This could possible be the great mother of all scams for the coming decade. The Dinar Scam might actually bump the magic bracelet scams out of first place because it's just so insidious and persuasive.
The Dinar Scam is one of the most popular being promoted right now, even having hype filled Dinar conference calls to get people pumped up about their future millions.
Here’s the info I pulled today directly from DinarTrade.com and via phone to their office:
They claim they will buy back Dinar’s at a rate of $900 per million. They sell them right now at the rate of $1220 per million ( that is DinarTrade.com’s exchange rate for today ). They claim they are only selling the Dinar's for numismatic purposes - but if that is the case, why is it linked to the exchange rate?
Here’s how the Dinar Trade prices break down:
You pay $1220 for 1,000,000 Dinars. The actual exchange rate is $848 to 1,000,000 dinars.
Based on the chart, you can see that since February, the number of Dinar’s you can get with each dollar is going UP, which is the exact opposite of what you want. In order to make any money on this deal, the dinar has to drop from 1 dollar to 1175 dinars, to $1 to ½ a dinar just to double your money ( hypothetically, I’ll explain next why that also isn’t true and you get raped when you buy these dinars ). So either the dollar has to get incredibly weak ( like literally finding out the 100.00 in your pocket is suddenly only worth a nickel on the world exchange ) or the Dinar has to somehow increase in value a thousand fold.
So first back to the exchange breakdown:
You pay $1220 for 1,000,000 dinars that are actually only worth $848 if you were to buy them through a legitimate Forex broker. You have already taken a 30% loss the moment you buy the Dinars.
But it’s worse than that. Because if you want to sell those dinar’s back today, that you just paid $1220 for, they’re going to pay you back about $780 per million, so you’re $1220 investment is worth $780 the first day you buy. And you only get that $780 back if the company even exists when you want to sell it back. Otherwise, what are you going to do? Fly to Iraq to exchange them?
Here’s how most of these scams work – they usually have some ‘hook’, some fact that they spin to make it sound like it’s all legit and the best deal ever.
They refer to the fact that prior to the Iraq war, 1 Dinar was worth 3 US dollars. So that makes it sound like your 1,000,000 dinars that you purchased for $1220 will potentially be worth $3,000,000 US dollars when the Iraqi currency bounces back.
The FLAW: The Iraqi Dinar was never legitimately worth $3 based on the usual ebb and flow of currency exchange rates over time. Saddam Hussein got up one morning and said, “The Dinar is now worth $3 US dollars.” Anyone who was actually foolish enough to accept Dinars for dollars found themselves with nothing, because the currency really had no value and quickly collapsed to 3500 dinars to the dollar before it was demonetized. I.E. scrapped. Like became worthless paper.
It’s the equivalent of me saying “Hey, every 1976 penny in my collection is now worth 1000 dollars”. If I can find some sucker to give me $1000 per penny because I suddenly declared that’s its value, excellent, but it’s still just a penny.
Iraq could suddenly declare again that 1 dinar is worth 1 dollar. But who is going to be foolish enough to give a dollar for a dinar that’s still, based in true valuation and market forces, really worth about a 10th of a cent? There has to be a market, meaning willing buyers, to complete the transaction. You can’t just take your 1,000,000 dinars and walk into BofA and say “Hey, can I exchange this for a million dollars?”
It is more likely that Iraq will demonetize their current currency ( making it worthless ) and issue a new currency that appears to have more of a 1 to 1 currency ratio in terms of the dollar and yen.
Here’s another way of looking at the Dinar Scam:
Let’s say a Big Mac costs $4.00 in the US. It should cost about 4,000 Dinars in Iraq based on the exchange rate.
If the President of Iraq declares that 1 Dinar is now worth 1 Dollar, do you think you’ll then be able to go buy 1000 Big Macs with that 4,000 Dinars? Not a chance. Currency is just a paper representation of value, and you can’t instantly create wealth by arbitrarily whacking a few zeros off of the dinar. That would make everyone with $848 dollars worth of Dinars in Iraq suddenly millionaires in American dollars. The Big Mac is worth exactly what the Big Mac is worth. About 4 dollars, no matter what the currency.
A better example might be:
Iraq’s primary asset is oil. Oil is at $100 dollars a barrel. That’s 118,000 Dinars. Does anyone really think that Iraq is suddenly going to start selling their oil for 100 dinar’s a barrel? Or less? That one day the President of Iraq says “Hey, the dinar is now worth 3 US dollars, so all of you with those 1,000,000 dinar notes, you can each now buy 30,000 barrels of oil?
This is just scammers preying on people who don’t understand basic economics, and that currency is just a piece of paper with no value unless it is backed by something of value by common consent. If you think your dinar is work 3 dollars, and I laugh in your face, you don’t get to buy what I have with them. McDonald’s says “Bite Me” to the President of Iraq because they still have to buy their beef patties from the US with American dollars, not magic Iraqi dinars, and OPEC isn’t going to say “Oh, okay Iraq, the rest of us are all just going to start taking a fraction of a penny on the US dollar ( or fraction of a Yen) for each barrel of oil because you decided your currency is now worth a bazillion dollars”.
I understand how people get sucked into this, and it’s almost impossible to deprogram them because they want so desperately to believe that they’ve found some magic secret to wealth. These scams come and go, but they always require the same thing: a large pool of people willing to be sold the kool-aid for 1000 times what it’s actually worth.