The Investment Scam That Refuses to Die
When a sales pitch begins with, "I'd like to explain to you why the Iraqi Dinar is not a scam," it's...a scam.
But, would-be currency arbitrageurs can't seem to resist something for nothing. Recently, the Better Business Bureau (once again) alerted consumers that it has been "fielding an increasing number of complaints about investment scams involving purchasing Iraqi Dinars."
There is nothing inherent to the Dinar itself that makes it a "scam." If one happens to be traveling to Iraq, Dinars will be very useful. As an investment, however, the Dinar is really nothing more than a souvenir.
Here's what the Washington State Department of Financial Institutions had to say last month in a bulletin titled "Consumer Alert: Iraqi Dinar Scams":
"What consumers are not told is that the Dinars can be redeemed only in Iraq, as most of the established currency exchange houses and banking institutions cannot convert the Dinar to US dollars. Since no exchange exists for the Iraqi Dinar, dealers can charge whatever they want to sell and buy back the Dinars. These dealers often register with the US Treasury as a Money Services Business (MSB ). An MSB registration is nothing more than a form they file; it does not reflect any experience in trading currency nor entail any qualifications on the part of the dealer, other than basic anti-money laundering requirements. The reason dealers seek this registration is to lend legitimacy to their scam and avoid more stringent regulation."
Hmmm…there must be some sort of misunderstanding. Because TampaDinar.com (of Middletown, Delaware), which bills itself as having been voted "Best Dinar Dealer Online," has a slightly different take on the situation:
"There is minimal risk associated with investing in Iraqi currency and the potential of yield is very high."
The essential pitch that Dinar dealers make to explain their reasoning is summed up on TampaDinar's website:
"There is a high chance that the increase in the exchange rate will coincide with the reduction of military force of the USA present in Iraq. Chances are also high that an appreciation might take place just before the Iraqi elections. Many international organizations such as IMF and WTO are working with Iraqi government to bring forth Iraq's financial system to the rest of the world. It is believed that Iraqi currency will soon be available for trade openly in the international market, which will only lead to greater economic stability to the region. As for how high the evaluation of the Iraq currency would be, some conjecture can be made in this regard. A sudden high growth is quite possible given similar circumstances in the past. This valuation could be anything between the values of 0.01 US Dollars to 1.49 US Dollars. Once this first evaluation is complete chances are there will be more steady progressive growth in the future. This steady growth will prevent an international financial rush. With a steady increment, it will form a limit on the exchange rates in the Iraqi Dinar as many would keep their Dinars expecting further growth. This constant progress in the appreciation of the Dinar will allow for the formation of a free fling market as some investors will sell their Dinars as others hold on to it while some will purchase expecting bigger returns.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter