Risk Disclaimer: Trading currency involves substantial risk of loss and is not suitable for everyone. Trading with leverage can work for you as well as against you. This is not a solicitation or an offer to buy or sell any investment.
I receive at least 10 emails per week (and more lately) about the Iraqi dinar.
Is it a safe investment? Some people claim that it's just about to become the next great amazing miracle. And if you got in early, you're going to make a fortune.

I'll share with you what I think. You're free to draw your own conclusions.

1. No U.S. bank - major or minor - NONE - will buy Iraqi dinars in ANY quantity from anyone. At all. If these banks were able to trade in the dinar, you would see it reported by CNBC and analysts would be talking about it and discussing the upcoming revaluation. It is a fact that no U.S. bank will process a transaction for anyone - not me, not you, not a hedge fund - to get out of that trade. If you want to buy them, that's great. But no one will buy them back from you.
 
This means that once you buy the dinars, there is only one way to get value out of the investment: To travel to Iraq and buy some dates, figs, or buckets of oil from a street vendor. Enjoy that. But please be careful outside the green zone.

 
Skeptical? Call any U.S. bank and say that you have dinars, and ask them to quote you a price on getting out of the trade. If no bank wants to talk to you, then you know that you will be holding something that you cannot sell. Who cares if the value of your dinars goes up by 1,000% on paper, if there isn't anyone to sell them to?

2. The Better Business Burueau has warned consumers about dinar investment schemes:
 
http://www.bbb.org/us/article/bbb-warns-that-iraqi-dinar-investment-is-creating-concerns-and-complaints-690

3. If you are thinking that a growing Iraq economy (once sanctions are lifted) will lead to an appreciating dinar, then you do not have history or facts on your side. There is talk that sanctions on Iraq will be lifted soon and that will lead to an explosion of economic activity. That's possible. However, you can point to many examples where an emerging market economy, growing very fast - was accompanied by a falling currency. Venezuela is one very real example, because it is an oil-rich economy with an autocratic regime, which then enjoyed greater access to world markets (and thus a growing economy). What did they get in return? A depreciating currency.

4. If your "dealer in dinars" has registered as a Money Service Business, then they have to register and disclose the following information:

It would not hurt you to ask them where they are registered, who owns the company, and where they do their banking (and ask for bank references), and what the dollar value of transactions they completed in the last year is.

5. If you buy dinars because you have faith in the Iraqi ecomonic miracle, then you are really, really, really hard up for investment ideas. You are better off investing in a real business, a startup idea, or something close to home that you can visit, touch, see, use, and understand.

6. If you don't fully understand the risks of an investment, it's probably better to walk away. You should understand the following before making an investment decision (not just about dinars):

a) How you are going to get out of the investment? Do you hire a realtor? Is there an IPO? Do you put it on ebay? Have many other people done this already? Is it an established exit method?
 
b) Have you ever done this type of transaction before?
 
c) Do you understand your legal rights?
 
d) Are you locked into this investment? Is there an immediate secondary market for the investment if you made a mistake?
 
e) Does the seller encourage you "not to worry?"
 
f) Does the investment REQUIRE YOU TO LEARN ABOUT A GODFORSAKEN WAR-TORN AREA OF THE WORLD WHERE NO ONE GIVES A SHIT ABOUT YOU AND HATES YOUR COUNTRY FOR INVADING REPEATEDLY, KILLING WOMEN AND CHILDREN, AND THEN LEAVING THE COUNTRY WITHOUT RUNNING WATER?

6. Would Google have been a safe investment if they'd been headquarted in Baghdad? Or listed on the Syrian stock market? What other great businesses or investments have emerged from Iraq in the last 10 years? If not, then what makes you think this is okay? Most economic bubbles will have a long enough cycle that you can wait until the sanctions are lifted and see how much money other dinar investors have made.

If I'm wrong about this, and I just caused you to miss out on the investment of a lifetime, I'm sorry.

 

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