As we continue down this very confusing investment path, I've found certain individuals to be solid in their understanding of specific topics. I am doing my best to bring them, their words, and their collective wisdom to you through this weekly newsletter. I hope in time this site, and the collective body-of-work that encompasses all my newsletter publications, will become a tremendous source of reference information for all to access freely and liberally. I know I can trust the individuals who I ask to contribute here each week. Unfortunately, I can't say that about all that is posted elsewhere on the subject of the Iraqi Dinar.
Go Truth... Go Education... Go Instruction... Go Dinar!
The Roth “Solo” 401(K)
By David Kauwe
Purchasing Dinar in a Roth IRA is an excellent way to save for retirement, and get all the appreciation at RV completely TAX-FREE!
But, what if you don’t qualify for the traditional Roth IRA because you make too much money?
Are you self-employed and own a small business?
Do you want to put more into your retirement?
If you had a “Roth-type” retirement plan that allowed you to purchase Dinar in it, would you be interested?
- What if you were under the age of 50, but still allowed you to put as much as $49,000 a year into it?
- Or, what if you were over the age of 50, and were able to put up to $54,500 a year into it?
Meet the Roth “Solo” 401(K)! Where did this come from? In 2006, Congress “merged” the Roth IRA with the Solo 401(K) to create this very unique retirement tool.
The Roth “Solo” 401(K) boasts the benefits of BOTH the Roth IRA and the Solo 401(K)! That which comes from the Roth-IRA is that you can contribute after-tax dollars, and all the principle and interest-earned comes out totally tax free when you meet the “Qualified Distribution Rules”, those being that it is held for a minimum of 5 years, and you’re at least 59 ½ years old at the time of distribution. The benefits adding to this retirement plan that come from a Solo 401(K) include being able to contribute the larger amounts discussed above, and being allowed to borrow from your plan.
Definitely, this is one you will want to find out about IF:
- You are a sole proprietor with no employees other than your spouse or partner(s) who’s only employees are self-employed partners and their spouses. The plan trustee and administrator of the plan is simply the business owner, their spouse or a partner.
- You are looking for the largest potential contribution for a business without employees.
- You want the capability of borrowing from your plan.
- You want to purchase leveraged real estate in your plan, and wish to avoid UBIT (Unrelated Business Income Tax).
Mahalo & Go RV!
David A. Kauwe CLU ChFC LUTCF is the Owner of Triangle Estate Planners located in Durham, NC. He can be reached at firstname.lastname@example.org or at (919) 698-8832 cell.
“The Trifecta Theory”
Hello all, and thank you for your recent comments regarding “The Trifecta”.
The world is being squeezed economically and the trade imbalances between the east and west have reached a boiling point. Currencies worldwide are being re-evaluated to combat this imbalance, but the debt in Europe and United States are far too great to overcome without dramatic changes. Hence, the birth of “The Trifecta Theory”.
The United States debt and unfunded liabilities have exceeded $80 Trillion USD’s and the government is on the verge of shutting down because the debt limit has been reached. At the same time, China has been closing the enormous worldwide oil deals to satiate their thirst for oil. Their consumption is doubling every three years and they will do whatever it takes to ensure their country’s success.
The leverage point is Iraq and the Middle East. Iraq has been primarily an asset of the US, but the sweet, inexpensive crude from the Middle East is exactly what China desires. China can’t make the necessary moves in Iraq without US consent. Again, “The Trifecta Theory” begins!!!
In the next post, we’ll be looking at the “Curve Ball, and the continued use of Petro-Dollars. Thank you once again for your recent comments. I look forward to chatting with you all soon!
Estimating the "True" IQD Rate
I want to talk about numbers, and maybe give you enough tools and information for you to come up with your own opinion. Dinar Daddy and I have been on a quest of self-education on the Dinar investment, so I am going to give you a few numbers, and then other factors to look at. And in doing so, my hope is to give you a base of enough information that you can become even more confident in your own decisions and opinions.
Iraq Reserve = $56 billion (actual reserve holdings in USD) x 6 (fractional reserve banking) = 336 billion (this is how much they can loan out using “fractional banking” on $56 billion)
M1 = 15 trillion Dinar (original amount already in circulation that was replaced)
M2 = 15 trillion Dinar (new installment of Dinar in addition to the M1 when the new IQD currency was introduced shortly after the war.)
M1 + M2 = 30 trillion Dinar
The CBI reported in 2010 that they had taken about 70% of Dinar off the market (Some have reported since that the real number is as high as 85%)
30 trillion Dinar – 21 trillion Dinar (30 trillion x 70% = 21 trillion) = 9 trillion Dinar (this is what is remaining in circulation conservatively speaking). Using the information above, with the 9 trillion Dinar remaining in circulation, it is estimated by world-renown economists that .13 cents is the estimated baseline value of the Dinar. This is strictly based on the current reserve, and on amount of outstanding Dinar in circulation (9 trillion), and NOTHING ELSE.
Knowing that .13 cents is the baseline value of the IQD, we can now expand our formula to include all of the other items within the economy that help formulate the true value of Iraq’s currency.
Here’s where you get to fill in the blanks, and take a different view at things. This information should help you to do your own research, and assist you when coming up with your own valuation calculations and formulas:
- DFI (Development Fund for Iraq) = $180 billion (USD)
- Oil reserve + futures
- Natural Gas + futures
- Gold + futures
- Agriculture + futures
As you can see by adding the numbers to the .13 cents the value of our investment is fantastic!
I’m presenting to you that, by law, Iraq must have 15% of whatever the rate is, backed up within their reserves and economic holdings. So, when adding up all the extra items above, you can add (potentially) 85% more on the value of the Dinar. This will give you a range on what COULD be done just on value alone.
Finally, I’d like to add one more scenario to the potential value of the Iraqi Dinar, and it is called “intervention”. This means that a host, a sponsor country, or a block of sponsor countries can help back up Iraq’s guarantee and add value to its currency.
I’ve included a report below many readers have seen before that factors almost all that I shared above. This report was put together by the IMF, the UN, and Baghdad University. In conjunction with the Ministry of Planning, the top economists I talk to all use this report in number crunching. It is the most up-to-date and valid report we have to go by on our investment.
Since the time this report was released, oil has gone up in price, more Dinar was taken off the market, and even more oil fields have been discovered and zoned… YOU DO THE MATH!Here's the article I referenced above...
The Exchange Rate of Foreign Currency in Economic Feasibility Studies
Below are the central controls related to the exchange rate of the foreign currency to convert the project inputs and outputs from foreign currency to its equivalent in the local currency, and that is by calculating the net discounted present value standard and the internal return on investments in economic analysis that governs investment projects that costs excess one million dinars.
Estimate the shadow price of foreign currency:
1. It is necessary to put central controls to amend the official exchange rate * to reflect the shadow price of the foreign currency, and that is considered one of the necessary requirements to implement the net discounted present value standard and the internal return rate on investment in the economic calculation stated in the instructions, paragraph nine.
The central controls for adjusting market prices distinguished a group of outputs and inputs traded internationally, where the projects production or usage of them is reflected on the abundance of foreign currency in the economy and thus project outputs or inputs used of such are considered purely foreign currency outputs or inputs.
|* What is meant by exchange rate: the number of units of foreign currency, expressed in dollar per one dinar.
In particular the following outputs and inputs of foreign currency were distinguished:
2. Justifications for exchange-rate adjustment: there are a number of important and powerful arguments which support the view that the official exchange rate reduces the real value of foreign currency for purposes of calculating the economic national profitability for investment projects and hence for the purposes of investment planning. It is demonstrated in this context to call for assessing the dinar for less than (3.208) dollar (official exchange rate) when assessing project outputs and inputs of traded goods of exports, substitute imports and imports… etc.
The justifications to call for the use of an exchange rate that is lower than the official exchange rate are:
- The use of an exchange rate that is lower than the official rate is the appropriate action at the investment planning level to translate the country’s economic strategy aiming at stimulating central investments in the sectors that encourage the development of non-oil exports, as well as sectors that encourage the expansion of domestic production base in order to reduce imports and compensate it with local commodities. This helps to reduce reliance on foreign exchange earnings from crude oil exports and increases the share of non-oil sectors in the local production.
- The application of the amended exchange rate on project imported inputs will assist in directing investments away from aggregated sectors dependent on imported inputs and the preference of those sectors that rely on locally produced inputs.
- The use of the amended exchange rate helps to correct the balance in favor of the traded goods sectors compared to non-traded goods.
- The real exchange rate has declined rapidly since the early seventies, through rapid rise of the level of prices and local costs which led by the steadiness of the official exchange rate to change in prices and actual local rate costs that gave an advantage for imported goods at the expense of locally produced goods, meaning that it led to deterioration of the competitiveness of alternative replacement goods and export commodities.
This action shows that the official exchange rate overestimates the value of the dinar, compared to the foreign currency and from the promoting goods substituting imports and export commodities point of view of.And in support to this view is the state’s utilization and in a broad approach to the customs and quantitative protection policies especially for consumer goods, as well as export subsidies that exports have through an amended export exchange rate.
3. Estimate the amended exchange rate of the Iraqi dinar to be used in technical and economical feasibility studies and for (1.134) dollar per dinar. This price should be approved for 3 years until re-appreciation by the competent authorities.
Crude Oil Futures
FuturesPros.com: Weekly Review for March 14-18
2011-03-20 13:37:47 GMT (Futures Pros)
Futures Pros – Last week saw crude oil prices retreat from a six-day high on Friday after Libya declared a cease-fire, however prices were supported amid fears that turmoil would spread to Saudi Arabia, the world’s largest oil exporter.
On the New York Mercantile Exchange, light sweet crude futures for delivery in April traded at USD101.31 a barrel by close of trade on Friday, gaining 1.05% over the week.
Crude oil prices rose to USD103.63 on Friday after the United Nations Security Council's approved "all necessary measures" to impose a no-fly zone over Libya. However, prices retreated after the country’s Deputy Foreign Minister Khaled Kaaim said the regime was ready to negotiate a cease-fire.
On Thursday, crude futures jumped 3.3% after Iran recalled its ambassador from Bahrain to protest the government’s crackdown on Shiite demonstrators as well as the arrest of six Shiite activists.
The arrests came a day after the country declared a three-month state of emergency and after troops from Saudi Arabia moved into Bahrain to support its government.
Global financial service provider Deutsche Bank said in a report on Thursday that, “The geopolitical backdrop of the oil market remains highly charged and is likely to support prices at elevated levels.”
Saudi Arabia is the largest exporter among OPEC members and produces approximately 8.4 million barrels of oil a day, while Iran, the second biggest OPEC exporter, produces approximately 3.7 million barrels of oil a day.
Earlier in the week, crude prices plunged 3.8% on Tuesday on concern demand from Japan would decline in the wake of the March 11 9.0-magnitude earthquake and tsunami and subsequent nuclear crisis it triggered.
Japan is the world’s third largest oil consumer, after the U.S. and China, and it accounted for approximately 4.42 million barrels of crude oil a day in 2010, according to the International Energy Agency.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for May delivery traded at USD114.16 a barrel by close of trade, adding 0.35% over the week and up USD12.85 on its U.S. counterpart.
Global financial service provider Credit Suisse raised its Brent price forecast for 2011 by 19.6% to USD105.80, compared to a previous estimate of USD85 a barrel, citing the threat of more output disruptions in the Middle East. It raised its 2012 estimate by 18% to USD100.50 a barrel from USD83.