How your old gold becomes new again

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crucibleGold is recycled more than any other substance. Here is a 9-minute video showing how old jewelry is turned back into pure gold. The video isn’t the clearest, but the narration is OK.

At our Maui pawn shop, we melt down old jewelry in a small crucible. No matter what goes in, the product that comes out is almost always just under 60% gold (because of the average mix of 10-, 12-, 14-, 18- and 22-karat gold that people bring us).

That’s just a preliminary step. The video by The Precious Metals West Blog shows what happens next. We at Kamaaina Loan don’t do this; it’s an industrial process that uses a very nasty substance, aqua regia (a mixture of hot, fuming nitric and hydrochloric acids), that only pros with special equipment mess with.

Aqua regia dissolves gold; it is the only thing that will. This is how we recover diamonds. The gold is dissolved, but the diamonds are not affected.

This is safer than trying to pry diamonds from settings, which can break or chip them.

 

Education of a pawnbroker

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In principle, pawnbroking is simple. The borrower presents some portable collateral and the lender gives him money. Later, they settle up and reverse the exchange. If the borrower can’t pay, the broker keeps the collateral and tries to sell it to recoup his loss.

And most of the time, it is pretty simple. Probably three-quarters of the deals at Kamaaina Loan And Cash For Gold’s Maui pawn shop are for gold in one form or another, or silver  or other precious metals. Most of the rest are for familiar items like Playstations, iPods, surfboards or fishing poles.

But the residue? Some curious stuff comes over the counter.

A good place to find it in at 50 N. Market St., where we sell fishing gear, golf clubs and tools. Most of the tools are common enough: battery-powered drills are probably the most numerous item these days. (Corded drills are becoming rarities, almost.) But ask Bob to show you around and you’ll likely encounter a tool you not only don’t have but never heard of.

Today’s exhibit is a professional grout scrubber. Yes, it was new to  Bob, too. Turns out that for a big tiling job, with several tilers laying down tiles, it pays to have one worker follow behind them cleaning up the new floor with a power scrubber and massive sponge.

The one we have is made by Rubi, and while it’s used, our price is less than a third of the price for a new Rubi Spomatic 250 Electric Sponge.

That’s why it pays to stick your head in the door every few weeks, even if you’re not shopping for anything in particular. You never know when we’ll have something you never knew you couldn’t live without.

Crying all the way to the pawn, shop, no doubt

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So many people — 5,000 a day — want to check out the “Pawn Stars” store in Vegas that it’s creating a traffic jam and making it difficult to keep videotaping. Brent Montgomery, creator of the top-rated show, who was in Banff, Alberta, Canada for some reason, said

A long wait

A long wait

:

the popularity of the reality show has brought big changes to the family business on which it is based.

The daily number of customers at the World Famous Gold and Silver Pawn Shop depicted on the show has gone from 70 to 5,000.

“It’s made production hard because we can’t let them all in at one time because it starts to look like a studio show and not a reality show,” Montgomery told the Banff World Media Festival.

“We also have to make sure they’re not in the way. They all want to take pictures.”

At Kamaaina Loan’s Maui pawn shop, we get nervous about customer satisfaction if the line is longer than 2 people. But we are not very famous. Yet.

Too much aloha?

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So, is this the reason our Maui pawn shop wasn’t selected for a reality TV show? Are we too nice, too?

A Washington pawnbroker who was approached  by a show producer didn’t make the grade:

 

With TV cameras following her throughout the day, she treated Jodi Flynn and the crew to a lesson in firearms and taser use. “We all had a wonderful time together for those few days, and Jodi really enjoyed herself.”

After several days of filming, Jodi phoned Nancy informing her that Ben’s Loan wouldn’t make the cut. The official verdict: “She’s just too nice.” 

Jodi explained that while Nancy treated her customers with compassion, her staff was extremely caring and professional, and her customers love her, it’s not the sort of thing that audiences come to expect from reality television.

Coming next, “Jerry Springer: Pawn Broker”?

Big dog

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Here at Kamaaina Loan And Cash for Gold, we often brag about being Maui’s biggest pawn shop. But that’s big-frog-in-small-pond talk. DFC Global just announced it had bought a chain of pawn shops in Romania that will bring its total to  1,457.

Its press release says Romania has a long history of pawn loans, but the shops are quite small. 32 shops did a turnover of $9 million,  That’s less than $300K per shop. Even Maui’s smallest pawn shop probably does more than that.

DFC Global Corp. is a leading international diversified financial services company serving primarily unbanked and under-banked consumers who, for reasons of convenience and accessibility, purchase some or all of their financial services from the Company rather than from banks and other financial institutions.

 

Romanian pawn shops are similar to Maui pawn shops in that they primarily lend or buy gold, usually jewelry. However, they also make auto loans, which some pawn shops in America do, although not so much

 

Arizona loves to pawn

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Nationwide,  about one American in 5 uses a pawn lender to raise cash, according to the private financial regulator FINRA.

But for some reason, in Arizona it’s 1 in 4.

Old West Indian trading posts were, among much else, pawn lenders. But there couldn’t be enough trading post business to account for the difference.

Our Maui pawn shop has active accounts for around 1 in 10 Maui residents. The FINRA survey asked whether respondents had used a pawn loan in the past 5 years.

There are other pawn shops on Maui besides Kamaaina Loan, and we have some turnover in customers over 5 years, so Maui people might be close to Arizonans in using pawn.

Nationwide, there’s more pawning in the South. But that’s because most Southern states raised the ceiling on interest, not because Southerners are specially attuned to pawning.

 

 

Fair’s fair

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You may not realize it, but Hawaii law requires second-hand dealers to follow the same rules as pawnbrokers — keep records of all incoming merchandise, and of the IDs, addresses and other information about the sellers (or borrowers in the case of pawn customers).

The reason you may not know this is that island second-hand dealers routinely ignore the law and enforcement is slight. Pawnbrokers, and our Maui pawn shop for sure, follow the rules strictly.

Why not? Our owner helped write that statute decades ago.

If you think it makes little sense to require pawn shops to keep careful records to discourage fences but to allow second-hand dealers a free pass, the idea is gaining some currency. For example,  this Boston Globe story explains the outcry when police advised consignment stores — often selling expensive goods like Prada — that they, too, needed to cooperate in deterring thieves.

Reporter Beth Healey provides a good overview of the competing arguments, including one from a defense attorney about civil liberties. He’s going to lose that one.

Unusually, though, Healey ends by revealing one of the dirty little secrets of the anti-pawn shop mindset — it’s about scorning working people:

 

Goldstein [a pawnbroker] said that out of fairness, consignment stores should follow the same rules.

If stricter measures are being applied to people in less affluent neighborhoods with lower economic means, he asked, “Are they being implemented with people on Charles Street and Newbury Street?”

A pawn shop chain moves upscale

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Pawn America is one of a couple of large (for the pawn business) chains that started in the past generation. Most pawn shops, however, are still small, local and often mom-and-pop operations.

Kamaaina Loan And Cash For Gold fits the usual pattern.

This story from the St. Paul Pioneer-Press describes how Pawn America is trying to attract shoppers who have never tried a pawn shop’s retail operation by separating it from the lending operation.

Our Maui pawn shop

Brad Rixmann, pawnbroker

did that long ago. In fact, we are perhaps overseparated, with four locations along one long block of North Market Street. One for jewelry, art and curios; one for tools, fishing and golf, the pawn shop and the new store with a wide selection of stuff, from guitars and surfboards to DVDs and Hawaiian artifacts.

The Pioneer-Press story also gives a good explanation of the difficulties pawn shops face from local governing authorities who have decided — but misguided — ideas of what pawn shops are.

“Six or seven years ago, they came to the city of Inver Grove Heights and we said no,” Mayor George Tourville said. “We took a look at the issues around how they operate, and the stigma of stolen goods going right straight to the pawn shop, and we didn’t have the votes to get them into the city of Inver Grove Heights.”

 

It took a while, but eventually the hicks in Inver Grove Heights got a clue:

Police were reassured by safeguards like the Automated Pawn System, which provides law enforcement with daily computerized reports on everything the pawn shop acquires — along with photo identification of each seller. That makes it much more secure than online resale activity, where it’s easier to stay anonymous.

Only then did Inver Grove Heights discuss rewriting its pawn ordinance and changing the zoning for Pawn America.

“It was not a slam dunk,” Tourville said. But with those safeguards and the company’s strong reputation, “it allowed the city council to say, ‘Hey, this is a good thing for our community,’ ” he added. “They built a good space, they’ve got people working. That space was empty and it was filled.”

As this blog has noted many times, a pawn shop is a really stupid place for a fence to offer stolen goods. He has to leave his name, address, driver’s license (or other ID) and a thumbprint, plus be filmed by surveillance cameras.

 

 

 

 

Words we like to hear

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Kamaaina Loan blog often grouses about the difference we perceive between how we see ourselves (and other pawnshops) and how the public sees us. Basically, the unpleasant guy played by Rod Steiger in “The Pawnbroker.”

So we were pleased to see reporter Jaime O’Neill in the Chico (Calif.) News & Review go out and see for himself. He, too, started with the Rod Steiger view, as he says,

I pitched this piece thinking it would provide the opportunity to write a hard-edged slice of Oroville noir focused on pawnshops where down-and-outers went from the Indian casinos to the pawnshops to hock their dead mothers’ wedding rings for a few pennies on the dollar, hoping to get enough money to return to the casinos and feed the slots once more, chasing the chimera of winning their money back so they could make the rent.

He was surprised.

Though it may be true that such scenarios get played out somewhere in the nexus between hard times and pawnshops, that wasn’t the story I found when I sat down to interview Danielle Batha, Chris Daniels and Gary Besser before business hours on a recent Thursday morning.

Instead, he found a pretty pawnbroker selling whole mammoth tusks and $5,000 Stetsons and not too much about busted gamblers hocking rings. Rather,

“I just don’t see that as a driving force,” she said. “More often, we see customers coming in who’ve had a win and they’re looking to go shopping. It’s not all tears and sad stories,” Daniels adds. “It’s like a curio shop.”

 

It’s quite a long piece, in fact the longest story about a pawnshop we’ve ever seen in a newspaper, and bouncy and positive, so of course we liked it.

As we have observed often, all pawnshops are different.  At Kamaaina Loan, our pawnbrokers are not kept behind thick plexiglass windows like in Oroville.

“We’re putting out the message that we’re not victims, and not about to be victimized,” Daniels answered. “We want customers to know that this is a very safe and secure place, and that stuff they pawn with us will be here when they come back to get it.”

 

Lucky we live Maui. On Maui, the post office clerks also deal across an open counter. If you don’t travel, you won’t know how different things are on the Mainland.

Not everywhere, but in some places, the United States Post Office is so afraid of its customers that a sliding, bulletproof glass is raised for you to put your money through, then lowered, while a second sliding, bulletproof glass on the clerk’s side is raised for him to take it.

But the basic dealings are pretty much the same at pawnshops in the Wild West of Oroville and the mild west of Maui:

“One of the things I’ve liked about working here,” Daniels added, “is how often people are grateful for the help we’re able to offer them.”

Batha nodded. “Our women customers tend to be really sweet people,” she added. “Lots of the people we do business with are single moms trying to get to the end of the week. They’ll bring in jewelry or laptops. Sometimes it’s for just enough money to fill the gas tank.”

 

 

 

The story of a pawn shop chain

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Lots of America’s pawn shops are one-outlet businesses, but there are chains, too. Here’s a feature about a fast-growing chain in the Southeast.

We find it interesting because the interviewer asked about “the seedy reputation of the pawn business.”

Rather than pretending it doesn’t exist, more and more pawn businesses are tackling this issue in public.  (Maybe it helps that the reputation of non-fringe lenders has gotten more seedy since 2008.)

Anyhow, Robbie Whitten has a good, succinct response to that question:

We’ve been fighting negative images for years. Pawn shops can be kind of shady, but the reality TV shows have been a big boost to the industry and its reputation. Now a lot of mom-and-pop shops are cleaning up their stores to take advantage of the interest.

There are a lot of new customers coming in who say they’ve never been in a pawn shop and want to check it out. We don’t want them to feel like they’re in a pawn shop. On one side we want them to think they’re in a fine jewelry store, and in the sporting goods section we want them to think they’re in a Bass Pro shop, with a department store in between.

 

Later in the interview, Whitten says:

There are lots of guys, like real-estate agents, who were making six figures that are now living on 40 grand. They can’t borrow $3,000 or $4,000 from the bank anymore–they just don’t make those types of personal loans. The term we like to use in the industry is “underbanked.” But these people have lots of nice tangible assets. They might have a Rolex or a $500 Ping driver they can sell.

 

That’s where Kamaaina Loan gets a lot of its resale merchandise. We even have a Private Viewing Room for customers who (we think) are either embarrassed to be seen in the pawn lobby or, perhaps, don;t want to be seen making a $50,000 cash transaction.

Economists list pawn shops as “fringe banking” institutions, because they serve what Whitten calls the “underbanked.” At least a quarter of Americans don’t have an account with a commercial bank. And not all of them are wearing Rolexes.

We prefer to think of ourselves as the most democratic of all “banks.” If your income is $100,00o-plus, we’ll be happy to serve you. And if it’s $10,0o0-minus, we’ll be happy to serve you.