thanks for the article.
Was helpful, a friend of mine was approached with one of these scams. Dodged that bullet.
Funny,
Why not do a little more due diligence before making so many incorrect remarks involving the Iraqi dinar. And no, I am not a dealer and could care less if anyone does or does not pick up some dinar, but when I hear you are better off getting lottery ticket, you must have an interest in gambling, for that is what the lottery is.
I have been holding dinar since 2004, and most was obtained at $620.00 per million dinar. Needless to say, it has risen, not fallen over the past six years, so where is the scam? No, it has not revalued nor restored to former rate yet, but who cares, it is one of the few investments which is rising other than gold and silver I also invest in.
You made so many incorrect statements that I wonder if you bothered researching anything more than a bunch of third hand blogs where other misinformed people are posting BS. for and against dinar being restored to former value.
Kuwait was an entirely different situation, so this much you got right, it was not a revalue, it was a restoration to former value after invasion when fear caused street rate to drop to .10 U.S. which only those in Kuwait at the time could have taken advantage of, and how do I know, I was there, and yes, I was able to pick up all I could afford at street rates, and did very well knowing U.S. would oust Iraqi army, so there is the real story.
As to your most stupid remark, that you cannot exchange dinar anywhere but in Iraq, wow, I cannot believe you can be this wrong and not be embarassed. In fact, the Iraqi dinar is now live on FOREX market, just like all the other currencies, so is this a scam? Soon it will be announced that Iraq has proven reserves of over 500B barrels of sweet crude, making it number one in middle east, and this is a scam.
Will the dinar be restored to former value? Yes, some day in the future, and rumors aside, it could be any day, or month, but certainly this year, but politics as usual determines when it happens, and with sectarian divide that runs deep for centuries, no one know when all the pieces will come together, but if want to advocate gambling over sound investment in dinar, go ahead, and let me know when you hit the big lottery, and I will let you know when the dinar is restored, and lets see which happens first.
Mortgage-Free-Homes.com
I'm a little confused by this whole thing. For every nay sayer there is 10 people who want to sell me dinar. I bought 500,000 dinar for a little over 500 dollars. Which is less than I lost in the stock market crisis 2 years ago. In case you are nervous for me I made it all back. This is all besides the point.
I feel that the word scam is a little harsh but I also feel that people will say anything to make a buck. I read a lot of "facts" on both sides but no one ever really sites any sources or leaves links as proof. I called a place in Los Angeles and asked them if they would buy a million dinar from me and they said yes for 900 dollars. I asked if they would sell me a million dinar and they said yes for 1,016 dollars.
Can anybody lead me toward real research that doesn't have dinar trading or dinar investing in the url? If i lose this money it's my fault for not doing due diligence first. However arguing doesn't prove anything.
Can someone please give me real sound factual advice. I'm not an idiot and i'll see through any bullshit. Thanks guys and gals.
The iraqi dinar was printed by De La Rue an English organization which is the planet leader in anti-forgery techniques. De La Rue would be the biggest printer of currency in the world and trades publicly on the London Stock Exchange. For more info check here
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