Bullish on Iraq:
Average Joes Place
Bets on the Dinar
Mr. Burbank Sells Stacks
To American Amateurs;
Early Snafu at Customs
By CRAIG KARMIN
Staff Reporter of THE WALL STREET JOURNAL
April 23, 2004; Page A1
CORONADO, Calif. -- On a cool January evening, John Rodinec approached
cafe, looking for a man with a manila envelope bulging with cash.
He handed over a personal check for $2,000. Bill Burbank gave him the
It contained one million freshly minted Iraqi dinar, the currency that
the one bearing the likeness of Saddam Hussein.
"It feels strange buying foreign money from a guy at Starbucks," says
a disc jockey and music-equipment salesman.
Plenty of amateur investors -- policemen, construction workers, a
a college student -- are taking the dinar plunge. As tension rises in
people are making a bet most professional currency traders wouldn't
that the dinar will appreciate.
Mr. Rodinec and hundreds of others, Mr. Burbank is the dinar man. A
former Navy SEAL with a middle linebacker's physique, Mr. Burbank says
sold more than $500,000 in dinar since he started his business in
recent violence in Iraq caused the currency's value to fall modestly
hurt sales, he adds.
"I never thought of myself as a currency trader," says Mr. Burbank, who
works three days a week as a fireman in San Diego. "But I called the
people I know -- a corporate lawyer, a Wall Street guy -- and they said
Today, he sells dinar on his Web site, Daystartrading.com. Prices are
depending on the size of the order and whether payment is in cash or
Mr. Burbank generally hands over about 500 dinar in exchange for one
He gets his dinars from three Middle Eastern suppliers, who give Mr.
a rate of about 950 dinar to the dollar. (In Baghdad, the standard rate
1,430 dinar to the dollar.)
This means Mr. Burbank is getting nearly two dollars for every one that
although his final profit is smaller because of the cost of
dinar to the U.S. and advertising in newspapers and on the Internet.
Mr. Burbank tells customers that the Saddam-era dinar traded at three
dollar before U.S. troops invaded last year and was valued at more than
sanctions were imposed in 1990. "It is now legal for Americans to own
this 100-year low price," his Web site proclaims.
Century-old comparisons don't necessarily make sense when a country has
a violent regime change. The six-month-old currency has no official
the Middle East and a new Iraqi government could decide to invalidate
While Kuwait's dinar rallied after Iraqi troops were expelled in 1991,
of other war-torn countries isn't encouraging. Italy's lira went from
to $1 before the war to 620 to $1 by 1950. The lira kept losing value
decades before it was replaced by the euro in 1999.
"I think it's not even a good speculative play," Marc Chandler, chief
strategist at HSBC Bank USA, says of buying dinar.
While Iraq's central bank is on the verge of approving three foreign
offer financial services such as foreign exchange, Mr. Burbank and
already hawking dinar to investors over the Internet. The U.S. Treasury
says the trade is legal.
Mr. Burbank's interest began last year when he bought 1.25 million
$3,000 on eBay. He struck up a relationship with the Jordanian who
the new currency and began buying directly from him.
Several competitors have sprung up in recent weeks, outfits with names
dinarsforless.com and IraqDinarInvestment.com. Some post photos of the
The red-tinged 25,000 dinar note features a Kurdish farmer on the front
drawing of Hammurabi, ruler of Babylon from around 1792 to 1750 B.C.,
Like Mr. Burbank's site, his rivals' Web pages are filled with
clippings about Iraqi job creation and the development of Baghdad's
markets. Several also include press releases from the Coalition
Iraq's temporary governing body, that paint a sunnier picture than
the mainstream media.
The Dinar Trading Company Web site links to the White House's site,
a bullish forecast for the currency. "As oil exports increase and more
are invested in Iraqi goods and services," Hugh Tant III, the
man on Iraqi currency, wrote last fall, "it is expected that the new
will appreciate in value over the long-term."
Now back in Mt. Pleasant, S.C., where he is a senior vice president at
Community Bank, Mr. Tant says the currency's value, as measured by the
Iraqi central-bank auctions, has already gone up more than 35% since
Len a 29-year-old dinar multimillionaire who works in
in Potomac, Md., says that at 2/10 of a penny, "there's no way" the
lose any more value.
"I've got enough so that if it goes up to a nickel, I'm a millionaire,"
John Meeks, a 50-year-old mortgage broker in Mission Viejo, Calif.,
20 million dinar.
Mr. Burbank is one of the biggest dinar investors. He started the
a way to fund his own big bet on the Iraqi currency. He says he's
million dinar at a cost of nearly $90,000 and continues to plow as much
profits as he can into the currency, believing that as the country gets
and oil starts freely flowing, a big currency rally awaits.
Mr. Burbank met last week in Coronado with Lew Knopp, another former
Mr. Knopp, solidly built in a blue suit with wraparound black
a company that provides security for corporate executives. He also
Mr. Burbank as the result of a bad experience Mr. Burbank says he had
start of his business. A 35 million-dinar shipment in four bags was
by customs officials in another Middle Eastern country. The bags
arrived a few
days later, short five million dinar each -- for a total loss of 20
Mr. Burbank says.
Since then, Mr. Knopp and his employees have been flying to Jordan to
the currency bundles personally. One trip can cost Mr. Burbank more
Mr. Burbank says it isn't any problem getting the cash through U.S.
long as he makes the declaration required by U.S. law.
After chatting with Mr. Knopp about the next expedition, Mr. Burbank
the UPS store to check his postbox. There he found a check for $2,000
prospective dinar investor in Chicago and another for $10,000 from
Not a bad take for one day. But Mr. Burbank believes his business has
date of sometime this year. Once foreign banks start making a market in
he figures, there will be no need for Web sites such as his. "Then
be able to do it electronically," he predicts. "And it will be just
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