FOREX

Starry-eyed investors take to the Web, but the scammers have beaten them there—and neither is eager to give up the dream of getting rich off the Iraqi dinar.

John Jagerson is on a lonely quest to debunk the Iraqi dinar scam, but it's not easy these days.

The investment analyst first posted comprehensive stories on his site in 2009— which have since replayed at MoneyShow.com and elsewhere—that clearly explain why the Iraqi currency is not likely to dramatically increase in value once the country stabilizes.

In fact, he points out, recent history suggests the dinar could lose value against the dollar. Look at Venezuela, Turkey, and Mexico, whose currencies weakened when the economy strengthened, or the Kuwaiti dinar, which did not strengthen in the early ‘90’s as sellers now suggest, and later even plummeted.

Jagerson is a bona fide expert, and he’s done his homework. His argument seems incontrovertible, if only for the reason that any opportunity that promises a high return at low risk should be suspect anyway.

Which is why the reaction he gets from readers is so mystifying. Even at savvy investing sites, the tone of the feedback largely amounts to one of indignation: Angry comments and flaming e-mails from people who have already bought dinars, or who have read enough on the Internet to know that they want to.

“I still can’t explain why I get so many negative e-mails from investors,” Jagerson says. “I think it’s that people don’t like having their dream challenged.”

Jagerson is hardly alone in his frustration. Financial experts and consumer watchdogs say the job of debunking financial myths has become astoundingly difficult in the Web 2.0 era, where search is king, algorithm trumps fact, and a vocal minority can tweet, blog, and comment to millions from the Internet rooftop.

The result: By the time an investor finally does stumble upon a credible source, his dreams have had an awfully long time to marinate in a bad idea.

“We’re having to disabuse them of these notions,” says Richard Jaramillo, an examiner with the Utah Division of Securities, who’s been fighting the Iraqi dinar myth for years. “It’s much tougher for them to understand the risks if you can’t even get them to believe what you’re saying.”

Good Info Is Hard to Find

Ryan Thorpe is not naive. The 26-year-old Iraqi war veteran is studying to become a mechanical engineer and works as a quality-control specialist in the Houston oil industry. When a fellow soldier gave him $300 in Iraqi dinar several years ago, he remained skeptical.

He didn’t believe, as some of his colleagues did, that his little stack of paper could suddenly be worth tens or even hundreds of thousands of dollars after some magic Iraqi currency revaluation.

Back home and curious, he decided to do his own “objective” research, and that’s when things got confusing. Thorpe, like many people, doesn’t have a personal financial advisor. But he’s young, smart, and comfortable online. Here’s what he found:

  • A simple search of “iraqi” and “dinar” returns dozens of different “informational” sites on buying and selling the dinar. However, three-quarters of the top results—those on the first four pages—are actually links to private companies that sell the dinar.

  • The sites provide links to news stories that back the prognosis: The Iraqi economy is destined for growth. It’s “The sleeper investment of the decade,” headlines BetOnIraq.com, “because liberty breeds prosperity.”

  • Self-described experts pass on “inside information” speculating on when the dinar will revalue. “They really stir up a buying frenzy,” says Thorpe.

  • Sites seem to offer consumer protection—with advice on how to avoid counterfeit bills, and information on various investment options. They point out that they are certified with the US Treasury Department and are a member of the Better Business Bureau.

  • The sites presume only high profits. One of the high rankers, dinartrade.com, displays payout options on an $833 investment today of between $10,000 and $1 million. “Picture Iraq as a company selling stock. Each dinar you purchase represents a share in Iraq ’s bright future,” the site reads. “Iraq 's economy can only improve. The dinar will appreciate in value as the oil-driven economy booms.”

  • Aside from a recent brief in USA Today and Jagerson’s article, none of the first 40 page links even raises the notion that the dinar investment may rest on a flawed premise.

“I can’t see what’s not persuasive about it,” says Thorpe, who decided to start searching for dinar-investment stories within news sites instead, but came up dry.

“Finding real news and credible sources is almost impossible,” he says. “So first-time investors go out there and they see all this and think, ‘Well, of course it’s going to happen.’”

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