Pawn 101: ‘Rogue’ gold buyers

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At the risk of sounding like a broken record (do young people even know what that means?), we are returning to the problem of dishonest gold buyers. Because the problem is not going away.

Here we link to an interview with a National Pawnbrokers Association vice president on the subject. Ric Blum makes a couple of points that Kamaaina Loan blog has not spent much time on:

First, “there are more businesses buying gold than just pawnshops. Almost every jewelry store in the country is now buying gold. Gold is being bought in flea markets, barber shops and auto repair facilities. Many are unlicensed and do not have the proper ‘legal for trade’ scales.”

Second, “Another popular scam is gold buying parties. These are usually ‘sponsored’ by a local person who is encouraged to invite all of their friends over to their house and bring their jewelry to sell to a ‘gold buyer.’ Besides not often paying a fair amount to the sellers, there are usually kickbacks being paid to the party sponsor.”

Blum says the problem is tough for law enforcement — especially if you are imprudent enough to mail your gold to somebody on the Internet. Even for local rogue buyers, enforcement is often low on the priority list for overstretched police departments.

You have to protect yourself.

Read the whole thing, but take this away: Do not mail off gold. Do check with several local buyers and compare offers.

We’d add: See us last. You’ll get the highest price that way.

Words to the wise from Ken Rutherford

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Ken Rutherford is a well-known name in the precious metals business. He makes and sells the Fisch instrument, a simple but effective tool that tests coins (by seeing whether they fit through calibrated go/no go slots and by a balance test).

He is also the author of a guide to counterfeits published over 25 years ago and revised several times. Here is what he said back in 1984:

The silver and gold business is crazy. Investors send $10,000, $20,000, even $40,000 to firms they’ve never even heard of and whose credit they’ve never checked. They just close their eyes, lick and send the envelopes and send their checks winging away.

Times change. Since Rutherford wrote that, gold scams have migrated to the Internet, and today people click their money away to unknown URLs; or, in a similar but also risky scenario, send their gold (coins, bullion, jewelry or scrap) to some address, from which they hope somebody will send them cash.

Rutherford recommended dealing only with established dealers. That’s still good advice.

He also recommends, when buying gold coins, to TEST EVERY ONE. Still good advice. But hard to do over the Internet.

An honest gold seller in India

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Bloomberg News has a story about T.S. Kalyanaraman, who shook up the gold jewelry business in India by putting pricetags on his products and teaching his customers how to test gold themselves.

Now he’s worth a billion (dollars not rupees) and is the first person in his state of Kerala to own a private jet.

India is the biggest market for gold. Brides are weighed down with gold jewelry, and it is considered auspicious to buy gold on religious holidays (often then presented to a temple).

“We don’t find it tough to sell gold; people love to buy jewelry,” Kalyanaraman said. “The only way to make your wife, sister or lover happy is to give them something that they love.”

In a separate Bloomberg story

Aishwarya Rai, a former Miss World and Bollywood star, is a spokeswoman for Kalyan Jewelers

, the government of India is raising the import duty on gold by 50% to help cover its current account deficit. The government feels it can manage this because the demand, and consequently the price, for gold has been rising, through good times and bad.

India, the world’s largest bullion buyer, increased taxes on gold imports to reduce a record current-account deficit and moderate demand for the precious metal that’s rallied for 12 straight years.

The duty on gold and platinum imports was raised to 6 percent immediately from 4 percent, Economic Affairs Secretary Arvind Mayaram told reporters in New Delhi yesterday. The tariff will be reviewed if imports moderate, he said. Gold climbed after the announcement.

Increased taxes may reduce gold demand in Asia’s third- largest economy after prices jumped 7.1 percent in 2012 as investors and central banks boost purchases. About 80 percent of India’s current-account deficit, the broadest measure of trade, tracking goods, services and investment income, is due to gold imports, according to the Reserve Bank of India.

Gold’s good year

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Gold momentarily touched $1800 an ounce last year and is now trading under $1700, so it may come as a surprise that — taking 2012 as a whole — gold had its best year since 1920.

So reports Bloomberg News.

At Kamaaina Loan and Cash For Gold, we buy and sell gold. We do not predict whether it will be higher or lower next month or six months from now, because we just don’t know.

What we do know is that we offer you the best price you’ll find any day in the week.

Notice Bloomberg reports that some famous investors are betting gold to go up:

Investors from John Paulson to George Soros have a $140.6 billion bet via near-record holdings in gold-backed exchange- traded products after the Federal Reserve said Dec. 12 it would buy $45 billion of Treasury securities a month as of January, adding to $40 billion a month of mortgage-debt purchases.

That’s kind of funny reporting, because all last year Bloomberg was reporting the details of Paulson’s failed bet on Chinese trees, where his fund put hundreds of millions of dollars into what turned out to be imaginary forests.

Paulson got famous by making a spectacularly good guess about mortgage securities but it was just a guess.Maybe he’ll have better luck with gold. At least gold exists

 

Another Craigslist catastrophe

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Via our friends at Jaxpawn, a story

A lonely place to meet a stranger

about a Craigslist encounter that went horribly, fatally wrong.

We worry about people who agree to sell gold through Craigslist. And this story — although it involved an ATV, not gold — is why. Inviting strangers to your house to buy your gold; or agreeing to meet a stranger in a remote place displays a trust in human nature that is not really justified.

Better, we think, to sell your gold jewelry at an established store where security measures are in place.

Besides, you’ll get just as good a deal, or better, from any pawnshop.

President Obama and gold

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At Kamaaina Loan, we are always interested in gold —

buying it, selling it, lending money on it. But not in

 predicting where the price is going.

Not everybody is so cautious. Consider this quote from

the financial advice service Seeking Alpha:

the reality is that President Obama is good for precious metal prices.

We’re not saying he is or he isn’t, but that’s short

and easy to remember. Remember that gold

was around $1720 an ounce on Election Day, but

it had varied by $75 up and down over the past

 30 days. It’s about $1729 as this is posted.

Let’s see where it goes from here. Meanwhile,

if you need cash, we have it and will exchange

 it for gold at the going rate.

Read the whole article at: http://seekingalpha.com/article/1003041-2012-election-president-obama-and-precious-metals

Is this the future of gold prices?

A gold rush in Ghana

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A miner from a 19th century gold rush

According to Bloomberg News, Chinese miners have http://www.bloomberg.com/news/2012-10-08/ghana-s-gold-sparks-conflict-with-illegal-chinese-miners.html rushed to Ghana. Just as with American 49ers in California, the environmental results are not pretty.

Ghana is Africa’s second-largest gold producer. It was the original “Gold Coast” that Europeans ventured to 500 years ago, looking for the source of the gold dust that showed up in Morocco and Algeria after being carried across the Sahara on camels.

And as in California 160 years ago, the rush is violent:

In July, Chinese men mining near the village of Manso-Nsiana fired warning shots when residents protested their presence, Koffi said. He couldn’t confirm a report published in Accra’s state-owned Daily Graphic newspaper in July that two Chinese nationals have been killed this year in a mining dispute.

More pawn reality TV

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According to Zap2it, truTV is about to introduce yet another pawn shop reality show, Hard Core Pawn: Chicago:

Hardcore Pawn: ChicagoHardcore Pawn: Chicago – New series premieres Tuesday, Dec. 18, at 9:30 p.m. (ET/PT)
Hardcore Pawn: Chicago takes viewers behind the scenes at “the baddest pawn shop in Chicago.” One of the city’s largest and oldest establishments in the pawn and gold-buying business, Royal Pawn Shop is owned by Randy and Wayne Cohen, two brothers who don’t always see eye to eye, except when it comes to finding the best deals for the business. These over-the-top siblings will wheel and deal with just about anyone, from a sweet kindergarten teacher to an intimidating mob boss. Hardcore Pawn: Chicago comes to truTV from Bischoff-Hervey Entertainment. 

 

The original Hard Core Pawn is in Detroit, and is reported to be one of truTV’s biggest hits. Well, more power to ’em. I cannot see a “Hard Core Pawn: Maui” in anybody’s future, though.

Gold bugs bitten in Texas

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From the Dept. of Always Deal with People You Know and Trust (Especially if You are Going to Give Them Gold), a warning tale from Lubbock, Texas, in the Avalanche-Journal:

The business was the target of several lawsuits and a criminal investigation last year over allegations that owner Edwin Chauncey accepted payments in advance for orders to buy rare coins and precious metals and failed to make those purchases.

It looks like rare coin dealer Chauncey’s marks gave him close to $2.5 million and are going to lose about $2 million of that. His coins were certainly rare. Nobody can find them.

Kamaaina Loan has been buying and selling gold for 36 years. ‘Nuff said.Would you give gold to this guy?

Will gold go up or down?

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Yes.

But we have no way to tell which it will be. The folks at Lear Capital confess uncertainty, too, but they have produced an infographic that shows the relative movements of gold, silver, stocks, inflation and national debt during presidential administrations. (For sure, gold never stays the same, it is always either up or down, like the grand old Duke of Kent in the nursery song.)

These are hardly the only indexes that matter (money supply growth is always interesting), but for what it’s worth, here it is.