Java jive

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A nice, doomed pawnshop Photo from East Sider

A nice, doomed pawnshop
Photo from East Sider

Well, excuuuse us, but $3 cups of coffee do not indicate gentrification.

A strange little story in the L.A. Eastsider is headlined:

There’s no place for a pawn shop in gentrifying Echo Park

As evidence of rampant gentrification, the East Sider notes

One by one, the adjoining Sunset Boulevard storefronts on either side of the Echo Park Pawn Shop have been renovated and replaced with new tenants . The high-ceiling interior of Sage Vegan Bistro is often busy with customers sharing plates of jackfruit nachos or ordering $3.99 scoops of vegan ice cream.  A few storefronts down, San Francisco-based Blue Bottle Coffee, where a cup of drip coffee usually goes for $3,  is preparing to open a shop.

So sorry, East Sider, but our little Maui pawnshop shares a block with a nice coffee shop (Wailuku Coffee Co.) where coffee is well over $3 a cup ($2 if you pour your own in the morning rush), and there’s no place on the island where you can get a scoop of ice cream for a mere $3.99, vegan or otherwise.

We don’t dispute the story’s statement that the landlord is pushing out the pawn shop in hopes of attracting higher-paying tenants. But $3 coffee? It takes more than that to separate the beautiful people from the rest of us.

Image v. reality

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Almost since the Kamaaina Loan blog began, we have been writing about how “Pawn Stars” and other reality programs have tended to improve the public perception of what pawnshops are like. We are all too familiar with the image presented in the old Rod Steiger film “The Pawnbroker.”

genuine

 

Even then – and that was half a century ago –the movie portrayal was far from reality. Just as, when you think about it, the “Big Bang Theory,” the most popular show on network TV, doesn’t provide a realist6ic view of how geniuses live.

So, what are real pawnshops really like?  Are they dark places where thieves slouch in, looking to convert a hot laptop into a couple of sawbucks? Hardly. For one thing, pawnbrokers have embraced technology. Stores are bright and open, so that surveillance cameras can be effective. Most of the nation’s 12,000 pawnbrokers also use technology to record driver’s licenses, serial numbers and other detailed information about both the merchandise they are offered and the customers.

That includes a thumb print.

A scoundrel looking to break the law could hardly leave more evidence if he tried.

Then look at the goods in a pawnshop’s retail department. (Almost all pawnbrokers are also licensed secondhand dealers.) Diamond jewelry, good watches, gold, good guitars. Pawnshop customers are, overwhelmingly, people with jobs and therefore with assets and money to spend.

Most goods in the retail division were not pawns that someone failed to repay. At Kamaaina Loan  And Cash For Gold, redemptions are at an all-time high—90%.

Retail stock (when it is not new, like our Kala ukuleles and some silver jewelry) is good stuff people didn’t want to keep. Maybe they were moving to a different island, or they are buying a better guitar and want to sell us their old one to help pay for the new one.

Or they realized that that designer handbag in the closet hasn’t been used for months because they have a new style that suits them better.

So they sell it to us and we sell it to you.

Maybe, in the movie, Rod Steiger dealt with down-and-outers, but when we take in a designer handbag that cost $2,000 new and that we resell for $800, we are still talking about upscale consumption.

To put it another way, the goods we sell are the same goods that were originally sold at the mall. Just used a little and marked down a lot. And our customers are the same as the shoppers in the mall, just with maybe a sharper eye for a bargain.

 

 

Gold — and not only gold — takes a powder

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At the start of this year, the mavens at Goldman Sachs — who had called the price movement of gold quite closely in 2014 — predicted it would finish 2015 as low as $1200 an ounce.IMG_3692

Maybe it will, but already in July it is plunging near $1,100. We think it is fair to say that no one foresaw this. Certainly at our little pawn shop, we didn’t.

But it isn’t only gold. Bloomberg News reports that world commodity prices have fallen to levels last seen in 2002. Gold, by contrast, has fallen to 2010 levels.

Raw materials are losing favor with investors as the dollar gains amid signals from Federal Reserve Chair Janet Yellen that the central bank may raise rates this year on the back of an improving U.S. economy. Higher borrowing costs curb the attractiveness of commodities such as gold, which doesn’t pay interest or give returns like assets including bonds and equities.

The other commodities include things like iron, natural gas, oil and wheat. At Kamaaina Loan And Cash for Gold, we like to say we will buy (or make a loan on) “anything that doesn’t eat. But we don’t buy (or lend on) oil or wheat. And salesfor that, just now, we are thankful.

 

Is pawn lending fringe or mainstream?

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pawnFor years, students of pawn lending have described it as an alternative to regular banking or — in the words of economist John Caskey — a form of “fringe” banking. Caskey, for one, is friendly to the pawn business, and even pawn lenders themselves have taken to calling themselves fringe lenders.

Unlike some other fringe groups, the designation is generally positibve.

Gun shy

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This is just too silly not to pass on. In Florida, a man tried to shoplift a firearm from a pawnshop.

So?

It was an AK47. He stuffed it down his pants leg.

And limped out till the pawnbroker stopped him.

The Sun-Sentinel has his mug shot. I’d keep an eye on him if he were in our pawnshop, even though we don’t carry firearms.ak

The Sun-Sentinel plays the story straight. HuffingonPost rewrites it with one of  the more obvious joke lines. But it isn’t funny.

 

We get calls

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But the callers don’t always appreciate an honest answer.

Caller to Kamaaina Loan pawnshop: Do you buy jewelry if it is gold-filled?

Us: We’ll look at anything, but “gold-filled” really means “no gold.”

Caller: It means “no gold”?

Us: It’s something retailers have used for years and years. There is a microscopically thin covering of gold, but essentially it means no gold.

Caller (sounding kind of exasperated): That’s good to know. Thank you.

 

What’s a GG? Why should you care?

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Last week, a young man came into Kamaaina Loan with a “diamond” in his hand, and another one in his ear.diamond

He explained that the earring had been his grandmother’s. Now, first, let us say we think it is sweet that a young man would wear his tutu-wahine’s earring. That’s not something that would have happened in the old days.

The stone had fallen out of the other earring of the pair, and he said he wondered: Is this a real diamond?

That was the easy part. Slap the stone under the electronic tester. Nope, not real.

But what if it had been real? That’s when a GG (Graduate Gemologist) is your friend.

That young man’s “diamond” was around a third of a carat, and it would have been worth serious coin if it were also of high quality. Most diamonds we see are, of course, average.

Value is based on the “4 Cs” (cut, color, clarity and carat size); and when you get into the bigger and better stones, a difference of opinion of one grade level can be worth hundreds of dollars. That’s when a GG comes in, and Kamaaina Loan is the only pawnshop on Maui with a GG on staff. (You can see her diploma on the wall at our diamond store at 96 N. Market St.)

The Gemological Institute of America is a non-profit research and educational organization (www.gia.edu). Those certificates are not easily earned.

gia

GGs don’t rely only on experience. They have expensive instruments (colorimeters, powerful microscopes), but when it gets down to it, experience is what counts.

This is even more crucial if the stone in question is “colored” (ruby, emerald, amethyst, and hundreds of others).

So if you want an accurate evaluation, now you know where on Maui you want to go.

 

 

A pawnbroker with a heart of platinum

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Most of our customers don’t have even one gold album, let alone 5 platinum ones, so this incident from the Top Cash Pawn Shop in Plano, Texas, is unlikely to be repeated at Kamaaina Loan. But it’s a wonderful little story.

According to the Plano Star-Courier, it seems rapper D.O.C. left his five — count ’em 5 — platinum albums with a friend during a move and then lost track of the friend. Don’t you hate when that happens?

Years pass. Taylor Packwood of Top Cash Pawn makes a loan on the albums, which is renewed for years and years but eventually forfeited.

More time passes. Long story short, a D.O.C. fan spots the albums, uses social media to alert the musician, and Packwood says he’ll return them to the star, no charge.

“They’re both just in shock, No. 1, that they wound up here, but that they actually found them,” Packwood said. “What they’ve told me is that there are a few more out there somewhere, five more matching gold plaques.”

 

Pretty packaging

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Some people will go to quite a bit of trouble to steal a measly $7,446.

Like the guy who made up 866 fake one-ounce silver bars and encased them in plastic.

Then, according to the Delco Times, he took them to a pawn shop outside Philadelphia, which incautiously accepted them as real without breaking open the plastic to test.

Not right away, anyhow:

“(Pawnbroker) Oblon told police he has purchased one-ounce silver bars from other customers in the same way in the past. . . .

Oblon became suspicious and broke open several randomly selected bars and tested them. The test showed the bars were not real silver, police said.

The story does not say what the fakes were made of. It is possible that even non-destructive testing could have detected them, although that would require breaking open the cases.

The Delco Times story does not say, but presumably the seller left his ID and address etc. with the buyer, which is required in many jurisdictions. At any rate, the pawnbroker knew where to find him in New Jersey.

It was a bad deal all around. The $7,446 paid for the fakes was only half what 866 ounces of real silver are worth among big dealers. Small dealers like coin shops and pawnbrokers buy at a discount, but a 50% discount is steep.

Trouble for diamonds

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The following post should concern you even if you are not a diamond miner, which we assume most of our readers are not. Even if the only diamond you ever own is in an engagement ring, there is trouble ahead.diamond

At last year’s National Pawnbrokers Association convention, Martin Rapaport, publisher of the Rap Report guide to current diamond prices, spoke about the increasing appearance of synthetic diamonds and how difficult they are to tell from natural ones.

We are not talking only about artificial coloring of natural stones, which is impossuible to detect, but also about factory-made stones passing as dug-from-the-ground gems.

A year ago, Rapaport was saying that the problem was coming but was not yet a big problem for diamond buyers and sellers in pawn shops (and, by implication, for their customers). Well, trouble is here already.

As Bloomberg News reports, producers of natural gems are frightened enough to have, for the first time ever, formed an industry association:

 

The famously secretive diamond industry has lacked coordinated leadership since De Beers’s monopoly over the supply of gems ended after it lost a 10-year legal battle with the U.S. over price-fixing in 2004. The proposed association would represent the vast majority of the world’s diamond supply.

When we say that the value of a diamond is determined by the 4Cs (color, cut, clarity and carat-size), left unsaid is the fifth factor: rarity. Manufactured diamonds, of course, are potentially infinite in availability.

Diamonds have been made industrially since the 1950s, but the process was difficult, not too cheap and not well-suited to making gem diamonds. Technology advances.

Although a variety of factors have driven down the cost of genuine diamonds considerably (end of the deBeers control, new sources in Russia, South America and Africa outside South Africa), the cost of producing a look-alike has fallen even faster.

The Times of India reported last month that 110 manmade diamonds were discovered in a parcel in the Indian city of Surat, the world’s biggest cutting center. The undisclosed mixing of diamonds has been discovered on several occasions in the nation with India’s Gem Jewellery Export Promotion Council starting the Natural Diamond Monitoring Committee to combat the issue.

The fact that the unscrupulous traders were caught proves that it is still possible to tell the difference between manmade and natural diamonds, but is not easy, inexpensive or quick. (An artificially colored natural diamond is undetectable with current technology.)

It requires a specialized laboratory and days. At present, a retail buyer of stones, like our Maui pawn shop, cannot do the test, and the days required mean that customers are not likely to wait around for a distant lab to report. We can hope that the technology will improve and become cheaper, the way gene-splicing moved from custom work to mass production (to take one example from many). But who knows when that will come?

At present, there are not so many fake gem diamonds in circulation that pawn shops and jewelry stores are taking a big risk in making an offer for a customer’s old jewelry. But the incidence of fakes could accelerate rapidly.

Pawnbrokers have already seen how fake coins — made available in huge quantities from the world’s largest Internet scam business, Alibaba — have ruined the numismatic market for some coins, including Kingdom of Hawaii coins.

For the moment, Rapaport is sticking with the advice he gave his pawnbroker audience last year: Know who you are dealing with and stick with respectable vendors.

Addressing whether consumers should be concerned about diamond synthetics, Martin Rapaport said, “If you’re going to be buying diamonds, you better be dealing with a reputable source and that’s number one. There are a million ways for the consumer to be taken advantage of and it’s important for the consumer to buy from a reputable source even if it cost a little more.”

He also added, “Find someone you’re comfortable with and trust. Don’t feel you’re under pressure to buy. A lot of times you are under some pressure, you really want to get engaged, but I say relax and find the time to find someone that you trust. Comfort is king.”

#maui #mauiretail #mauijewelrydiamond