Monday, January 31, 2005

Buying Iraqi Dinars

I've been keeping up on my blog reading, though not necessarily my writing. On a few of these blogs that have been talking about the Iraqi elections, I have been seeing some interesting ads.

Yes, Jack looks at the ads sometimes.

One of these services advertized is "Bet On Iraq". They say that you can help the Iraqis by purchasing Iraqi dinars, and if the price goes up, you can make a lot of money.

It sounded like a good idea the way they presented it, and being that I've seen the ads on many blogs I respect, I was thinking about buying a few for more historic purposes than an investment. However, the closer I looked, the less sense it made.

You can see from the Bet On Iraq site the number of Iraqi Dinars you can buy, and how much in US Dollars it cost to buy them and have them sent to the US. So I head over to XE.com, a currency conversion site, and plugged in some numbers to get a real conversion rate.

Now I know it costs to get the money to you through Fedex from across the world, through some bad conditions, but the numbers didn't add up to my Ferengi brain. I put it all into a table below. The first column is the number of Dinars you get, the second is how much you pay for them, the third is the actual converted value according to XE.com, the fourth is "Bet On Iraqs"' gross profit before shipping and other costs. You can see for yourself the numbers. You pay almost twice in shipping and profit for the company than what it costs to buy 25,000 dinars. OK - $32 to get a package from Iraq and keep their business running, I can understand that. what I don't get is how quickly it raises with the number of Dinars you buy. Maybe it is the 'insurance' costs from FedEx. I haven't called FedEx to get a quote for shipping stuff from Iraq, but it still seems to be too high.

I also ran into this article on XE.com that talks about the various scams.

Now, i am not claiming at all that "Bet On Iraqs"' offering is a scam, I believe that if someone offers a service at a price, it is up to the consumer to look at all the facts and make an informed decision. Impulse buying on risky investments rarely pay off. I just thought I would point this out. I wonder how many bloggers would still feel comfortable advertizing this service once they see this. What do you do if the currency is 'changed' to another type, you'd have to send it back to be exchanged for the 'newer' stuff. How would this be accomplished?

Again, I'm not saying that there should be any regulations or the business should be closed down, just pointing out the numbers involved.

Dinars	Cost ($US)	Converted ($US)	Gross Profit

25000 $50.00 $17.09 $32.91
50000 $90.00 $34.18 $55.82
100000 $175.00 $68.36 $106.64
250000 $339.00 $170.91 $168.10
500000 $639.00 $341.81 $297.19
750000 $859.00 $512.72 $346.29
1000000 $1,150.00 $683.62 $466.38
2000000 $2,300.00 $1,367.24 $932.76
3000000 $3,450.00 $2,050.86 $1,399.14
4000000 $4,600.00 $2,734.48 $1,865.52
5000000 $5,750.00 $3,418.10 $2,331.90

0.00068362 Iraqi Dinars for Each US Dollar as of 1-31-05