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Annals of dumb crooks

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And a not-too-bright employer, as well.

This story about a minor fiddle (total value to crook: $507.93) leaves us with some questions.

First, why didn’t he throw the pawn tickets away? He was not planning to redeem the computers he stole.

Second, why didn’t the school system have 1) an inventory sticker on its computer; and 2) an inventory check.

If you follow down in the comments, you get this gem:

One time I found a pc on the curb to be picked by the trash collector.

I took it in and found over 12,000 medical files relating to a certain hospital.   Yes the pc belong to a doctor.

If that anecdote is valid (and we have no reason to think it isn’t), then you can see how a pawn shop has some difficulty in confirming that a customer really does own the item he’s pawning.  Our Maui pawn shop requires the customer to state that he is the owner, and as further encouragement to square dealing, to leave his ID, thumbprint, address and phone number with us. (Part of that is required by law.)

But since by definition, all our collateral comes in a second-hand goods (even if sometimes still new and in its shrink wrap), and because items (like computers) can pass from hand to hand, even a sticker label reading “Kanawha County School District” would not necessarily tip us off to suspect a theft. (See comment quoted above.)

What does help is notification of losses. That’s why Kamaaina Loan And Cash For Gold has mystolengoods.com. It’s a unique and free service. If you’ve been ripped off on Maui, file a police report, then post up a description of your lost goods.

We check it every day. It is used more for stolen jewelry than for computers but it could include anything.

Knowing your serial numbers helps, of course, especially with things like computers. But waiting more than a year to notice you’ve been robbed pretty much guarantees that all precautions are going to be unhelpful.

The story does not say whether the school district recovered its computers. Probably not.

 

Banks abandon the average Joe

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I cannot say I think much of this New York Times Dealbook story about changes in the pawn business.

It seems to be based on the novelty, to the reporter, that some pawnbrokers are offering platinum debit cards.

Of interest, though, is the statement that

banks zero in on more affluent customers who promise twice the revenue of their lower-income counterparts, close branches in poor areas and remain stingy with credit

This is news only to the New York Times and is incorrect to boot. Banks have been looking for ways to stop serving half their customers for a generation, ever since it dawned on them that 50% of their clients account for 150% of their profits. In other words, banks not only don’t make small profits out of Joe Sixpack, they make losses.

Were it not for government oversight, you would not find a bank branch anywhere on the poor side of town, and you will not find many.

It is entirely understandable why banks would want to behave this way but not very nice. When they say, we want to be your bank, they don’t really mean it.

Meanwhile, pawn shops keep on serving all comers, as they have for centuries.

Note also this statement:

EZCorp, a publicly traded operator of pawnshops, reported that total loan balances swelled 22 percent to $44 million in its most recent quarter.

EZCorp is big for a pawn business, but $44 million is unnoticeable in the context of commercial banking. In other words, EZCorp is there for the little guy.

 

 

Mean streets

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As Kamaaina Loan blog has noted many times, a pawnshop is a stupid place to try to fence stolen goods, since you have to leave your picture ID, thumbprint, address and phone number — not to mention your performance on the surveillance camera for the burglary squad to enjoy.

But pawnshops are also a poor choice if you are planning to rob somebody. Most American pawnshops deal in firearms, so the people behind the counter are familiar with how guns work.

This is not true for Hawaii, where pawnbrokers mostly choose not to deal in firearms. But in Hawaii, armed stickups are thankfully rare anyhow.

In the tough town of Hamtramck, Michigan, three robbers chose the low odds approach, according to this report from the local Channel 2.

It seems ALL the pawnshop employees were packing heat, and before it was over, one robber was shot dead and the others were in cuffs.

But it was  business as usual for Hamtramck, where, according to the police chief Garbarino:

“It’s not too often we get things like this in Hamtramck. Most of our shop owners are armed around here, not to mention our police response is under 30 seconds. In fact, we were here within 30 seconds of getting the call.”

The story does not say, but presumably the pawnshop had a silent alarm that someone tripped when the bad guys came in.

There’s an easier way to get cash from a pawnbroker — bring in something you own (even burglars must own something), and take out a pawn loan.

Mike's. Don't mess with him

Mike’s. Don’t mess with him

 

 

‘Marketplace’ explores pawn business

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National Public Radio’s Kai Ryssdal decides to see if the ups and downs of pawn business are useful in tracking the economy, the way car sales or home turnover are used.

Michael Mack, a fourth-generation pawnbroker explains that, yes, pawn shops are affected by swings in  the overall economy, but buffered, too. When booms come, the retail side improves, while the loan demand may drop; and vice versa in slow periods.

“Pawn shops do well in most every economy,” he argues. “We loan more money in the downturn; we sell more merchandise in the upside. So we try to hedge ourself both ways.”

At Kamaaina Loan, we use the RolexIndex. When the real estate agents start bringing in  their Rolexes, we know the downturn has begun.  But that’s Maui, where real estate turnover, especially on the high end, is more important to the overall economy than in, say, Dubuque.

Mack also lets Ryssdal know that pawn changes, too. When he takes some big collateral (like a plane), he does not hope the borrower fails to repay.

In the old days, Mack told Ryssdal, that might have been the thinking — make a big score by selling the big collateral. But no longer.

Today, pawnbroking, like many another sector, is a relationship business. Mack’s Max Pawn and our Maui pawn shop  both operate on the theory that it is to our advantage to have borrowers repay and reclaim their collateral. And, Mack says, maybe return later to do another transaction. We don’t want to keep your gold ring. We want to keep you as a customer.

Kai Ryssdal

Kai Ryssdal

The profits from selling collateral are never as juicy as they look to outsiders. Just ask any mortgage lender stuck with a foreclosed house over the past six years or so.

More good press for pawn shops

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A ReutersMoney feature discovers (again) that well-to-do people use pawn shops for short-term loans. Pawnbrokers like to emphasize this, because so many people are convinced that all our customers are fences, derelicts and down-and-outers.

When Marc Kaye needed a loan to fund his boutique insurance firm at a time when payroll, his kids’ college tuition and a mortgage payment were all draining his cash reserves, he didn’t go to a bank.

Instead, he pulled a 1940s Picasso pencil drawing off his living room wall and made an appointment with Borro, a high-end pawnbroker. Borro did not require mounds of paperwork, did not care about his credit rating and did not put him through the third degree over how the money would be used.

“I needed some immediate cash,” says Kaye, who quickly got a six-month loan of $39,500, agreeing to a monthly interest rate of 3 percent plus about $175 in processing fees. “I had never pawned anything before.”

Nothing really new here. Even our little Maui pawn  shop has made a loan on a Picasso. It doesn’t happen every day, but it happens perhaps more often than you would think.

That’s the great thing about pawnbrokers. They are completely democratic.

Well, maybe not completely. Because some customers don’t want to be seen in a pawnshop, either because they are embarrassed or because they don’t want anyone to know money is tight, many brokers — including Beverly Loan Co., mentioned in the story and famous among Hollywood stars as a place to get a discreet hit of cash — have set up private transaction rooms, with secluded entrances.

At Beverly Loan Co., a brick-and-mortar pawn business outside Los Angeles that has catered to the wealthy for 75 years, business is also brisk, and small business customers are on the rise, says owner Jordan Tabach-Bank.

To meet demand for loans ranging from a few thousand dollars to $1 million, he opened a second office in the New York City’s International Gem Tower; it offers well-heeled customers secure storage for everything from GIA-certified diamonds to Patek Philippe watches.

Kamaaina Loan has a private transaction room, too. We go further. Call for an appointment, and if the deal sounds big enough, we’ll send a limo to pick you up.

In  reality, our private transaction room is used  at least as much for appraisals to help conservators settle estates as it is for pawn loans.  (Since the owner is a court-recognized appraiser.)

And not necessarily only for high-value deals. As Jimi, who has been working our pawn counter for longer than anybody except our owner, Big Rich, points out, sometimes a customer comes in with 50 items, all different, that he wants to borrow on (or sell).

That’s awkward to do on the counter, so usually that bargaining ends up in the private transaction room, where there is room to spread out. (Think about offering a collection or coins or stamps. It takes time and space to go through a big assortment.)diamond

Should you be interested in the private transaction room, call for an appointment, 242-5555.

 

Thoughts about buying gold now

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Is now a good time to buy gold? Maybe.

The price is the lowest it’s been in about three years. Which does not mean it couldn’t go lower still. But if you think gold is near a bottom and you want to accumulate, here are some things to consider.

Trust, trust, trust.

Somewhere in China, clever guys are busy counterfeiting gold coins, bars and nuggets. We see it all the time.

Want to hear a horror story? About a year ago, a customer brought us a “native nugget” (that is, as found in nature) of what looked like gold from a well-known deposit in China. (All gold is yellow, but this gold, probably because of the other minerals combined with it, is noticeably paler than most.)

Gold was selling high at the time, and the nuggest weighed close to a pound: If genuine, we would have offered about $26,000 for it.

But first we tested. At our Maui pawn shop, we always test (and, yes, once in a while, even with our experience we miss a fake). And when the “nugget” was sawed in two, it proved to be lead.

We don’t know where the guy got his nugget. Probably he wasn’t a counterfeiter. Just some poor schmoo who bought his “nugget” from somebody he could no longer get back to. Maybe, who knows, from an address in Internetland.

Even “slabbed” coins and bars, with serial numbers, are showing up fakes these days. And the fakers are getting better and better.

So, first, know and trust your vendor.

That means, among other things, avoid those “pop up” gold buyers that appeared everywhere — including kiosks at shopping centers and hotel meeting rooms — when gold was high.

Funny thing. It’s getting easier and easier to avoid those guys, because a lot of them have already disappeared. Several have closed on Maui in the past couple of months. One was a “chain” that had outlets on several islands.

Until one morning, it didn’t.

If you bought a “gold eagle” from those guys and you are dissatisfied now, lots of luck trying to do anything about it.

If you don’t like what you buy from Kamaaina Loan And Cash For Gold, bring it back. We were here 37 years ago, we’re here now, and we’ll be here tomorrow.

Other things to think about, if you are going to hold gold:

1. Put it in a bank safe deposit box. The annual rent is cheap insurance compared to just about any other place you could keep it.

2. Keep your records. There are plenty of legit places that will happily buy your gold. Our Maui pawn shop is one of thousands of reputable pawn shops that belong to the National Pawnbrokers Association. There are other reputable buyers, too.

Unfortunately, there are also too many shady ones.

3. If you are buying $50,000 worth of gold, or more, in a calendar year from one agent, that agent is supposed to file a report to FinCen (the government anti-money laundering agency). We will.

4. If you are converting cash to gold, a FinCen report is required for any purchases of $10,000 in a day. “Structuring,” or dividing up deals to avoid having to report is not allowed.

5. If you are selling gold (as jewelry, coins or bars), in Hawaii (and many other jurisdictions) the buyer is required by law to file your ID. In Hawaii, that means a government-issued picture ID (usually a driver’s license), and, at our Maui pawn shop, a thumbprint, and a physical address (P.O. Box won’t do). If the business you are dealing with does not ask for your ID, they are flouting the law, and that should make you suspicious about everything else, including the accuracy of their scales.

We have checked and found any number of pop-up gold dealers on Maui who do not follow this law, but it isn’t something that gets prosecuted. Be smart on your own behalf.

The same cautions apply to silver coins and bars as well. You might suppose that counterfeiters wouldn’t bother with silver, which is worth so much less than gold. And that’s true — up to a point.

Real secrets of reality TV pawn shows revealed

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One of the newer entries in the unending stream of pawn shows, Hardcore Pawn: Chicago, started out its latest program this way:

The first person on this episode wants to sell cemetery plots, and although they are worth the money, nobody wants to buy a plot at a pawn shop. Randy knows that being buried alongside his brother Wayne would surely be hell. No sale!

We have had customers offer burial plots at our Maui pawn shop, and we turned them down, but not because nobody shops for gravesites at a pawn shop — although that’s true enough.

No, the real reason is that pawn loans are made on portable collateral. That’s why Kamaaina Loan And Cash For Gold will give you money for your gold or silver coin but not for an equally valuable spot at the memorial gardens.

Now, the secret is revealed. Although it is not impossible that Hardcore Pawn: Chicago really was offered a chance at a plot, it’s much more likely that this little incident was dreamed up by screenwriters.

Get out! Do you mean to tell us that reality TV is scripted?

Yes. If you subscribe to iMDB Pro, you can read off the names of the scriptwriters. And not only for Hardcore Pawn: Chicago. For all of them.

 

 

 

‘I didn’t know you were legit’

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goldaLes Gold, the Hardcare Pawn guy, is promoting his new book, so he’s all over the interview shows this week. Here, on Fox Business News, he explains that the bankruptcy of Detroit is not good news for his pawn business there.

Our Maui pawn business is no different. Here at Kamaaina Loan blog, we keep trying to debunk common, but wrong, opinions about the business.

The Fox interviewer assumed that most pawn customers are desperate. That’s not true.

Besides, nobody,  but nobody wants to do business with people who are going to have no income. Not Les, not us.

Now, it is true that a fraction of a pawnshop’s customers are selling or borrowing on their last assets, and they are one step from destitution.

And pawn shops do do business with those people, helping stave off the wolf for another few days. What other business would touch them? Not one.

But while that is something pawnbrokers do, it is not how they prosper.

They — and we on Maui — do well when borrowers redeem their collateral.

It’s true that a pawn loan is somewhat less insecure than any other loan. The lender has his collateral already, unlike a mortgage lender, who, if the loan is not repaid, has to shell out money to start foreclosure, then sell the property and hope the return covers the balance. (Something that, as we all know, frequently did not happen since the Crash of ’08.)

The pawnbroker’s security is in house, but, as Les Gold explains, it costs him money to store and insure it, and if he forecloses on it, he still has the expense and trouble to trying to sell it. Since it is used goods, he will have to offer a bargain price.

It’s a system that works, but not perfectly.

People find it hard to believe, but a pawnbroker would always rather have the loan repaid. Then he gets his principal back with interest. If all has gone well, the customer is pleased with him and may come back to make a new loan sometime.

Contrast that with a pawn loan to someone with no further assets. The pawnbroker loses his principal and gets no interest. He may or may not be able to recover that by selling the collateral. And the customer may not be happy to have lost his (ring, surfboard, computer etc.)

(The pawnbroker will have an easier time, usually, if the collateral is gold or silver. Unless the price of precious metals has gone down during the 60 days he has been required by law to hold the item. This has been the case lately, as gold has dropped by hundreds of dollars per ounce. There ain’t no free lunch.)

Besides, the customer’s broke and out of assets, so he won’t be a repeat customer anyway.

Gold says redemption rates at his pawnshop and across the country average 90%. That might be a little optimistic over the long run, although redemptionr rates have been up in recent years. But 80% is a solid number year in and year out for most pawnshops.

And, remember, there is a fraction of borrowers who are getting rid of something they no longer care to have. They could just sell it outright, but sometimes they aren’t sure. So they pawn it, and when it comes time to reclaim it, they decide — even if they have the money to do so — that they don’t want it.

Call it values clarification.

The Fox interviewer is surprised by all this. “I didn’t know you were legit,” he tells Gold.

 

 

 

‘Is Pawn the new Prada?’

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midtownlogoIt is in Miami, according to this press release from the Jiminez Group. (Full disclosure: our Maui pawn shop, Kamaaina Loan And Cash For Gold) knows Jiminez well; we use their pawn business consulting services.)

“It’s like the Neiman Marcus of Pawn, the Mercedes-Benz of Pawn, the Tiffany’s of Pawn . . . you get the idea,” laughs President, Adriana Hernandez, “it’s the complete opposite of the dark, cluttered, seedy places you may have seen on Law & Order or in the movies.” 

Well, our Maui pawn shop is not dark and seedy, but nor is it the Neiman Marcus, Mercedes-Benz or Tiffany’s, either.

Somewhere in between, we like to think. You can indeed find Tiffany jewelry in our retail store at 42 N. Market St. , and Prada in our eBay store, safedeal. But no Mercedes-Benzes.

Pawn shops continue to battle their image as resorts only for down-and-outers. In a way, pawnbrokers should be proud to help down-and-0uters. Who else does? Not banks, that’s for sure.

But we keep trying to get out the message that pawn borrowing is a service that can suit the needs of everybody, from the person who’s out of work and hungry to the rich entrepreneur that Hernandez is angling for:

“It’s no different today. You’d be surprised at how many of our clients are visionaries or businesspeople who want to take their unused assets and trade them – temporarily – for the capital they need to invest in a new venture or project, and who were turned down by traditional banks. We offer a safe, cost-effective alternative for financing. The way we see it, we don’t make loans, we fund dreams, just like (Queen) Isabella did (to finance the voyage of Columbus) 500 years ago.”

In reality, the story about Isabella pawning her jewels is not historically correct, but kings and queens did pawn their stuff in the old days. Maybe they still do.

Here is another story about pawn’s bad reputation, this time in Roanoke, Virginia. The comments are interesting.

Somebody named Joe says what Kamaaina Loan Blog has often  referred to:

Pawn shops are governed by the state. They do not knowingly take in stolen merchandise, or they would lose their pawn license. A customer is required to have a valid State ID, and a complete description of the item, including the serial number if applicable, is entered into the shops’ computer system. At the end of every business day, all pawn shops report all of their transactions to the Virginia State Police. Once that information is submitted, the State Police enter the information in a data base so detectives from various counties can access the list for a match of possible stolen merchandise. Believe this; the thieves get caught.

Some people aren’t fortunate enough to have good credit. These folks might get in a bind and need some money to pay a bill or whatever. A pawn shop helps these people in times of need. In fact, pawn shops have been around longer than banks. Look it up.

Don’t worry, South Roanoke, the pawn shop will not cater to thieves and drug addicts as you so believe. They are legitimate businesses with educated owners and employees. Also, you never know, one day you might need a little loan to get you out of a tight spot.

Even if you don’t need a loan, try taking that one diamond earring — the one you lost the pair of under mysterious circumstances at the best party you ever went to (you think you remember) — to a bank and see what you get for it.

Then try us.

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.