New Iraqi Dinar: Two-Year Review
With any investment, it is important to periodically review performance. This provides a basis for assessing whether the investment is as worthwhile as originally perceived and, also, for making "buy, hold, sell" decisions. [tag]Iraqi dinar[/tag] is unique in that it is not an investment security or currency with a price determined through organized trading. Buying and holding dinar is easy (though dealer pricing varies widely), but selling (for individuals, at least) is presently done through mechanisms like [tag]e-Bay[/tag] rather than a developed exchange market.
Nonetheless, there is [tag]exchange rate[/tag] pricing data available which provides some guidance as to how well the dinar is doing. It also provides rough indication for assessing [tag]investment performance[/tag] if the new Iraqi dinar was traded and exchanged actively.
The following chart was prepared using the average [tag]Interbank[/tag] "ask" price as reported by Oanda.com. The "ask" price is the price at which sellers are willing to sell a currency. The "bid" price is the price at which buyers want to buy a currency. The ask price is always higher than the bid.
According to this data:
- the 6/30/06 price ($1540.70) is 5.52% higher than the price on 7/1/04 ($1460.00). This represents a 2.8% annual rate of gain if the dinar could have been freely exchanged in a market environment at these rates.
- As comparison, the S&P 500 stock index increased from 1128.94 to 1270.20 (12.5%) for the same period.
- the average "ask" price over this 730-day period was 1493.06925
- the highest "bid" price during this same period was1473.8000
- the lowest "bid" price during this same period was1384.7000
Of course, most people who buy Iraqi dinar realize it is long-term (5+ years) prospect. Still, a two-year review provides useful information for buyers (and prospective buyers) to consider.
Investing in the Iraqi Dinar: Expert Opinions
There are a lot of "experts" out there telling people to buy Iraqi dinar. But often these experts are also the people selling dinar. It's relatively easy to find websites selling dinar with their in-house expert painting a seemingly convincing picture as to why Iraqi dinar are a good investment.
But finding truly independent and clear advice from acknowledged personal finance experts is more difficult. Only a few of the best-known personal finance gurus have ventured to express clear opinions on this topic, but the few who have are decidedly negative on the idea:
| Opinion | Expert | Source | Date | Excerpt | Link |
|---|---|---|---|---|---|
 | Matt Krantz | USA Today | January 10, 2011 | "Investing in the Iraqi dinar is a huge gamble, and one in which you should be prepared to lose all your money." | Investing in Iraqi dinar: Source of quick riches or too risky? |
| Dave Ramsey | daveramsey.com | July 6, 2010 | "This is the dumbest thing to come along in years. It’s borderline on a scam! A lot of military folks have fallen for this, and there are ads all over the internet for the stuff." | Currency "Investing" Is Ludicrous |
| John Jagerson | Mint.com | April 6, 2010 | "The bottom line: This is an investment opportunity marketed by unregistered advisors to mostly unsophisticated currency investors. No risks are disclosed and past information is fabricated or modified to make the opportunity look better than it really is. This investment is a gamble at best." | New Investment Scam: Buying the Iraqi Dinar |
 | Jim Cramer | TheStreet.com | October 20,2009 | "I'm always a fan of buying the currency as a play," he said, and requests are rolling in to "Mad Money" for a way to own the dinar. | Cramer's Dinar Comments |
| Jennifer Openshaw | MarketWatch | Oct. 29, 2009 | "What did the Web site recommend? "It said she should invest in Iraqi dinars," my friend said, still amazed at the concept. The handyman recommended this 77-year-old grandmother of seven invest her retirement money in the currency of a nation whose financial condition is so volatile it didn't even make it on to the World Economic Forum's 2009 list of the most economically unstable nations on the planet (Chad, Zimbabwe, and Burundi are the three worst). Kind of takes your breath away." | Link to Jennifer Openshaw Article |
| John Jagerson | NASDAQ/Learning MArkets | April 2009 | "The bottom line is that this (Iraqi Dinars) is an investment opportunity marketed by unregistered advisors to mostly unsophisticated currency investors. No risks are disclosed and past information is fabricated or modified to make the opportunity look better than it really is. This investment is a gamble at best." | Link to John Jagerson Article |
| Michelle Singletary | Washington Post | January 27, 2008 | "Take, for example, the Iraqi dinar scam. In this con, promoters promise double-digit returns to investors. The promoters tell people that democracy in Iraq and the ensuing peace will stimulate the economy and drive up the value of the post-Saddam Hussein dinar. The Better Business Bureau has seen a substantial increase in complaints from around the world about the dinar scam, with many of them coming from military personnel and civilian contractors. The BBB said people complained that they paid for the currency but never received the money." | Link to Michelle Singletary Article |
| Kimberly Lankford | Kiplinger.com | March 2007 | I have a friend who, along with his buddies, is investing in Iraqi dinars through USACurrencyExchange.com. Please help me enlighten them about what they're getting into. -- Mike Klinedinst, Crossville, Tenn. Tell your buddy to forget his dreams of making a killing in dinars. Since the new Iraqi dinar appeared in 2003 to replace the old currency carrying Saddam Hussein's image, scores of Web sites have begun peddling these so-called investment opportunities. But would-be investors are speculating on a volatile currency in one of the world's most unstable places. Penny stocks are risky enough, but the dinar is not even a penny currency. In mid January, it took 1,313 dinars to equal $1. The offer on USACurrencyExchange.com gets you 250,000 dinars for $238, implying the site is taking a 25% markup. What's more, the currency isn't freely traded. U.S. banks won't buy dinars, nor will the dealers who sell them. In fact, the only way to unload dinars that we know of is on eBay, which recently listed about 500 auctions of new Iraqi dinars. | Link to Kimberly Lankford Article |
| Jeffrey Frankel | Boston Magazine | October 2006 | "(He) calls the activity 'pretend currency trading.' “I’ve received a large number of e-mails from people saying, ‘I understand you’re an expert on Iraq. Do you have any views? Can you advise me?’” he says. “I get the feeling that all these people doing this shouldn’t be. They’re little people, they don’t know what they’re doing, and they’re going to lose a lot of money.” | A Fistful of Dinars |
| Walter Updegrave | Money Magazine/CNNMoney.com | January 2006 | "In my mind, at least, nothing has changed since I first warned people about investing in the Iraqi dinar in a previous column -- except, perhaps, that individuals still seem willing to buy this currency despite any credible evidence that people who buy it as an investment have earned any sort of return. So my position today is the same as it was before: putting anything more than a few token bucks in dinars as an investment is a lousy idea. Indeed, I don't think you can call it investing at all, since investing implies having some knowledge of the actual value of what you're buying and some reasonable way of calculating an expected return." | Link to Walter Udegrave Article |
| Walter Updegrave | Money Magazine/CNNMoney.com | August 2004 | "My take is unequivocal. Given the difficulty of predicting currency movements, I'm not even a big proponent of investing in established currencies like the euro or the yen....And when it comes to buying and selling the fledgling currency of a fledgling government in one of the most chaotic parts of the world, that goes beyond mere speculation. I'd call it gambling. " | Link to Walter Updegrave ArticleLink to Walter Udegrave Article |
| Bruce Williams | Smart Money | August 2006 | "Currency speculation can be a very rewarding enterprise-but it is fraught with peril. The Iraqi dinar is extraordinarily speculative and has nothing behind it. While it can be observed that Iraq has lots of oil, with the huge amount of turmoil that is currently embroiling that nation and so many amateurs, military personnel and some civilians working there and getting involved in this, it is one of the last currencies I would speculate in just now. " | Link to Bruce Williams Article |
| Sandra Block | USA Today | "PARKERSBURG, WV: WHAT IS ALL THE HYPE ABOUT BUYING THE IRAQI-DINAR? DO YOU FORSEE A SUBSTANSIAL INCREASE OF THIS CURRENCY IN THE FUTURE. DO YOU BELIEVE IT TO BE A GOOD INVESTMENT? THANKS, BOB Sandra Block: Somehow I missed that hype, but maybe it's because I go to bed early and miss the late-night infomercials. Right now, it takes 1,471 dinars to equal $1. Dinars are suitable for framing, though." | Link to Sandra Block Article |
If you are aware of other experts expressed opinions, please leave a comment and we'll include them.
XE.com Weighs in on Iraqi Dinar as an Investment
XE.com which calls itself "the world's most popular currency and [tag]foreign exchange[/tag] (fx, or forex) site" has devoted a page on its website to an overview of the [tag]Iraqi dinar[/tag] and its suitability as an investment. Their conclusion:
A number of people have begun touting so-called "investment" opportunities in the Iraq Dinar as a "sure way" to make a lot of money with little or no risk. Many of our clients have asked our opinion on the legitimacy of this.
Is [tag]"investing" in the Iraq Dinar [/tag]a sure way to profit? We don't think so. In our opinion, buying the Iraq Dinar is a high risk investment with a poor outlook.
If you're [tag]considering buying Iraqi dinar[/tag], you should take a look at the information they've brought together on this page.
