Oct 2, 2011 | Volume 11, Issue 5
Iraqi Dinars Are Bad News, But Good News Is Out There
by Trader Ed

Some questions I receive make me really ponder the reason for the question. A true case-in-point is the one below. I have to wonder why the reader wants to know anything about the Iraqi dinar. After all, we are talking about a country that is still to a degree in a civil war. We are talking about a country ... Continue Reading Below

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... that is barely holding onto a governmental structure. We are talking about a country still rebuilding infrastructure destroyed from years of bombing and war. We are talking about a country sitting in the Middle East, a hotbed of unrest and civil disorder.

Will the Iraqi dinar have real value soon?

Okay, I have thought about this question and I can come up with only one reason the reader, or anyone outside of Iraq for that matter, actually cares about the dinar. Somebody is selling something that just ain’t gonna happen, and with just a couple of minutes on the Internet, I found the scam …

Advertisements in local newspapers promise great wealth by purchasing the new Iraqi dinar. Promoters explain that as democracy comes to Iraq, the expected peace will stimulate the Iraqi economy and the value of the dinar. What investors are not told is the dinars can be redeemed only in Iraq and that the sellers already have doubled their money. Thus, the dinar would have to more than double in value and you would have to take a trip to Iraq to collect any profit.

In the future, it is possible the world’s second largest oil producer could become stable and prosperous. The future, though, is a pretty big place, and there is a lot of time between then and now. So, my answer to the reader’s question is: the Iraqi dinar will not have any real value anytime soon.

Some good news on the economic front came out this week. U.S. businesses stepped up orders for capital goods in August. In my book, this is a sign the economy is not as bad as many claim.

The Commerce Department said on Wednesday that non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, increased 1.1 percent after falling 0.2 percent in July. That was well above economists' expectations for a 0.3 percent rise and suggested that businesses, sitting on about $2 trillion in cash, had not responded to the recent financial market volatility by curtailing investment. The solid rise in investment spending, which was accompanied by a 2.8 percent rise in shipments of capital goods, prompted some economists to raise forecasts for third-quarter economic growth.

And still more good economic news, news that supports my contention that consumers will pick up spending as gasoline prices drop this fall. You see, the sky is not falling, really …

Oil is sliding after the government reported weak fuel demand in the U.S. and an unexpectedly large increase in supply.

Trade in the day – Invest in your life …

Ask Ed a Question



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About the Author

I live on a small ranch on the beautiful Central California coast. I am a writer by trade and a trader by choice. I ride horses, play tournament poker, and spend a majority of my "down" time sitting outside in my anti-gravity chair, listening to the birds, watching my horses, and letting my mind drift to the softer corners of everyday life.

Aside from the above, I also spend time writing this columnm, which to me is fun, edifying, and enlightening. In a former life, I mediated disputes between people who had real animosity toward one another. The aspect of mediation I truly enjoyed was helping people help themselves become better people. My goal is here is to help you help yourself become a better trader.

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