The following was posted at Dinar Recaps on Nov. 3. I thought it presented an excellent opportunity to rebut some of these points and help people to understand why the dinar investment is considered a scam. My comments will follow the article.
For the “Negative Nellies” who told us the Dinar is a Scam
We’ve all heard from someone that investing in the dinar is a scam:
If there is a scam going on, it is the dream stealers trying to rob you of hope. In actuality, they are missing out on the blessings that come with dream building with one’s spouse. That alone is very rewarding, and very telling, into how well two soulmates are really thinking on the same page.
If there is a scam going on, it’s the US govt, Iragi govt and UN holding back info … delaying … the invitable. But post RV/RI you’ll be praised for your insite into this investment by the nay-sayers. (Hindsite investors).
You want an example of a scam? Play the lottery. The odds of winning are astronomically against you. That scam plays on the hopes of the un-informed, or desperate, seeking great rewards without understanding the odds. Governments make unimaginable dollars preying on lottery ticket buyers.
Whereas investing in the dinar, we can attempt to track international politics and become somewhat educated on our investment. We are talking the currency of a resource rich country torn by a former dictatorship, war and civil unrest. In time, this RV/ RI will happen. Maybe not when we expect it, and maybe not in the manner we expect it, but the value of the Iraqi dinar will rise.
And eventually, we will see our financial rewards. But with the lottery, as those little balls keep tumbling, the odds of winning never get any better, and you never gain any additional insight on what numbers to pick, and you have to keep buying more tickets for a fresh “chance to win.”
We’ve all heard it’s risky:
Bunk. The most you can lose in dollars, is the amount invested, and that is only if you actually lose your dinar. That is right … if you misplace the currency. After all, dinar dealers have a buy-back policy, right? Does your financial planner or 401K manager have such a policy? ‘Fraid not.
You want to talk risky? Buy into the stock market, without educating yourself. And what can you really learn from a prospectus? And remember, most financial planners are commissioned salespersons. Ask them if they make their living on their commissions, or on the results of the products they invest their clients money into. You’ll be shocked by this scam.
Let’s say you timed the market well, and bought General Dynamics a year ago at about $35/share. And now it is about double that. Forget trading fees, … you doubled. So if you had purchased 5 shares, for $175, you would now have ~$350. Remember these numbers. Double your money in the stock market … but limited realization in terms of dollars gained, but the limited number of dollars invested initially. 100% rate of return in one year.
How about SSI? Counting on this for retirement supplement, now that’s another risky government scam. ‘Nuff said.
How about Real Estate? Let’s compare it to purchasing dinar. Build a spec-house for 200,000 and try to market it for 300,000. That is a 2:1 ratio. Or buy a foreclosure house. Say EFMV $150,000 purchased at auction for $100,000, plus holding costs and closing costs, so max realized gain is maybe $50,000 – again a 2:1 ratio. But you may hold longer than anticipated, (more expense) and lower your selling price and only make $25,000 – now you’re at a ratio of say 5:1. That is saying that for every $5 invested, you only made $1.
If in the example, you are upside down in real estate, you’ve invested 150,000 and got out at 125,000. Now you have lost $25,000. Now compare that to the dinar. In the dinar, you only risk what you invest, and to that I take you back to Dinar Dealers buy-back policy. Further, you did not have to start with a $100,000 investment to try to gain $50,000.
How about buying an estate property below EFMV, and needing to sit on it for three years before reselling it. Even if a profit is gained, the rate of return annualized needs to be divided by three. And was there a positive or a negative cashflow on that property for the three years you held it?
Again, compare that to the dinar. The only argument against the dinar here is that the amount invested was stagnant while you held it.
And if you had the amount of your dinar purchase in a CD right now, could you get 2% return? I doubt it. And to get 2% you’re probably looking at a 5 year hold. ‘Nuff said.
We’ve all heard negative news soundbites:
The few soundbites I’ve heard were so trite, they were laughable. That’s not journalism … it’s sensationalism, not credible research. It’s been the blind leading the blind.
What about how long we have to wait for the RI to exchange.
If you are in an employer based retirement system, how long do you have to work, in terms of years, before you become retirement eligible? And what kind of return do you get? Do you know how to track it? Have you done your homework there? Now that might be a risky investment … a lifetime
Oh, you don’t have an employer based retirement system? Okay. Then look into your Roth or traditional IRA or other “paper assets” in your portfolio. What did you say? You don’t have a portfolio? Or did I just hear you say your portfolio was cut in half in the past two years, as well as your annual earnings? Wow. That was a risky investment, … very risky.
We’ve all heard it’s an pyramid scheme:
Go to work tomorrow to your JOB (just over broke). I’m all for capitalism. I believe in rewarding those that take the calculated risks, those that create jobs for others, those that stabilize local economies. But when you look at the company ladder, well, there is your pyramid at it’s best.
There are the nay-sayers that say the only ones making money on the dinar are the sellers, such as CBI and dinar dealers. Well, time will reveal the truth on that point of contention.
So let’s talk dinar. 100,000 dinar mailed overnight from dinar dealers is approximately $140, + 24 UPS fee, + $1 for the money order = $165 invested. This is a relatively small amount to invest in anything.
Presently the rate is $1=1170 IQD, or $0.0008547/dinar (less than 1/10th cent per dinar). But with shipping, etc, ~= $0.000165 (a trifle above 1/10th cent per dinar.) So we’ll call it $0.001 = 1/10th cent per dinar.
If/when there is an Re-V/I/D, look at the numbers. We’ve heard lows of 1IQD at $0.86 to highs of $3.86.( or much higher) For easy math, I’m just using RV at 1 IQD = $1. That means you $165 investment is now worth $100,000, pretax.
Okay, you’ll have some expense to exchange … minimal in big scheme, but may take your total investment to say $500. So you turn $500 into $99,500 (pretax).
You did not have to risk investing 1,000,000 to make a potential 100,000, or $125,000 to make $25,000.
Better yet, you were not excluded from the opportunity to make this $100,000 because you lacked the $1,000,000 in cash or credit to invest.
And if the increase in the dinar on the currency exchange boards is a gradual float, and not a spike from an RI (not saying this is likely) you will have to decide for yourself when to cash in. But in this scenario, all it needs to do is increase to 1 IQD = 1 penny, and you have a ten fold return on investment, grossing $1000 on a $165 investment. Have your financial planner or realtor or banker deliver that return! Not gonna happen.
Still skeptical? Stay with the gradual float. At a dime, cash in on 25,000 dinar note. Gross $2500 – $165 + fees and tax so say you clear $2000 How is that for a rate of return? Initial investment of $165, net $2000, but n0pot done yet … still holding 75,000 IQD and you’re “playing with house money.” The rate of return calculated on any gain, is infinite … because you already made more than your initial investment on the first cashout.
Now who cares if you have to wait a few years for a float to reach $3.00+. So $3.22 x 75,000IGD = $241,500 (pretax) is pure profit. Understand i am not an advocate of a gradual float, and favor an RI, but wanted to include it in this post, for the negative nellies to chew on as a worst case scenario. I’ll take that return!
Compare the dinar to CDs. No comparison.
Compare the dinar to IRAs/MFs/stocks/bonds, etc. No comparison
Compare the dinar to the lottery. No comparison. How can I say that? In the lottery, the numbers predicate the number of winners, typically one, if any per drawing. But with the dinar, all that exchange are winners. Thus, again I say, no comparison.
Compare the dinar to real estate. I’ve had great returns and can even mathematically show you infinite rates of return, but for the vast majority of people, real estate transactions returns vs the returns on the dinar investment, well … no comparison. Further, how many across the globe are in trouble financially as we speak, because they thought their home was their biggest asset, only to now realize that their mortgage and over-leveraging is eating them up, both financially, and emotionally.
Compare the dinar to pension plans. Took you 20, 25, 30, 35, etc years of your life, and you can only receive pension payments as alloted, under someone elses discression. So, … no comparison.
I’ll conclude with these thoughts. For the negative nellies that say you were scammed when you bought into the dinar investment, with the $165 they did not invest, they may have purchased them something else. Lets say they bought dinner and a movie for two, or some clothes they’ll only wear a few times …
So when your investment is eventually worth (Example only) $99,500 pretax, I hope they enjoyed the dinner, movie and clothes that now cost them ~ $99,500.
And I’m not done yet. Let’s say you pay your taxes and tithes, and then pay off your remaining mortgage, freeing up that $650/mo payment for the next 180 months of your life. Look at how much “not buying dinar” now cost the negative nellies.
So I’m willing to give up a night out with my wife and new shoes. In fact, the reward potential in my household said … what else can we postpone pre RV/RI, … to not have to postpone life any longer?
If you followed all the way through this post, thanks for reading. I needed to vent. I needed to take the frustrations of listening to negative vibes and multiply that with negative reasoning, to produce a positive outcome.
First, the author states that the lottery is a scam. Well the lottery commissions around the country notify all participants of the odds of winning. They don’t tell people that they’re holding a winning lottery ticket like dinar pumpers have done. People know when they buy lottery tickets that it’s a longshot. And as one of my readers DaveD has pointed out, somebody who bought a lottery ticket will hit the jackpot, but nobody who holds dinar is going to get rich. The lottery isn’t a scam. People know it’s gambling and they know the odds. Dinar investors on the other hand are told that this is a blessing from God, that Dick Cheney, the Fed, and the IMF set this RV up just like they set up the Kuwaiti RV, that there’s a global currency reset accompanying the RV, that the US Treasury holds trillions of dinar that they will use to pay off the debt after the RV, that the CBI is reducing the money supply, that the lower denoms have already been printed, that the RV is already done, that special cash-in rates have been negotiated with certain banks …. etc. All lies!
Lottery websites encourage participants to play responsibly. When have you ever seen a dinar dealer site with the same admonition for dinar investors? When have you ever seen a dinar dealer site notifying potential investors that the largest RV in history was less than 40%? When have you ever seen a dinar dealer site mention that the CBI’s policy is a stable exchange rate, and that they’ve announced their intention to demonetize the IQD when they redenominate?
Sure, there are people who ignore the disclaimers from the lottery commissions and spend their rent money on lottery tickets, but it’s not because they were lied to. It’s because they ignore the advisories. But many dinar investors have spent money that they really can’t afford to lose on dinar because they trust somebody who lied to them, and in some cases the liars have a criminal background.
And the statement that the odds in the lottery never improve is completely wrong. You can improve your odds by buying more tickets. For example, if there are 20 million possible combinations that means that the odds of hitting the jackpot with one ticket are 20 million to 1. But if you buy 100 tickets the odds are now 200,000 to 1. If you buy 2000 tickets the odds are now 10,000 to 1. I’m not recommending that you do that, but the point is the odds can be improved with the lottery, but the odds of getting rich by owning dinar will never improve no matter how much you spend. Currencies don’t revalue in a way that would make that possible. So whether you approve of the lottery or not, there is no comparison to the dinar.
Next the author claims that the only way that you can lose all your money on the dinar is if you lose your dinars, because dinar dealers have a buyback policy. He doesn’t mention however that several times in history countries have closed their borders when they redenominated and people outside of the country were unable to participate in the exchange and lost all they spent on the currency. I’m not saying that this will happen in Iraq, but it has happened before and it’s a possibility.
He then goes on to call the stock market, Social Security, and real estate scams. Let’s start with the stock market. Sure, if you attempt to pick stocks without doing your due diligence you could lose money. But if you buy the stocks that Warren Buffet is buying over time you will prosper. If you have an investment plan that constantly buys over the years in good times and bad you will gain, because the market over time trends upward. Even people who took a hit on their 401K back in 2008 have seen most all of those losses restored as the DOW is near its all-time high, and if they bought on the dip they came out ahead. Is their risk? Of course there is. But the stock market isn’t a scam. It’s an investment vehicle that will produce profits over time if used properly.
Social Security? Well, the future of SSI isn’t certain, but for now people who have paid into it are able to receive what they’re entitled to. Personally I’m inclined to agree with Rick Perry, the presidential candidate from 2012 who called it a Ponzi scheme. But until we run out of new people to pay into it or it becomes insolvent people can still receive their benefits. It might collapse in the future, and if it does we can officially call it a scam then. But until that happens there’s still a chance to fix the problem before it’s too late. Let’s hope our elected representatives are up to the task. Whether Social Security ultimately fails or not, for 75 years people have been getting what they expected from it based on what they paid into it. You can’t say that for the dinar.
Real Estate? Historically real estate has provided people with a good way to increase their net worth as they pay off the mortgage on a house that is increasing in value. The problem is that so many people bought real estate during the housing bubble from 2002-2007 and took a hit. Many of them should never have been approved for a mortgage in the first place. Does that make real estate a scam? Of course not. There was dishonesty in the lending industry, but real estate isn’t a scam unless you buy a home from somebody who doesn’t own it, or that has substandard construction, or that has a lien on it that you aren’t informed of. The issue here is fraud. Anything that is sold via dishonesty, even a legitimate product, is a scam if the reason for purchasing is based on a lie.
That’s the issue with the dinar. As I’ve stated since I started this blog, if you’re buying dinar because you’re going to Iraq and need it for purchases it’s not a scam. That’s why banks used to offer the exchange service for their customers before speculators started abusing the service. I’ve also said that the dinar investment isn’t a scam if you only bought it thinking it might outperform other investments. While I consider that a highly speculative investment, there have been periods of time over the past ten years where the IQD did exactly that. But come on, how many people have bought dinar from banks and dinar dealers for those reasons? We all know that people are buying dinar because they think it might make them rich, and that won’t happen. It can’t happen. Not as long as they’re on a conventional managed float like all of the other currencies of that region are. Not as long as they’re backing tens of trillions of dinar with their foreign currency reserves at 100%.
The author then goes on to dismiss the spread as inconsequential compared to the incredible returns you’ll get from an RV to as little as one cent. In his example you buy 100,000 dinar for a total expense of $165. Now, considering that 100,000 dinar is worth less than $86, my math tells me that the spread here is 92%! Sure, 92% is no big deal if you’re going to turn that $165 into anywhere from $1650 to $350,000 which would equal an increase of 1000-350,000%. But when you consider the fact that RVs of even 50% don’t happen and that Iraq’s current arrangement of backing about 84 trillion dinar with $80 billion in their currency reserves only allows for an increase of less than 10%, those spreads of 20-90% start to look pretty steep.
The problem in the dinar community is that people who are ignorant about how currency valuations are determined are making investment decisions based on wrong assumptions. I include myself in that group, because I bought millions of dinar before educating myself in that area. Thousands of us over the years have gone through this same experience and took our losses after coming to understand how the scam works. It feeds on misinformation and wrong assumptions. Assumptions like currencies go up in value as the economy grows. Assumptions like the dinar is backed by oil. Assumptions like people made millions on the German deutschmark and the Kuwaiti dinar (they didn’t) so the same could happen with the IQD. The author’s numbers are based on impossible events. You might as well try to calculate how much money you’ll make if the US dollar increases in value by 100,000%, or how long it would take you to fly to Mars on a magic carpet.
I’ll conclude by saying this. The CBI has announced their plan to redenominate (lop). If for some reason that doesn’t happen in the next five years, the dinar will not increase in value substantially. It might go up a percent or two here and there, but the IQD will NEVER be worth as much as 2/10 of a penny no matter how long it exists, and even that much of an increase is very unlikely. They will replace it before it increases that much. Chances are it will never be worth more than 1/10 of a penny. When you consider that the vast majority of dinarians have bought in the last five years after the exchange rate was stabilized and are still in the hole, and when you consider that the chances of an increase high enough to get them out of that hole are not very good, the reality of the scam begins to take shape.