If you are considering buying the Iraq Dinar in hopes of making a lot of money from a modest outlay of cash, you're not alone. This get-rich-quick idea has been circulating on the internet for about eight years now and shows no signs of going away.
Websites pitching the sale of Iraqi currency tell you that, before the 1990's Gulf War, 1 million Iraqi Dinar (IQD) was worth $3,200,000 USD. Today you can buy 1 million Iraqi Dinar for about $1,200! If the Iraqi economy improves as expected, and the Dinar is revalued at anything approaching the prewar exchange rate, a modest cash outlay today could turn into millions of dollars of profit. Iraq's vast oil resources, well-educated population and guaranteed rebuilding support from the United States are cited as further reasons the Iraqi Dinar is prudent investment. The websites' sales pitch is intuitive, straightforward and, to many, very appealing.
Sensible arguments (both for and against buying Iraqi Dinar) can be made. The purpose of this article is not to take one side or the other. Rather, our focus is on pointing out to potential buyers the enormous variation in Dinar pricing that exists.
Unlike actively traded stocks or bonds, there exists no formal market for pricing Iraqi Dinar transactions. When you buy Iraqi Dinar you will receive actual physical bundles of currency from a retailer, not an electronic entry on your brokerage account statement. Several factors impact the amount you pay for Dinar:
Dealer pricing - There can be wide variation in how much dealers charge for identical packages of Iraqi Dinar. For example, a recent spot check of pricing for 1 million IQD, uncirculated, in 25,000 denomination IQD notes (40 notes total) found prices ranging from $999 to $1,249 - a 25% spread. (On the same day, the official Central Bank of Iraq exchange rate was 1,000,000 IQD = $854.70USD).Denomination - Large denomination notes will generally cost less than the same amount of smaller denomination notes. For example, one internet dealer recently was selling 1,000,000 IQD in 25,000 denominated notes for $1,160.00. The same purchase of 1,000,000 IQD in 1,000 denominated notes cost $1,500. This equates to a 29% spread for the same amount of currency.
Circulated or Uncirculated - You will pay a slight premium for never before used IQD notes. The same dealer selling 1,000,000 IQD in 25,000 denominated uncirculated notes for $1,160.00 was selling the 1,000,000 IQD package of circulated notes for $1,150.00.
Shipping and Handling - Expect to pay $20.00 to $40.00 shipping costs for a 1,000,000 IQD purchase. Some retailers tout free shipping but generally charge a higher base price for the currency.
For people willing to take the risk, a purchase of Iraqi currency may well prove to be a fortuitous decision. However, you should know that most experts do not recommend buying Iraqi Dinar. Only time will tell who is right. If you do decide to purchase Iraqi Dinar, be certain to shop and compare carefully to find the best deal. The Dinar marketplace is unregulated. It is particularly important that buyers beware in this arena.
Tim Paul is a financial management executive with more than 30 years experience. His websites focus on personal finance issues including 401k Planning and the pros and cons of buying Iraqi Dinar.
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