Monday, December 1, 2014

December Update

Hello again.  I only have a few things to discuss this month.

There was a discussion at Dinar Vets about our friend Marcus Curtis' post a while back entitled "Trials for Dinar Holders".  In that post MC postulated that Iraq was actually using dinar sales to feed their foreign currency reserves, and that there are about 25 trillion dinar in the hands of speculators.  The responses were predictable.  "He's a guitarist and an armchair economist" .... "That was before Maliki was removed" ... "It's just a blog; he ddn't even bother to purchase a domain name" ... etc.  No real discussion occurred as to the links Marcus provided or the facts he presented. 

First of all, the fact that he plays the guitar has nothing to do with whether or not his analysis is valid.  After all, what qualifications does Adam "Wolfyman" Montana or any other guru have?  What matters is whether or not his theory holds water, and if it's based on facts. 

Second, as I've mentioned for some time Maliki has nothing to do with whether or not there's an RV.  He's been gone for four months and no RV.  I'm confident that four months or four years from now there still won't be any RV of the IQD.  Nothing more than a few % anyway.  The bloated money supply of the IQD is the issue, not Maliki or Obama or Madame Wu or anybody else.  It's about the numbers.

And third, Marcus has never run any ads or made any money from his site, so why should he purchase a domain name?  And again, domain name or no domain name ... what counts is facts.  It's a fact that the CBI financials show 34 trillion dinar outside of banks, and that less than 10 trillion can be accounted for within Iraq.  It's a fact that their money supply steadily increased from 2004-2013.  (It seems to have stalled over the past year or so.  By a strange coincidence dinar sales have really fallen during that time.  Dealers don't really need to buy from out of country any more because they can get all the dinar they want from disillusioned specuators, which would support Marcus' theory that they have used the sale of dinar to grow their foreign currency reserves.  No dinar exports for USD = no FCR growth = no expanding money supply.  With fewer USD flowing into Iraq for oil due to lower oil prices, and with fewer USD being exchangd for IQD, my guess is that the market value of the IQD will take a hit in 2015 which could trigger another round of inflation, which ironically enough could lead to an increase in the official value of the IQD from its currenct value of $.000857.  I wouldn't be surprised to seem them bump the value up a few % next year.  Anyway, back to the original topic.)  And it's also a fact that dinar from outside of Iraq wasn't accepted during the previous two currency changeovers in Iraq.  Marcus provides links for all of that.   

So LAC (the lady who asked if there was anything to what Marcus said) take note of the fact that nobody who responded to you dealt with any of these facts.  Then form your own conclusions.


On Nov. 17 Breitling said that in the last five or six years the dinar has gone up 26% while the S&P has only gone up about 12%.  I thought it might be nice to look at some charts to see if there's anything to this.

As you can see the S&P six years ago was at 903, and today it's at 2041.  That would be an increase of 126%, or about 21% per year.  Now let's take a looksie at the dinar.

As you can see, the dinar was at $.00085 six years ago and today it's at $.000857 which is an increase of about 8/10 of 1%, or about .0013% per year.   

While I'm talking about B, let me issue a reminder about his claim that the Ministry of Planning's feasibility study told us that they're going to raise the value to $1 and eventually $3.  That study said that they recommended REDUCING the exchange rate from $3.20 to $1.13.  The IQD was never valued at more than a tenth of a penny.  The feasibility study is from the Saddam era and is 100% irrelevant.  The issue that they were adressing was that depreciation of the Saddam dinar during the 80s had rendered the $3.20 valuation obsolete.

It turns out that the study was from 1984 and was revised in 1990.  As our friend Brian has pointed out more than once, basing your dinar speculation on this feasibility study makes about as much sense as shopping for a house based on real estate prices from the '70s.  I wrote about this two Decembers ago.

In turn, The Guidance For Technical And Economic Feasibility Studies And Post-Project Assessment Of Development Project (Regulations No. 1 for the Year of 1984 and it’s amendment for the year of 1990) has specifies a series of steps to be undertaken, which lead to the completion of a Capital Budget.

Also, as you've probably heard in the news the price of oil has dropped about 40% since June.  What does that mean for dinar investors?  Well, it's good news of course!  This means they'll have to hurry up and RV because they're going to be hard up for cash, you see.  At least that's what you'll hear from the gurus.  Interestingly enough it's also good news for dinarians when the price of oil goes up, because they'll be able to RV at a higher rate.  And it's also good news when the price remains stable because Iraq needs stability, you know.  So no matter what happens it's all good.  (facepalm) 

The  truth is things are really bad in Iraq, what with ISIS controlling a good amount of the country and sectarian division and all.  This slump in oil prices (remember that oil revenues account for nearly 90% of their GDP) only makes things worse.  The gurus won't tell you this of course, but I will.  Right about now anybody with any sense who has dinar ought to be questioning this "investment".  Don't worry, you're not alone.  I went through the same epiphany a little over three years ago, and many of my readers did as well.  We all make mistakes in life.  The important thing is that you learn from them and move on. 

And finally, I'd like to issue my annual reminder that the gurus love to predict an RV by the end of the year, and they're ALWAYS wrong.  They'll be wrong this time, too. 

Happy Holidays!

Wednesday, November 5, 2014

November Update

Not much to report this month other than a couple of articles and a really stupid guru comment.

The article that seemed to generate the most interest was this one.

"A few days ago announced a committee of economy and investment in the Iraqi parliament, that the deletion of zeros from the Iraqi currency will be working by next year (2015).

It is noteworthy that the subject of the deletion of zeros from the Iraqi currency is not new, it was the Iraqi government project about deleting three zeros from the Iraqi dinar, to reduce inflation suffered by the Iraqi currency, but it has been postponed. He was scheduled to testify in 2011 to delete the three zeros from denominations of Iraqi currency, so that it becomes the new dinar, equal to 1000 Old dinars.
What does that mean?

First, it is necessary to clarify the fact that the abolition of zeros any currency in the world, does not mean in any way an improvement in the exchange rate, and this in turn leads to another conclusion is that the deletion of zeros does not mean as well as any improvement in the Iraqi citizen's income, it does not mean to address the many
economic problems suffered by the Iraqi economy. If that is the case, for all the world's governments scrapped zeros from their currencies. The deletion will not address inflation and will not contribute to the aggravation, and will enhance the economic reform, that if there is any economic reform originally.

The only goal is to facilitate the buying and selling processes, and the mitigation of carrying large quantities of banknotes, and perhaps give a positive psychological boost for Iraqis, so that they feel, even if only from the door of the feeling, that the purchasing power of the dinar, has become the best. In any case, we must clarify here is the fact that the Central Bank of Iraq, the authority is independent of the government is not entitled to state intervention work."

The article clearly states that:

  1. The new dinar will be equal to 1000 old dinars. That means that it will be valued at $.86. That would be a lop, folks.
  2. The deletion of the zeros doesn't mean in any way an improvement in the exchange rate or in the Iraqi citizen's income. That would be a lop too, folks.
  3. This isn't being done to fix their economic problems. If they could fix their economic problems by removing zeros then every country would do it. While that sounds sooo obvious it's amazing how many dinarians can't seem to comprehend the fact that you can't revalue your way into prosperity.
  4. The only goal is to facilitate buying and selling. "Facilitate" means it will be easier, which is what a redenomination (lop) does. It makes cash transactions and accounting easier. They go on to say that they hope that this will provide a psychological boost to use a currency with a higher value, even if there's no true increase in purchasing power.
The article concludes with a reference to the dinar returning to its glorious past (how many times have we heard gurus talking about the dinar returning to its glorious past through a revaluation?), but that this is "false joy, nothing else". In other words, the redenomination will give the people a good feeling, but it's only a feeling. There's no true increase.

Read the article here.

A November Douchie is awarded to Frank Villa (Frank26) who stated his opinion that the algorithm has been released and is making its way around the world. Folks, this line is almost three years old. Take a look at this post I did in December of 2011. There's no algorithm, no activation, and no RV. The IQD is stuck at 1166 to the dollar and will probably remain there until it is replaced by the new dinar. The only thing in the system that's making its way around the world is pumper BS.

Another article getting a lot of attention was this one that says the initiative to revalue and delete zeros from the Iraqi Dinar will be delayed for five years because of the political and security situation in Iraq. Of course there are some who will point to the word "revalue" and insist that it's not a redenomination or "lop" that they're talking about but an increase in purchasing power from a revaluation. But as many of us can attest, you have to go by the description of the process and not the particular verbage resulting from the translation of Arabic into English. The process they've been talking about for at least four years is a typical redenomination that you can read about in any financial or investment dictionary. You don't delete zeros, issue new currency, and remove the old currency from circulation in a revaluation. Even if they botch the translation the description tells you very clearly what they intend to do.

Removing Three Zeros - Brad, Charlie, and
Michael Teadt do the perp walk (Sept. 2012)
But the good news from October in my opinion was the sentencing of Brad Huebner and Charlie Emmenecker from the BH Group. Brad got seven years and Charlie got three for dinar fraud and related charges. It seems there is at least some justice in this world. Apparently Brad is still in denial, stating that "one day in the near future the Iraqi government would revalue its currency and everyone’s investment would pay off". Unbelievable! Their partner in crime Rudy Coenen received a five year sentence back in September for his role in the ruse. Now if we can just get the justice department to follow up with a dozen or so more indictments.

Tuesday, October 14, 2014

October Update

It's been a month since I did a post, so I thought I should write something.  The truth is there really isn't much to talk about.  The "war" against ISIS isn't going well, but even if we could instantly eradicate them it wouldn't bring about any increase in the official value of the IQD.  The leadership in Iraq is still trying to figure out who is in charge of what and how they're going to proceed from here.  And of course the gurus are still saying "any day now".

I've been asked to comment on a couple of things.  First is this Dave Schmidt guy.  I've already given him two Douchebag of the Month awards.  The guy is a serious contender for the 2014 Dinar Douchebag of the Year.  For anybody who is on the fence about him check out the links below.

The second thing is the Zimbabwe dollar.  Somebody emailed me telling me that the gurus are pumping it again and that it's a scam.  NO KIDDING!?!?!?!  I know the fact that the ZWD has a ton of zeros excites people at the possibilities of a revaluation, but you have to realize that the currency is valued that low for a reason.  NOBODY WANTS IT!  Nobody except for gullible speculators, that is.  From Wikipedia:

"Despite attempts to control inflation by legislation, and three redenominations (in 2006, 2008 and 2009), use of the Zimbabwean dollar as an official currency was effectively abandoned on 12 April 2009 due to the skyrocketing inflation."

Just because something has a very low price doesn't mean it's undervalued.  Toothpicks are pretty cheap too.  Why not stock up on them?  Maybe the Central Bank of Toothpicks will raise the value on them and you'll get rich!  It makes about as much sense as buying Zimbabwe dollars.  As one honest ZWD dealer says "ZIMBABWE CURRENCY IS DEFUNCT AND NOT LEGAL TENDER ANYWHERE.". 

In closing, I'd like to direct you to a great post.  Jay Adkisson from Forbes did an article called "You Can't Fix Stupid - The Iraqi Dinar Scam Lives" a couple of years ago, and every month or so he updates it with his thoughts on the dinar investment.  This month he said, among other things:

"Sometimes currencies lose their value to the point where the mere size of the bills means they have become impractical. Thus, if you’re having to pay for a pack of smokes with a Dinar-10,000 bill, things are obviously out-of-whack, and the government has to re-denominate the currency so that the folks using the currency don’t lose all confidence in it and start trading in some other currency. That is what is happening to the Dinar.

But re-denomination of a currency does not, repeat NOT, change its value relative to other currencies. What actually happens with a redomination is that the government simply issues new bills, knocking a few zeros off, and then sets a deadline by which the old bills become worthless unless they are traded in by that date. So, the local resident might take in their old Dinar-10,000 bills and exchange them for new Dinar-100 bills."  (Give the page a minute to load, and then scroll down to the bottom right before the comments.)

Now, lest anybody conclude that Jay talks about the dinar like I do, I assure you it's the other way around.  Experts like Jay and John Jagerson are responsible for my epiphany.  I learned what I know from them, from a few sharp guys who frequently comment on this blog, and from my own research.  My thanks once again to Jay for his frank analysis of this scam.  Until next time.