Monday, October 1, 2007

Shoebox FOREX - The Iraqi Dinar and Vietnam Dong

The FOREX market, otherwise known as the foreign exchange market, lies in the intangible world of ones and zeros that flow over the internet between thousands of computers 24 hours a day, 5 days a week. There is no brick and mortar location for this market like the New York Stock Exchange. There is no regulation. This is the international market of currency exchange where changes in one-hundredth of penny can equate to thousands of dollars for some investors. It is the wild west of investing.

Until this past decade this market has remained in the hands of central banks, international firms, large commercial banks & corporations, hedge funds, and the wealthiest of individuals. Only recently has the internet allowed it be accessible to the average person and with it, the ability to double or wipe out your account in a matter of minutes. How is this possible? Leverage. Unlike a traditional margin account, with a stock broker for instance, where one will get 2:1 leverage, FOREX brokers have accounts available with 100:1, 200:1, even 400:1 leverage. This makes a change in one-hundredth of a penny that much more powerful.

But some people aren't using leverage in their desire to make big gains in the FOREX market. In fact they aren't even using the internet or a computer. A simple shoebox under the bed will suffice and the cash in their bank accounts. These unique individuals are buying up hundreds-of-thousands, even millions in currency weak against the dollar and simply sitting on it.

One of the more popular is the Iraqi dinar. The War on Terror has put the spotlight on the country. Hundreds of online dealers and over a thousand auctions on eBay peddle Iraq's new currency (issued 10/2003) citing the currency could behave like the Kuwaiti dinar after the Gulf War appreciating over 3000%. With the current exchange rate of 1235:1 people don't need money leverage to get a return on this currency. It's up 18% since November of 2006 and over 125% since it's release into circulation despite the turmoil in the war torn country.

The action in Iraq has started to bring light to the potential opportunity in the Vietnamese dong. The dong is the weakest currency in circulation hovering near 16,000:1. Over a decade of depreciation has brought the dong to its current level. Yet Vietnam is the second fastest growing economy following China. Unlike the uncertainty which surrounds Iraq, Vietnam is seeing increased foreign direct investment, good business growth and excellent economic news on a consistent basis. Quite possibly the only thing keeping the currency's valuation at its current levels is Vietnams desire to keep the price on exports low.

Some businesses like the Massachusetts based Web Ownership Group offer both currencies. The founder believes they are both potentially good long-term investments. Only time will tell in this interesting twist in currency investing.

Nolan Robidoux is a business owner and technical FOREX trader who was recently exposed to the dinar and dong. He provides both currencies at his sites: and