Monday, September 17, 2012

Hype from TD

Somebody recently posted an unwelcome spam comment on my blog.  I removed it a few hours after it was posted but I did click on the link and read through what was written so in a sense I'm grateful to the spammer because it brought the following to my attention. 

The deletion of zeroes will allow the value of the Iraqi Dinar to rise. It will facilitate in dealing with the currency and improve the payroll system in Iraq.
How Does it Impact Investment in Iraqi Dinar?
The deletion of zeroes will have a positive impact for the investor. Firstly, this will result in a rise in the value of Iraqi Dinar. Since, both old and new currencies will remain in circulation during the time of exchange. In effect the currency that the investor holds will be worth more.
The main aim in the investment of Iraqi Dinar is for profits. The deletion of zeroes is expected to raise the value of the Dinar and will serve the actual purpose of investment. The ICB believes that this step will speed up the process of raising the value of the Dinar. So, even though investing in Iraqi Dinars has been viewed as a long-term investment, the deletion of zeroes will allow investors to yield profits sooner.

These statements are misleading.  The deletion of the zeroes will not result in an increase in the value of the IQD.  It will result in the demonetization of the IQD as it is replaced by a more valuable currency in shorter supply. 

Iraq, ravaged by war, is now on the path of substantial growth. They have oil fields that will continue to support the economy and help in its growth. But, it is true that the growth of their Dinar will be linked with the political and economic condition of Iraq. Investment in the Dinar will follow the growth of their economy.
According to Global Finance Magazine the Real GDP growth of Iraq in 2011 was 9.9 percent. It is expected that it will rise to 11.1 percent by the end of 2012. According to the Iraq Daily Times the overall economic growth of the country will reach approximately 47% by 2014. This all will be made possible by strategic planning of the ministry.
This is, of course, the right time to invest in the Iraqi Dinar for someone who is looking for a long term investment. It is important that people do not confuse it with a get-rich-quick scheme because this is definitely a long term investment. It will take a few years before the economic situation of Iraq is stable enough to yield big benefits to the investors. However, their growth is inevitable with support and investment from the U.S.
It is the perfect kind of investment for people who are only willing to take moderate risk. Similar patterns were seen with the Kuwaiti Dinar that showed extremely high growth when its economy lifted itself after war. And if the past growth is any indication then the Iraqi economy can be expected to stand up on its feet and show considerable growth very soon. Just in 2006 the real GDP of Iraq was 17 percent.
If someone is considering investment in the Iraqi Dinar then do the necessary research that you would do for any other financial investment:
Keep a track of past performances and growth.
Keep an eye on the economic growth of Iraq and the world because both will impact the value of the currency.

First of all the dinar is a currency, not a stock.  The economic growth of the country might contribute to an increase in the monetary base, but it won't necessarily result in an increase in the value of the dinar.  Many countries with booming economies have a currency with a depreciating value.  Brazil, for example, is forecasting a GDP growth rate of 5.5% for 2013 which is more than twice that of the US currently around 2%.  So you would expect the Brazilian real to increase in value vs. the USD right?  Wrong!  The same forecasters say that the real will lose ground vs. the USD.  Dinar investors (and potential investors) need to grasp this fact, counterintuitive as it may be.  Currencies don't increase in value just because the economy is growing.  The opposite is true more often than not.  Many countries prefer a lower valuation for their currency as it benefits them when it comes to exports.  China is an excellent example as they've come under fire in recent years for keeping their currency's value artificially low. 

Secondly, they say that now is the right time to invest in the Iraqi dinar and yet in the preceding paragraphs they talked about the deletion of the zeroes which is a lop.  If Iraq is going to lop now is not the time to invest in the Iraqi dinar.  Now is the time to avoid owning the dinar as you will lose money. 

Third - past performance and growth?  Iraq's economy has grown impressively since 2009 (currently around 10%) and the dinar's value has gone up a whopping 1/3 of 1%.  Is that the kind of growth you're looking for?  Shabibi's policy is exchange rate stability, so why would anybody expect any significant gains from the IQD?  The only reason that I see to own dinar is if you anticipate a resurgence of inflation which would likely prompt a response by Shabibi similar to what happened from 2006-2009, but that's a gamble. 

And finally, why are these guys giving an assessment of the dinar as an investment in the first place?  By their own admission they're not financial consultants and are only registered as a Money Service Business (MSB) and therefore unqualified to offer any investment advice.



  1. I always wondered if TD Ameritrade would start giving them a hard time at some point. I don't know if it's purely coincidental but it certainly helps that their call letters are so similar. I'm sure Tampa Dinar goes out of their way to promote "TD" rather than Tampa Dinar. Of course, the "TD" in TD Ameritrade stands for Toronto Dominion (Bank). Even the logo at the top of the Tampa Dinar website looks strikingly like the TD Ameritrade logo. It certainly implies a much more professional service organization than the rinky-dink money service business it is. It probably isn't worth their time, but it certainly wouldn't break my heart if outfits like Tampa Dinar got slapped down by the likes of TD Ameritrade.

  2. I actually do quit a bit of business with TD Ameritrade and have a good friend who has a pretty good position at our local office here. I recently did mention this info about Tampa Dinar to him. His reaction was "you have to be kidding me, anytime anyone even mentions the word Dinar around here you become the laughing stock of the office".

  3. Additionally, the web site leads you to believe they are a dealer in many currencies. There are images for Hong Dong, Vietnam, Iraq, South Korea and China on their page. However, the only currency you can buy is the dinar. They don't deal in any other currencies. The dinar is it! Those are just irrelevant, pretty pictures. How ridiculous.

  4. Well, here is some MAJOR news... it is about time, but it looks like th law is finally catching up with these guys..

    Check out THIS news story about Rudy Coenen and Brad Huebner.. BUSTED!!!

    1. Love the pic of Rudy with the nice Dept of Correction scrubs on.. he wears it well.. lol!!


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