I'm aware that this topic has been written about before time and time again. Heck, even many government agencies, law enforcement agencies and even consumer groups and financial institutions ahve put out warnings about this currency. Despite all this many people buy Iraqi Dinar under the impression they will make millions if not billions of dollars.
I'm inundated with emails and blog comments from suckers telling me about the untold riches that they will receive when the Iraqi Dinar finally does revalue. Oftentimes people ask, when will the Dinar revalue...my answer...NEVER.
Scams and frauds involving currencies have been around for years and as far back as...well...as far back as there have been currencies. Today however many of these scams and schemes involve pyramid schemes which have been disguised as complicated "Forex Trading Programs." In fact what is really going on is scammers weren't doing any Forex trading at all, simply paying one investor with another investors money or as the age old saying goes robbing Peter to pay Paul.
Forex scams actually became so prevalent in the 90's and early 2000's because of speculation on the Euro, which was a new currency at the time, that the US Commodities Futures Trading Commission was forced to put out a number of warnings about these scams.
Now let me first say Forex in itself isn't a scam, nor is the sale of the Iraqi Dinar. In a sense I suppose you can't even really call this a scam. If a consumer buys Dinar and receives authetic Dinar in the mail they got exactly what they paid for. The scam isn't so much the sale of this currency so much as it is the hyping and false information put out about the currency. Some dealers I see online actively engage in this type of hyping while others do not as there's really no need. Consumers are hyping themselves up and hyping up others as well on various message boards and forums such as Dinar Vets, Investors Iraq, and Iraqi Dinar Rumors just to name a few.
Just listen to all the radio commercials, banner ads and other materials for Forex. Forex markets are a legit thing, however there are hords of Forex scammers out there who spend their lives looking for suckers such as the gullible, uneducated, and elderly just to name a few of their targets. Oftentimes it's individuals in retirement or near retirement who'd other investments may not have panned out for one reason or another and who are looking to invest their money with promises of high and risk free returns. Now anyone with a brain knows high paying and no risk don't go together but greed and desperation often cause people to overlook that nice thing we call common sense. What is really happenning? The money is disapearing into foreign banks where the scammers put the funds for themselves.
Generally these Forex scams don't even involve the purchase or tarding of foreign currencies, what it is, is simply scam artists running bonus earnings statements and printing them off on their home computers showing huge returns right up until the time they disappear with everyone's money. If someone for some reason wants to cash out on their returns early they simply rob Peter to pay Paul but why would someone want to get out when money is pouring in right, and that's just what causes these scams to go on as long as they do. It's not until people demand their money that the scam artist has problems.
Now as we said before, just buying Dinar in itself is not a scam, though most people do have innacurate expectations for what the Dinar will do and don't understand currency or currency markets. That said the real scams involve people being scammed in the Dinar industry, not simply buying Dinar. For example, many Dinar scams work in the same way as the Forex scams. You don't actually get any Dinars but instead get a statement showing that you have Dinars, or have Dinars on reserve or layaway or have some type of fake certificate of ownership.
Now this is debatable depending on who you talk to and what someone's idea of a scam is but some say the Dinar scam is successful because with the Dinar "scam" unlike the Forex scam you actually get physical Dinars in the mail. Suckers around the world have Dinars in envelopes, safety deposit boxes, in books and heck some even have bales of Dinar in their attic just waiting for that magical day it will revalue and they will be millionaires if not billionaires...which is never.
To help sell this scam, some scammers have setup all types of websites, bulletin boards, confrence calls, newsletters and even social media. If they can find some way to create the impression that the Dinars are valuable and about to revalue at any minute they will have buyers. You constantly hear on these boards and confrence calls people sure that their Dinar is going to revalue withinthe week, by months end, or even tomorrow. They also always have some "special intel" on why this will happen. Their brother in laws, sisters, husbands neighbor plays gold with a guy who used to work in the secret service. Their siters, neigbhors, husband, works at Chase bank and has seen the Dinar pop up in their FX system.
Funny thing is human nature. It's human nature to stick to your beliefs and once someone believes something it's hard to convince them otherwise. People also don't like to feel like they got scammed or like someone got the best of them so often people will continue believing what they origionally believed. Others however are truly convinced that their initial investment is a good one and no amount of logic or facts can disuade them from that belief. Denial is not just a river in Egypt.
So why is this a scam? The Iraqi Dinar is a scam because the dinar has no chance for a revalue and even the prospect of a significant appreciation is not good at this point in time. If the Dinar were to appreciate it would make buuying the Dinars worthwhile.
Why won't the Dinar appreciate significantly? Well I suppose anything is possible but the current state of affairs doesn't make it likely. First off there's alot of political uncertainty in the region. Who would invest in a currency of a government who could fall into civil war at any moment or a government who may not even be around a few months or a few years from now? Add to that the fact that there is such a huge volume of Iraqi Dinars produced and floating around that even if Iraq discovered the largest oil reserves, gold mine, and natural gas reserves in the world the Dinar would not appreciate significantly because there's just too much Dinar out there in circulation.
Many people love to say, look at Kuwait!!! The Kuwaiti Dinar revalued. After the first Gulf Storm War the Kuwaiti Dinar did show significant appreciation, that is true. It's like comparing apples and oranges however.
First off, as a country, Kuwait is significantly richer than Iraq and also has much larger oil reserves. Most people don't remember this,but the reason Iraq invaded Kuwait was for Kuwaits oil, NOT because Iraq had enough oil of their own.
Secondly, the Kuwaiti population is much much smaller than that of Iraq. The population of Kuwait is only 3 million, that compared to Iraq's population of 33 million. What does this mean? This means that Iraq has to take care of ten times as many people as Kuwait, and in addition to that they also have to rebuild an entire infrastructure ruined by a decade of civil ware. And they have to do all this with less money than Kuwait.
Third, and this is the biggest sticking point. The Iraq government has to borrow about $100 million per year just to provide basic services to their people. No country which is borrowing money is going to have an "imminent revaluation"...for those of you who aren't aware that's a term in the Dinar community. The Iraqi Dinar revalue is always "imminent."
Lastly, Kuwait had a stable government before the War. That government essentially fled Kuwait and then returned after the war and the government was restored. That is another big difference between Iraq and Kuwait. By contrast Iraq's government is new and whether it survives is something nobody knows.
Main point here being that there is really absolutely no reason to believe that the Iraqi Dinar will revalue or even appreciate significantly in the long term, but it's bordering on insanity to believe that Iraq will even appreciate significantly in the short term, the short term being 10 years which to those in the Dinar community is a lifetime.
And there is the scam laid out for you. The scam artists sell Iraqi Dinars to suckers based on the belief that the Iraqi Dinars are about to become very, very, very valuable at any moment, when in reality they are not.
I know we used the word scam alot in this article. I guess scam may be a strong word. A scam or a fraud involves someone being scammed or defrauded. There are instances of true scams and frauds, just do a quick Google search on the BH Group. It's my understanding they were selling Hedge Funds for Iraqi Dinar that did not exist. Similar scams have happenned with the Warka and Iraqi Stock Markets. Another example of a true scam would be someone purchasing Iraqi Dinar and either not receiving it or receiving coutnerfeit notes.
For the most part most Iraqi Dinar dealers are on the up and up as far as that goes. Probably part and partial because it would be more costly to even make counterfeit Dinar notes than the notes would even be worth. None the less simply buying Iraqi Dinar is not a scam, however the hype and pumping up surrounding the purchase of the Iraqi Dinar is what could be construed as a scam. Some dealers simply seem to say we sell Dinar and not much more. Others, on the other hand seem to aid in pumping up the Dinar community by advertising saying things like "The RV Is Imminent" and that is what I would consider a scam.