Pawn shop treasure: Peace out

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In a sense, this is old news, but a Nobel Peace Prize discovered in a pawn shop is headed for auction in, of all places, Baltimore.

Identified as the Peace Prize, this medal is actually a Pulitzer Prize

Identified as the Peace Prize, this medal is actually a Pulitzer Prize

Old news, because the pawn shop discovery was made 20 years ago, when an alert collector recognized the hefty medal (nearly half a pound of 23-karat gold) in a pawn shop in some unspecified place. Presumably Argentina, where the medal was awarded to the foreign minister for helping to bring to a conclusion the Chaco War, a war fought over what turned out to be no oil.

You never can tell what will come into your pawn shop. From the story, it appears the pawnbroker may not have known it was a Peace Prize medal but knew enough not to melt it for the gold. At today’s prices (way up by the way, thank you Vladimir Putin), the metal is worth around $10,000.

As a collector’s item, the presale estimate is $50,000. That’s why at Kamaaina Loan, we say we will give you the highest amount based on either the metal weight, the artistic value or the collectible value.

Is gold looking up?

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Some people think so. From Bloomberg News:

Coutts & Co. is adding gold for investors as rising wealth in China and increasing political risks including in Ukraine spur demand, helping prices rally from the biggest annual decline in more than three decades.

And:

Gold is getting more attractive to hedge-fund managers even as Goldman Sachs Group Inc. says the metal’s surprising rally this year will soon fizzle.

Hedge funds and other speculators expanded bets on higher prices for a fourth week in New York futures and are now the most bullish since December 2012, government data show. While gold is off to its best start in six years after topping $1,350 an ounce, Goldman’s Jeffrey Currie says chances are increasing that prices will slump to $1,000 for the first time since 2009.

As Kamaaina Loan blog has noted many times, Goldman predicted a sharp drop in the price of gold in 2014. So far, Goldman has been wrong but they are not admitting it yet. $1,000 gold would be close to half the highest price from last year.

 

Gold taking a breather?

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We have been fascinated by the steady rise in the world price of gold, because we listened to the smart money (at Goldman Sachs etc.) that was predicting a fall in 2014.

Well, today, gold pulled back a little, but according to Kitco news, only because some holders were cashing in their profits from a 4-month-long rally:

Gold prices ended the U.S. day session moderately lower Wednesday, pressured on profit taking and chart consolidation following recent gains that saw prices hit a four-month high overnight.

#maui #mauigold #mauiretail

Gold offered for sale on Maui

Gold offered for sale on Maui

Pawn shop with ferris wheel

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Loved this headline from the Broward/Palm Beach New Times:

 

Pawn Shop Opens March 6 With Ferris Wheel, School Bus, and So Much More

Was totally bummed to find out that the “pawn shop” is just a disco club called “The Pawn Shop.”

On the other hand, gold climbed past $1,340 today, continuing to confound the seers who predicted falling prices for precious metals.

#maui #maui pawn

Hey, wassup? Silver and gold. that’s what

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It’s kinda puzzling. The Dow is up sharply, which usually has a depressing effect on metals. But gold is up, too. It was  briefly over $1,337 an ounce today. Silver, too. It got over $22 for the first time in a long while before slipping all the way down to $21.99.

Nowhere near the $1800 and $38 of a couple years ago,  but the trend is up not down.

Not only do we at our Maui pawn shop not pretend to understand what moves gold and silver prices, we find stock prices puzzling, too. Especially stocks in pawnshops.

Most of America’s 12,000 or so pawn shops are quite small, but there are a few  big chains.  Big  being relative compared to banks. Even local banks often have assets over a billion dollars. Pawn chains are not that size.

One of the ” big” ones is EZ Pawn, which reported an 8% gain in same-store sales over the holidays. The stock bounced up by 27%. How very nice for them, but hard to understand since “The company’s profit and sales actually fell during the quarter, by 27% and 1%, respectively.”

Profit down 27%, stock up 27%. It must make sense to somebody.

Bring us your old surfboard. We know how to value that.

 

 

Lots and lots of gold

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Here at Kamaaina Loan And Cash For Gold, we buy and sell gold every day. A typical deal might involve 20 or 30 grams of 14K gold. Sometimes more, but always gram by gram.

Thus we were impressed in reading this Bloomberg News story about a guy who

 used his connections in Iran and Turkey to move almost a metric ton of gold to Iran every day for 1 1/2 years.

Bloomberg didn’t say whether those were long or short tons, but either way that’s a lot of gold. There are 28 grams in an ounce, so that’s around 900,000 grams a day. Multiply that by 1.4, since the gold we take in averages around 60% fineness, and you get around 1,250,000 grams equivalent of jeweler’s gold.

We’d have to do 250,000 deals (at 50 grams a deal) to equal one day of Riza Sharraf’s gold trade.

Riaz Sharraf, via Bloomberg News

Riaz Sharraf, via Bloomberg News

Not that we envy Mr. Sharraf, who now resides in a small cell in a Turkish prison. It started when fog made an airplane full of his gold land at an alternate airport where the customs officials asked questions and seized the gold for non-declaration.

Except, get this. Maybe it wasn’t gold.

Sara Turizm, for its part, claimed that Omanye had sold it fake gold. It provided to the Ghana courts in June an analysis of the gold done by Emirates Industrial Laboratory LLC. The “gold” was 99 percent lead for the base, brushed with a patina of 96 percent nickel.

Sarraf’s lawyer says, “My client is innocent. I look forward to proving that in court.”

An interesting legal point. Is it a crime to smuggle lead?

All of this is fascinating but has nothing to do with pawn, except we deal in gold at our Maui pawn shop and Riza Sharraf dealt in gold in Turkey and Iran — or something. If you are a fan of mysteries with surprise twists and turns, you will like the story of Riza Sharraf.

Pawn 101: Pawn shop scammed

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Is that real gold?

Is that real gold?

Here’s an odd little story — in its entirety — from the Bradenton Herald:

MANATEE — A Manatee County pawn shop has been ripped off by a jewelry fraud artist.

Officials with America’s Super Pawn, 5612 15th St. E., say they paid out $550 for what they thought was a 10-karat gold chain with charms, but which turned out to be worthless metal, according to a Manatee County Sheriff’s Office report.

The transaction occurred on Oct. 1, but the pawn shop manager was just notified Tuesday by the company’s jewelry analysis expert that the gold chain was fake and of no value, the report states.

The pawn shop manager notified the sheriff’s office.

It is believed the subject who sold the necklace has sold other fake jewelry to pawn shops throughout Manatee and Sarasota, the report adds.

Odd because at our Maui pawn shop, we test all gold coming in. It is possible to fool the tester, but the touchstone is seldom fooled by something like a chain. Didn’t Manatee Pawn Shop test?
Maybe it was busy and they were in a rush. So if you ever have to wait a minute or two during the Christmas rush because the customer ahead of you in line is having her chain tested, that’s why. Always test.
Odder yet is the hint that the same scamster has hit other shops. Don’t any of the shops test? We know some Florida pawnbrokers, and we are sure almost all of them do test.
Has somebody in south Florida gone to the trouble of making some trick chains that defeat the touchstone? It could be done, but it would be a lot of work, both to manufacture the fake chains and then to pass them out in $500 lots all over a county.
Read more here: http://www.bradenton.com/2013/12/10/4881419/manatee-pawn-shop-ripped-off-by.html#storylink=cpy

A look inside the gold price mechanism

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Revelations that London banks manipulated the LIBOR interest rate — misbehavior for which they have been fined billions by regulators — has prompted a closer look at the ways other financial markets are manipulated, including gold, one of the biggest — $20 trillion (trillion with a T) according to Bloomberg News.

It appears that the term “London fix” may be as problematic for gold as for LIBOR (which is a base interest rate that has spillover effects on rates you and I pay, for adjustable rate mortgages or credit cards, and much else).

Should it prove that the five banks — at least two of them already proven to be corrupt — that fix the London rate have also been gaming the gold price, that might not have a great deal of impact on our Maui pawn shop. We buy and sell gold based on the New York spot price, which is updated every 15 seconds during the business day; but we do not change our benchmark so often. Besides, our prices are flexible within a few dollars or so (out of, at this writing 1,245 dollars), so we are not playing in the same league as the arbitrageurs who may (or may not, who knows yet?) be fiddling the gold market.

As the story explains, the mischief seems to come in very short-term (minutes long) bets on futures prices. Pawn shops deal in physical gold, whose value is necessarily somewhat decoupled from the vagaries of the futures market. Nevertheless, suspicions that crooks are loose in the marketplace cannot be welcome. Crooks in banks? Who knew?

“Traders involved in this price-determining process have knowledge which, even for a short time, is superior to other people’s knowledge,” said Thorsten Polleit, chief economist at Frankfurt-based precious-metals broker Degussa Goldhandel GmbH and a former economist at Barclays. “That is the great flaw of the London gold-fixing.”

Stay tuned. Kamaaina Loan blog will be keeping an eye on this.

 

 

 

 

Gold gets interesting

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As readers know, the daily and weekly gyrations in the price of gold (and silver) don’t concern our Maui pawn shop too much. We make our money off commissions, so when gold goes up $25 or down $30, it doesn’t affect us that much.

Where will it go?

Where will it go?

 

But when gold gets near a top or a bottom, then we start paying attention. Today, the Dow-Jones average topped 16,000 for the first time and the S&P topped 1,800 for the first time. As often happens when stocks are up, gold is down, by $17 to about $1,273. That’s near the lowest for the 21st century.

Will it go lower? We have no idea. But here’s a good roundup of differing views from Bloomberg News. Some of the big noises in the Republican Party, like Rep. Paul Ryan, are gold bugs and, the story says, trying to get the Federal Reserve to tie the valuation of the dollar to the commodity price of gold.

Not everybody thinks that is a good idea:

“It’s a stupid idea,” Joseph Gagnon, a former Fed economist, said in an interview. “It’s pretty clear the Fed thinks so, too, since they do the opposite. They go out of their way to exclude commodities.”

It looked different, at least to vice presidential candidate Ryan, in 2010. His prophecy didn’t turn out too well:

To Representative Paul Ryan of Wisconsin, record gold prices in 2010 heralded “a lower standard of living for many Americans.” Representative Ted Poe of Texas foresaw “a blast of inflation that will crush the middle class” adding: “Where gold prices go, other prices follow.” Fellow Texas Representative Ron Paul, a perennial critic of the Federal Reserve, warned that “confidence is being lost in the entire fiat monetary system,” a reference to money created by central banks.

But the price of gold didn’t keep going up, up, up. Instead, it has dropped by a third.

The gold bugs may yet turn out to be right, but not so far.

Who do you trust?

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One cool thing about being in the pawn business is that we can (usually) make money on gold whether its price is up or down. That’s because we both buy and sell and depend on the commission for profit, not the fluctuation.

That is not the case with most individuals. Probably most buy gold as jewelry, so the variation in price doesn’t matter much to them anyway. But for those who buy gold as an investment, it certainly makes a difference when to hold ’em and when to fold ’em.

For example, right now the price of an ounce of gold is about $1,314. Goldman Sachs thinks the price will be down close to $1,000 by the end of next year; but there’s an alternative opinion. Bloomberg News describes the views of  Peter Schiff, a well-known gold bug. He thinks gold is going to $2,000, and soon.

So, take your pick, $1,000 or $2,000. The story quotes Ben Bernanke:

“Nobody really understands gold prices and I don’t pretend to really understand them either.”

Neither do we.

We will buy your gold or silver jewelry, coins, ingots, dust any time, for the daily New York spot, minus a small commission. Or we will sell you jewelry, coins or ingots (sorry, gold dust not usually in stock), for the New York spot plus a small commission.

We will beat any other written offer you can find on Maui, too.

A reliable form of Maui gold

A reliable form of Maui gold