May 192016
 

Triple Digit Returns on Currency Investment

There are lots of ways¬†to make money in the world. It’s up to us investors to find them. ūüėČ A couple of years ago I blogged about my investment in Zimbabwean dollars. I purchased¬†some¬†uncirculated¬†$100 trillion Zimbabwean banknotes¬†on the internet and paid¬†CAD $5¬†for each one. ūüôā

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Back then I even made a prediction¬†that these notes would be worth $25 each in 2016. Boy was I wrong, lol. It’s now been about 3 years since I purchased my¬†investment. Here are some recent¬†ones that actually sold on eBay within the last day!

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Holy mackerel! ūüėÄ Each of my Zimbabwean banknotes is¬†worth over CAD $60 today. That’s at least¬†1,200% return on investment in just 3 short years. Financial independence – here I come! ūüėÄ If the people who¬†read my previous blog post purchased 15 or 20¬†of these notes, then they could sell their investments today and be thousandaires! ūüôā

Due to runaway hyperinflation what you can buy for a Zimbabwean dollar these days is absolute non-cents. Around the year 2000 the government enacted a policy to redistribute land and resources. Foreign capital stopped flowing into the country. As a result the Reserve Bank of Zimbabwe printed huge amounts of money to pay for labor and services. The¬†value of the Zimbabwean dollar dropped due to an oversupply of currency and prices began to rise. By 2008 prices of food and other goods were literally doubling every 24 hours! At its highest point the annual inflation rate was 230,000,000%. Savers were wiped out. And businesses didn’t know how much to pay their employees or charge customers because there was no price stability, including for labor. All this turmoil caused the country’s GDP to fall 18% in¬†2008. By 2011, about¬†72% of the country’s population lived below the poverty line.¬†If the¬†first president of Zimbabwe, President Banana, was still alive today, he would probably be very upset by all damage his successors have done to the¬†nation’s economy.¬†(yes, that’s his real name)

The Zimbabwe currency was abandoned by most people in 2009. Since then the country has stopped printing the currency, and consumers have been using the U.S. dollar and the South African Rand to conduct financial transactions. Last year the government decommissioned the Zimbabwean dollar completely and anyone who still had some could exchange it for American dollars at the official exchange rate set by the government: $1 USD = $35,000,000,000,000,000 ZWD, lol.

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Jan 072014
 

Last year I wrote a post about how to¬†invest in foreign currencies and how I personally bought a lot of U.S. dollars and Chinese¬†Yuan. Luckily those decisions are already paying off ūüôā $USD gained against $CAD in 2013, and the Yuan is now trading higher than when I bought it. Don’t worry if you didn’t pull the trigger last year because today I will tell you about another investment opportunity in the currency markets. It is the Zimbabwean dollar ūüėÄ

14-01-cheapmoneyzwdA long time reader recently asked me about it, so I thought I’d share my views. Initially the Zimbabwean dollar was worth more than the U.S. dollar at¬†1 ZWD = 1.47 USD¬†in 1980.¬†But the $ZWD quickly began to lose its value. Inflation rose to 32% annually by 1998. Hyperinflation was out of control by 2008 at 11,200,000% annually, Ay Caramba! ūüėĮ Finally in 2009 the Zimbabwean dollar was suspended indefinitely. Today, the country officially uses $USD, ‚ā¨EUR, ¬£GBP,¬†and the South African rand as acceptable currencies.

I bought some $100 trillion Zimbabwe banknotes on eBay in 2012 for only $4 CDN each!¬†But since Zimbabwe banknotes are no longer being printed, finding them is becoming difficult as the currency becomes more rare which ironically is sending its value back up due to shortage.¬†I bought more in June 2013 at approximately $5 each, including shipping. A few months later in October Anne from Unique Gifter mentioned these $100 trillion notes were selling for $6 each.¬†Finally I checked once more earlier this year, 2014, and the cheapest ones I found were selling at $9 each. Goodness gracious. Look at that trend!¬†I’m making a higher return (percentage wise) from these Zimbabwean dollars than from the stock market! I predict these same notes will be worth $25 each in a couple more years ūüėÄ Financial independence, here I come! Below is a¬†picture of some $ZWD banknotes I purchased last year.

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