Posted By: hobie [Send E-Mail]
Date: Sunday, 28-Jun-2015 23:57:53
(Thanks, M. :)
Reader MM writes:
I lament some of the confusing and contradictory information coming from our blessed Dinar Gurus lately. Perhaps they do not know as much as we think. I wish to remind everyone of the history behind the Iraqi dinar reevaluation program.
Way back when Iraq invaded Kuwait, the value of the Kuwait dinar was about $3.22. During the Iraqi occupation of Kuwait, the value of the Kuwait dinar dropped to almost nothing, pennies at most. Then the Iraqis were driven out of Kuwait, and the local government reestablished itself. Within a short time the Kuwait dinar was revalued to near it pre-war value about $3.22. Those few who had invested in the Kuwait dinar made huge profits. But few people outside of Kuwait knew of the situation, and thus the profit taking was done by a small group of insiders.
When the situation appeared to repeat itself inside Iraq, the situation was different. Before Saddam Hussein was overthrown, the value of the Iraq dinar was also about $3.22. Then, after his overthrow, the dinar also dropped to almost no value. You could buy a dinar for 1/10 of a cent.
Many saw the same opportunity as had presented itself in Kuwait. So astute investors loaded up on Iraq dinars. This time the opportunity was made known to many of us in the USA.
And so it is that now some hundreds of thousands of us own Iraq dinars. We watch and see that the Iraq government is slowly but firmly reestablishing itself. At some point, the Iraq government is going to have to revalue its currency. This we await with great hope.
Now some of our Dinar Gurus tell us that this will never happen. This makes me question their authenticity. I know of no country that has ever cancelled its currency. I doubt that Iraq will be the first. The new leaders of Iraq are seeking legitimacy and respect for their new government. Cancelling their currency would definitely hamper their efforts.
Also, I recently watched a video presentation where Dave Schmidt said that China had no reason to provide financing to Iraq for the revaluation. I was, quite frankly, dumbfounded by the inaccuracy of this statement.
Here is my understanding of this situation. China has trillions of dollars that it cannot unload in the international financial markets because to do so would damage the dollar-yuan exchange rate. This would cripple their exports to the USA.
But they see a unique situation in Iraq. If they provide dollar financing to the Iraqis for the revaluation, they can get long-term oil contracts in exchange. In effect, by selling their dollars for oil, not currency, China solves two big problems. It gets rid of its excess dollars and it gets a badly needed source for oil.
This is a win-win for both Iraq and China.
So dear friends, I am as positive as I always was about my investment in Iraq dinars. I hope that you are also.