Dinar Run

Have you guys noticed how eBay is a world bank these days? Like literally, you can buy whatever currency you want on there, including Iraqi dinar in huge, huge stacks, as if it were play money, because it’s not traded in an open market. There’s no local bank that will exchange it, though there are lots of people getting in on this currency, hoping to get rich really fast. Thing is, when you buy large quantities of money like this, you don’t want to get it sent in the mail. We went along for a ride into the Arizona desert with some folks exchanging nearly four thousand in US dollars for hundreds of thousands of Iraqi dinar.

We chilled in the van while the traders went inside, where it was reportedly weirdly nonchalant. You know, just going to this soldier’s house where he keeps a vault stuffed full of Iraqi money in his teenage daughter’s bedroom in the middle of the desert. Whatevs, it’s casual. And then they went to a nearby bank lobby to count it all.

Later, we talked to one of these Iraqi dinar investors on an agreement of anonymity. Because why the hell is this even remotely a good idea? Is this not some sort of scam?

VICE: What’s with this whole Iraqi dinar craze?
Anonymous Investor: I’ve been investing in gold and silver for decades. The reason I do that isn’t just so I can make a profit and make money. It’s important that people carry little bits of it here and there when we have a bit extra so that if the American money system were to go to hell in a handcart we have some true value that we can trade with. It’s a security vessel, not an investment vessel.

What do you mean? The American money system is tanking?
We’ve known for a long time that the American dollar is really not based on anything of substance. I actually believe that if we opened up Fort Knox today we’d find that there is no gold in there at all. But that’s beside the point. What’s really behind the American dollar is faith in its government. And you know that the American dollar has been downgraded recently. What’s even worse is that the euro was supposed to be the new currency that was going to come up and replace the dollar.

Right. And now it’s shit.
Exactly, it’s even worse. The euro for the last few weeks… any day now I thought it was going to collapse. There’s been some really, really rock and hard places that the euro has put us between, and there’s no way out other than collapsing it. And I think that’s going to happen very, very soon.

Where would that leave us?
In the West that leaves us the British pound, which is also shit, or shite as they say. And not much else.

I don’t feel very good right now.
So looking for value in currency to place your money in so that you can survive—not just thrive, but survive—the first places you look are Japan or China or India, because all three economies are doing quite well right now. However, if you look at them, they’re based on products they produce that I consider to be garbage. They’re products and a few services that we basically only buy when we’re in a booming economy—like stereo systems, your 15th TV set… things like that, which aren’t things we truly need. So even though they’ve got strong economies, those economies are based on an American and European consumption of material goods. So if the American dollar or the euro were to collapse, people wouldn’t be buying this stuff anymore. So their economies would be hurt as well.

Who is doing well, then?
If we look for economies backed by items of real value, the Swiss franc is number one, backed by gold and silver. However, compared to the dollar right now, it’s a very, very poor investment. So you’d have to invest millions of American dollars to get Swiss francs and you’d be very secure, but it’s not a good exchange rate right now.

So you look at good exchange rates and you look at countries that have their money backed not by gold or silver but by oil—even though I believe that eventually we’ll be running on free energy, right now our world runs on petroleum, for the most part—and the countries that have their money backed by petroleum, like Kuwait and Saudi Arabia, both of their countries, their dinar is approximately four American dollars to one.

That’s pretty decent.
Yes. So their dinar, compared to the American dollar, is very valuable. The Iraqi dinar, right before the war started, was trading one American dollar for one Iraqi dinar. A couple of years before the war in Kuwait started, the Iraqi dinar was also about four American dollars to one. So it was on par with the Saudi dinar and the Kuwait dinar.

When the war started, first of all it became illegal for Americans to own the dinar, because that would be an act of treason, but then the dinar was still trading for the American dollar because the US dollar is the medium of exchange in the world. And once the war started the dinar became 4,000 dinar for one American dollar. So obviously their money was quite devalued. Then in 2003, after the overthrow of Saddam Hussein, a new Iraqi dinar was minted and the new Iraqi dinar is now valued at approximately 800 dinar for one American dollar. [Other sources value it at 980 dinar for one American dollar. –ed]

That’s a bit better.
It’s much better, because their stabilization—and now that it’s been just recently announced that the war is over (supposedly)… well, there are a few things that need to happen. One of them is Iraq has to remove itself from bankruptcy, which it will do. It’s got some of the largest reserves in the world. Saudi Arabia is first. Canada is second, but because of their environmental regulations, most of it is unavailable to us at this time.

So they still have to get out of bankruptcy. What else?
They have to pay war reparations, which I think they’ll do with the promise of future oil money. And then they’ll just turn on the taps for their petroleum reserves and become a relatively stable government. They already are, and they’re not American puppets the way Saddam Hussein was for the nearly 24 years that he was in power. I’m very, very confident that in a relatively short period of time the stable Iraqi government will be a good investment.

How good are we talking?
If the Iraqi dinar does again revalue to a one-to-one exchange rate, that means for every dollar you’ve invested you’ll make $800. For every thousand, it’s $800 thousand. So you literally could become very, very wealthy overnight. I think the revaluation is going to happen relatively soon. Like in the next month or so.

Really?
I could be wrong, but I certainly think it’s going to happen in 2012 sometime.

Why do you think this?
The euro is going to collapse. It’s not even a big secret that it’s happening.

Totally. People are protesting over it all over the continent.
It’s just a matter of when. So think about it: When the euro collapses, where are those people going to put their faith and trust? Certainly not the American dollar, it’s not the British pound, and I guess a lot of these countries will go back to their own currency—the German mark, stuff like that. At least that country is relatively stable.

Yeah, and the US dollar is fucked.
Right. So it doesn’t make sense to go anywhere else other than a country that’s got oil reserves. Do you want to invest in the one where you can make a huge profit, or do you want to invest in one like Kuwait, where it’s 1 to 4 against the dollar?

I’d pick the one where it’s like 800 to 1.
And there’s no reason to think it won’t be at least 1 to 1, or even 1 to 4, because the oil reserves are what causes the value. There’s no reason to think that Iraq will be less of an important oil trader than Kuwait.

Interesting.
It is an interesting investment, because even for something as little as a thousand dollars, maybe it doesn’t revalue at 1 to 1, maybe it’s 10 to 1, but still that’s $80,000.

Guess we’ll find out if you’re right about this pretty soon.