If you are among the thousands of people who have bought Iraqi Dinar in the hope of making a big profit, you may now be wondering what options exist to liquidate your Dinar holdings.
The dream of investing in Iraqi dinars has been around for almost a decade. The dream is promoted by a series of websites that sell Iraqi currency – that is, actual physical packets of currency – to “investors” via mail order. The websites sales pitch goes like this: “Before the 1990 Gulf War, 1 million dinars was worth $3,200,000 USD; today you can buy 1 million dinars for only $1,150.00 USD.” As Iraq’s economy improves, the dinar is likely to appreciate. If the appreciation is close to the pre-war exchange rate, today’s small cash outlay could net millions for those smart enough to jump in now. Iraq’s vast oil resources, well-educated population, and guaranteed rebuilding aid from the United States make buying Iraqi dinars almost a safe bet.”
This reasoning has proven convincing to thousands of people who jumped in and bought Iraqi currency.
But people who buy Iraqi dinars are not buying an actively traded and liquid investment; rather they are buying a numismatic “collector’s item” that has very high transaction costs. For example, today you can expect to pay around $1,150 USD for 1,000,000 Iraqi Dinar (IQD) currency from online dealers. The same 1,000,000 Iraqi dinars has an official exchange rate value of just $854 USD, a hefty 30% markup. Traders justify this margin by pointing to the high costs of transportation and custody of currency packages.
Similarly, if you hold Iraqi currency and have decided to convert your dinar back into US dollars, your options are limited and expensive. The One Dinar website makes the following notable disclosure on its Q&A page in fine print: Until markets for the resale of Iraqi dinars develop, it may be difficult for you to liquidate your Iraqi dinars or exchange them for US dollars.
One option is to sell the coin to a Dinar dealer. Typically, online dinar dealers who advertise selling 1,000,000 Iraqi dinars for $1,110 are willing to pay $800 to repurchase the same 1,000,000 Iraqi dinars. In other words, when you take the Dinar off the lot, it is instantly worth 32% less in the eyes of the dealer who just sold it to you. Selling Dinar to a dealer is the option that has the highest transaction cost but the least amount of hassle.
A second option is to sell your holdings on eBay. With eBay, transaction costs should be 10% or less (meaning you could pocket $1,000 if your 1,000,000 IQD can fetch $1,100). (This eBay fee calculator will give you a good idea of your transaction costs.) However, for the newcomer, eBay can be intimidating and involve a substantial learning curve. You should also keep in mind that eBay has a very active community of Iraqi Dinar traders with whom you will be competing directly.
A third option is to sell your dinar holdings on Craigslist. Craigslist is free, easy to use, and very effective for selling items. However, the audience is mostly local and the number of listings for IQD is relatively small, even in the larger Craigslist communities.
The dream of the Iraqi dinar may one day become a reality for those investors willing to buy and hold dinars for the long term. But people looking to liquidate their dinar holdings today will likely suffer a significant loss on their “investment.”