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As followers of the Iraqi dinar know, there are a lot of “updates” out there on the various websites that either sell or track the troubled currency.
Most of this “news” is much ado about nothing.
Iraq is on the precipice of a civil war with some 5,000 victims this year alone. It doesn’t appear that the country’s woes — partially unleashed by the disastrous American-led war — will be resolved anytime soon.
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In the interim, untold millions have been spent on speculating in the country’s currency, which is not traded on any legitimate foreign exchange and is worth a fraction of a dollar.
The currency is so unpopular that many Iraqis prefer the buck. But that hasn’t stopped a plethora of internet-based “dealers” from selling the dinar as fodder in a get-rich-quick scheme.
The ruse is simple: Get dinar buyers to believe that the currency will be favorably revalued soon so they can sell their dinars at a huge profit.
While that may happen, it’s highly unlikely given the current political and economic situation. No U.S. bank will handle the dinar while dealers reap huge commissions and mark-ups.
Yet rumors continue to feed this market the way a stoker feeds a coal-fired boiler.
The latest rumor is that the Wells Fargo WFC -0.93% bank is setting up some kind of mechanism to buy the currency. I heard the rumor last year and it’s since resurfaced. But the bank wants nothing to do with the currency. Here’s a statement they sent me when I inquired (an email directly from Kate Ellis in Wells Fargo corporate communications):
“Wells Fargo does not currently buy or sell Iraqi dinar and has no plans to do so in the future. When we provide banknote services to customers, it is generally for travel related purposes and we do not foresee a high number of customers traveling to Iraq for business or leisure purposes in the near future.“
What was the origin of this rumor? Whoever spread it was desperate to signal that a legitimate regulated entity was getting involved in the dinar trade, which, thus far, has been completely unregulated and beyond the reach of bank watchdogs.
Keeping the Dinar Flame Flickering
It’s clear that by ginning up news about the dinar, the myriad websites that are pushing dinars are trying to keep hopes up for the untold thousands who bought the currency.
One of the ways the dealers keep the flame burning for the beleaguered currency is through “conference calls” where so-called “experts” report on developments on the revaluation front. When you google “dinar conference calls,” you get more than 60,000 hits. I get several alerts a day from sites claiming to have dinar “news.”
One reader who contacted me (and asked to remain anonymous) looked into it further:
“My friend’s brother gave him dinars, motivating us to start researching. We looked at the likelihood of a revaluation, then started looking at what is motivating them (the dinar site operators)…Many of them do not appear to be selling dinar on their sites. Plus, the only way they can make money on the difference is if there is a way to exchange. As you know, the only way to exchange is to fly over there (Iraq) with boxes of dinars, trade them for a box of U.S. dollars, and hope you make it back alive. Another way we thought they are making money is by pretending to sell the dinars. From what we can tell, everybody who has purchased dinars has received the currency. The only way we’ve been able to determine how money is being made is the free conference calls. I estimate the dealers are making at least $2,500 per day per conference call.”
Thanks to: http://www.forbes.com