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OT - Long Shot Investment

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Dug

01-01-2005 22:16:50

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Wanted to get your feedback on buying Iraqi Dinars as an investment. Obviously, the risks associated with this type of investment are high, however, the payoff seems to warrant the risks.

The pros on this are: 1) Iraq holds the worlds second largest oil reserve. 2) They also hold the worlds largest natural gas reserve. 3) They have tremendous ag opportunities with the Euphrates and Tigris rivers. 4) The Dinar, introduced in Oct '03 is at an all time low, currently trading at .007 Dinar to the dollar. Pre-war (late 80s) the dinar was trading at a high of 3.2 dinar to the dollar.
5) Free elections scheduled in late January.

The risks are obvious:
1) They have about 20,000 bad guys causing trouble.
2) That area of the world is prone to unrest.
3) The dinar is currently not traded via normal markets. (However, five major banks are planning to enter Iraq after the elections have finished.)

What do you guys think?

Dug

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Mark - IN.

01-02-2005 19:45:01

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Re: OT - Long Shot Investment in reply to Dug, 01-01-2005 22:16:50

Some years ago when did phones at a major exchange floor in Chicago, had a neighbor that was a security officer on the same trading floor. Security officers were some of the lowest paid employees there, but the guy got to know some brokers. One day in the late eighties or early nineties I saw the guy leaving for work to secure brokers and the exchange's interests, and the next time I saw him, he was coming home in a stretch limo to pickup his family (parents, sister, whomever else). I asked the guy what in the world? He got a tip from a broker that Mexico's state run telephone company (TelMex or MexTel or something like that on Nasdaq) was going public the next day, and talked him into investing his life's savings, like $5,000. Yep, it went public alright, opened at a penny or two a share, and closed at about $1.10 a share the first day. Never know how these things are going to turn out. And, the guy and his family were of middle-eastern descent, and maybe went back home and bought a bunch of oil wells in Iraq that got blownup years later too - I don't know, never saw him again after that day. Yep, never know how these things might turn out.

Mark

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Movie Fanatic

01-02-2005 12:29:23

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Re: OT - Long Shot Investment in reply to Dug, 01-01-2005 22:16:50

I don't know about investing but there was a great movie once called "GUESS WHO'S COMING FOR DINAR" ... maybe rent the video and then you can make a decision whether you want to invest or not.

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Rauville

01-02-2005 09:58:57

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Re: OT - Long Shot Investment in reply to Dug, 01-01-2005 22:16:50

My thinking is that you might as well invest your money in the Baghdad Pork Sausage Factory...you would see as much return!
There is a reason that their currency is trading at an all-time low...no one has faith in a plan that could just as easily end in disaster.
But use your own judgment.

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kyhayman

01-02-2005 09:46:24

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Re: OT - Long Shot Investment in reply to Dug, 01-01-2005 22:16:50

If you have 2 or 3 thousand that you wouldnt mind risking a total loss on it seems like a decent speculation. I'd personally rather see you speculate on other currencies in the futures market (or another commodoty). The dollar is trading at an all time low against the Euro. A futures option on Euros or Yen (or any other currency in a stable currency) has as much potential reward with a lot less risk. For that matter (options on oil would reflect the Iraq economy without the risk). If you think Iraq is going to get straightened out in say 6 months then why not sell a crude oil futures contract or a gasoline futures contract for June delivery. If the price drops (which it should as the markets account for the Iraqi oil fields coming back online) then exercise your option and buy back at the lower price. If crude rises, simply let the option expire.

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Dug

01-02-2005 18:04:11

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Re: OT - Long Shot Investment in reply to kyhayman, 01-02-2005 09:46:24

Kyhayman,

I appreciate the informative response you provided. I agree the future options on crude offer a tremendous opportunity without the added risks. I may have to think about that a little more...

Dug

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Griff in Ont.

01-02-2005 13:32:47

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Re: OT - Long Shot Investment in reply to kyhayman, 01-02-2005 09:46:24

Why risk 2-3 grand, when you could buy a nice tractor for that price!!

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Dug

01-02-2005 18:08:45

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Re: OT - Long Shot Investment in reply to Griff in Ont., 01-02-2005 13:32:47

Already have a tractor and it cost aheckuva alot more than $2-3k! However, I could use a new loader...

Dug

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kyhayman

01-02-2005 16:59:27

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Re: OT - Long Shot Investment in reply to Griff in Ont., 01-02-2005 13:32:47

Thats true, though most tractors I have gotten for that price have become money pits.

I have a partner that I normally invest with in things like futures contracts. He really really wanted me to buy crude oil futures at $36.00. I say no way, OPEC's target is $30.00, it will come down. Hah, 2 months later it was at $48.00. That would have made us $31,000 each on a $1600 futures option. That buys me 2 tractors of the range I want.

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DCM

01-01-2005 23:25:55

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Re: OT - Long Shot Investment in reply to Dug, 01-01-2005 22:16:50

Too many heavey negatives for what I think is a long term deal.If it was my $$$$ I would look at gold certificates and or stock in banks or utilities.Its what I think anyway.Dan in AB

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Dug

01-02-2005 18:15:22

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Re: OT - Long Shot Investment in reply to DCM, 01-01-2005 23:25:55

I agree the negatives are tremendous, almost staggering when you really think about all the turmoil in that part of the world. However, along with risk comes reward, or the potential for it. At the current rate of the Dinar, a small move would be a tremendous gain especially with the dollars value down.

Dug

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Sid

01-01-2005 22:37:19

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Re: OT - Long Shot Investment in reply to Dug, 01-01-2005 22:16:50

When I take my wife out and buy her dinar it usually has a quick short term return on my money. She has been with me thirty five years so I guess I am seeing some long term benifits as well.

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UncleTom

01-02-2005 04:32:33

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Re: OT - Long Shot Investment in reply to Sid, 01-01-2005 22:37:19

Thats funny sid lol. I know a marine that came back from iraq and lots of dinar was laying in the street. He brought back a big handful.

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Sid

01-02-2005 10:35:39

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Re: OT - Long Shot Investment in reply to UncleTom, 01-02-2005 04:32:33

Uncle Tom please shake that marines hand for me?

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dr.sportster

01-02-2005 06:50:20

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Re: OT - Long Shot Investment in reply to UncleTom, 01-02-2005 04:32:33

Are you nuts.Buy American and invest in America.You would be throwing that money away when Iraq ends up in civil war then splits into three different countries.

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Dug

01-02-2005 18:31:08

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Re: OT - Long Shot Investment in reply to dr.sportster, 01-02-2005 06:50:20

If you think about it, America is building Iraq into a new country. Granted, it will never be the type of Republic we enjoy, however, it may very well become "the" capitalistic force in the middle east. Yea, I know about all the negatives, but I also see the possibilities!

Dug

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Mark - IN.

01-02-2005 19:57:34

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Re: OT - Long Shot Investment in reply to Dug, 01-02-2005 18:31:08

Didn't same thing happen in Iran under the Shaw? We built the country, the Shaw was thrown out years later, one of them turbin headed guys that wore black (drawing a blank on his name now) took over, took our embassey and fellow citizens hostage, froze all "American assets", turning them into big business losses? Come to think of it, didn't that same turbin headed guy (some meanie guys that's dead now) release the hostages like the day before Ronald Reagan was inaugarated President? Kind of figured he and his magic carpet's days were numbered? Never did give back the assets though. Is a gamble.

Mark

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Harley

01-02-2005 15:10:34

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Re: OT - Long Shot Investment in reply to dr.sportster, 01-02-2005 06:50:20

I'd leave the dinars for the camel jockeys. My son is over there and he says they need the toilet paper more than you do. Later, Harley

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Jay (ND)

01-02-2005 15:16:20

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Re: OT - Long Shot Investment in reply to Harley, 01-02-2005 15:10:34

Toilet paper? Things have certainly gotten lush over there - before it was wipe with your left hand, eat with your right.

Personally - If I was looking for a devalued currency to invest in, I would maybe think in investing in weak dollar.

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