If you are among the thousands of people who have bought Iraqi Dinar currency in hopes of scoring a big profit, you may now be wondering what options there are for liquidating your Dinar holdings.
The Iraqi Dinar investment dream has been around for nearly a decade now. The dream is promoted by a slew of websites that sell Iraqi currency - that is, actual physical bundles of currency - to "investors" through mail order. The websites' sales pitch goes like this: "Before the 1990's Gulf War 1 million Dinar was worth $3,200,000 USD; today you can buy 1 million Dinar for just $1,150.00 USD". As the Iraq economy improves the Dinar will likely be revalued. If the revalue is at a level approaching it's pre-war exchange rate, today's small cash outlay could return millions for those savvy enough to get in now. Iraq's vast oil resources, well-educated population and guaranteed rebuilding aid from the US make buying Iraqi dinar almost a sure bet."
This rationale has proven compelling for thousands of people who've taken the plunge and bought Iraqi currency.
But people who buy Iraqi dinar are not buying a liquid, actively traded investment; rather they are buying a numismatic "collectible" that has very high transaction costs. For example, today you can expect to pay about $1,150 USD for 1,000,000 of Iraqi Dinar (IQD) currency from on-line dealers. The same 1,000,000 IQD has an official exchange rate value of just $854 USD - a hefty 30% markup. Dealers justify this margin by noting the high costs of transporting and safekeeping foreign currency bundles.
Similarly, if you are a holder of Iraqi currency and have decided to convert your Dinar back into US dollars, your options are limited and costly. One Dinar website makes the following noteworthy disclosure in its fine print Q&A page: Until markets develop for the resale of Iraqi Dinars, it may be difficult for you to liquidate your Iraqi Dinars or exchange them for US Dollars.
One option is to sell the currency back to a Dinar dealer. Typically, online Dinar dealers who advertise 1,000,000 IQD for sale for $1,110 are willing to pay $800 to buy back the same 1,000,000 IQD. In other words, when you drive the Dinar off the lot, it's instantly worth 32% less in the eyes of the dealer that just sold it to you! Selling Dinar back to a dealer is the option having the highest transaction cost but least amount of hassle.
A second option is to sell your holdings on eBay. With eBay, transaction costs should be 10% or less (meaning you might pocket $1,000 if your 1,000,000 IQD can fetch $1,100). (This eBay fee calculator will give you a good idea of your transaction costs.) However, for the newcomer, eBay can be intimidating and entail a substantial learning curve. You should be aware too that eBay has a very active community of Iraqi dinar dealers who you will be directly competing with.
A third option is to sell your Dinar holdings on Craigslist. Craigslist is free, easy to use and very effective for selling items. However, the audience is primarily local and the number of listings for IQD is relatively small - even in the larger Craigslist communities.
The Iraqi Dinar dream may someday become reality for those investors willing to buy and hold dinar for the long-term. But people looking to liquidate their Dinar holdings today will likely take a significant loss on their "investment".
Tim Paul is a financial management executive with more than 30 years experience. His websites focus on personal finance issues including 401k Planning and whether investing in Iraqi Dinar currency is a sensible choice.
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