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A few words about protecting artwork

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Via Pawn Times, a link to a page of advice from Beverly Hills Pawn (where the movie stars go, so they say) about how to protect your artwork, particularly prints, lithographs and photographs.

Take good care of her

Take good care of her

Our Maui pawn shop also takes artwork in on pawn, and like Beverly Hills Pawn, we store it in climate-c0ntrolled spaces. The post has some cautions about storing your stuff at home, and that goes double for Maui, where humidity and mold are worse problems than in Southern California.

The post does not say it, but protecting art is cheap (how much can a Mylar sleeve cost?) while having a conservator restore it is expensive.

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According to this Huffington Post story, in the five years 2007-2012, the number of pawn shops in the United States grew from 6,400 to 10,000.  We’re not too confident in the numbers. Nobody really keeps track, and other sources claim the country has about 12,00o pawn shops. santy If it is correct that there are 3,600 more pawn shops than there were before the stock market swoon of 2008, then that’s 2 new ones a week. It also means there are about as many pawn shops as McDonald’s hamburger stands. Whatever that says about us. On the other hand, the number of gas stations dwarfs both pawn shops and Mickey Ds at 159,000, but that’s down from 200,000+ 20 years ago (and down from over a quarter of a million in the cheap gas era of the 1950s). (Numbers from a website called howmanyarerthere.org, where you can play this comparison game all day long.) Well, whatever the exact number, the Huffington Post story fingers the reluctance of the big banks to lend to “non-standard” people and the decline of the “community banks,” which were allegedly a source of money for such folks in  the past. We doubt the accuracy of that. The most we’d accept is that smaller banks were prepared to make smaller loans that the big ones wouldn ‘t bother with. On the other hand, really small banks couldn’t lend much, because regulators tried to prevent them from making loans that were a large fraction of their capital. On the third hand, for Huffington, “small” means up to $100 million, which is enormous by pawn shop standards. Even the big chains don’t have total loans that approach that. Most of those 10,000 pawn shops do under a million a year, probably. But the point, made to Huffington by our friend Jerry Whitehead (a consultant who advises Kamaaina Loan) is that:

pawnshops are focused on consumers who are “getting forgotten in the banking system.”

We’d put it another way. Unlike other lenders, pawn shops don’t turn away anybody. If you’ve got collateral, we’re good to go.

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 depressing tale of fake pawn shops

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The Milwaukee Sentinel has uncovered a depressing — some might go so far as to say, slimy — story about how the Bureau of Alcohol, Tobacco and Firearms goes about intercepting illegal gun sales. It involves treachery, sales of illicit drugs, recruitment of mentally-damaged mules . . .

And that’s just on the law enforcement side.

Among the tactics was setting up fake pawn shops. Thanks ATF. It’s not as if legit pawn shops like our Maui operation don’t have to struggle against an undeserved — we think — reputation of pawn shops as fences and exploiters.

How bad did it get? What’s known is very bad, but there are reasons to suspect the situation is worse than the public knows:

The ATF refused the Journal Sentinel’s request for an interview with Director B. Todd Jones or other agency officials to address findings of the investigation. Instead, the agency provided a written statement that failed to answer any questions, and spokeswoman Ginger Colbrun suggested reporters read ATF news releases issued after the stings.
The use of falsefront businesses to capture crooks has a long and, at least in the hands of journalists, distinguished history. The Chicago Sun-Times and the Better Government Association once set up a bar called the Mirage (get it?) to capture corrupt city inspectors. They won a Pulitzer Prize.
One difference between them and the ATF was that the journalists were not themselves criminals.
As more revelations come out — and it looks like both parties are ready to have Congress investigate — it is unlikely that there will be local examples. Hawaii pawn shops do not generally deal in firearms.  But on behalf of our honest colleagues on the Mainland, we are just as angry as we know they are.

Badge of shame

Badge of shame

Read more from Journal Sentinel: http://www.jsonline.com/watchdog/watchdogreports/atf-uses-rogue-tactics-in-storefront-stings-across-the-nation-b99146765z1-234916641.html?ipad=y#ixzz2n0kGefcZ
Follow us: @JournalSentinel on Twitter

Pawn 101: Pawn shops get more respect

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As an old newspaperman, it pains me to say it, but TeeVee is capable of performing feats — so far as public opinion goes– that print just cannot match. Case in point: Making pawn  shops respectable in the public eye.

We have mentioned a couple of times that Fender has a “Pawn Shop Special” line of instruments and amplifiers, but while this shows a certain degree of respect, it is not general. Rather, the theme seems to be that musicians, who unless they hit the big time lead a rather hand-to-mouth life, rely on finds of still-good but cheap equipment in the retail departments of pawn shops. Nice but not a full-throated endorsement of the place of pawn shops as bankers to those abandoned or ignored by the big financial institutions; or even of just the convenience of no-credit-check, no-hassle (as we say in our Maui pawn shop: NO HUMBUG) borrowing.

(For context, there are other businesses that are so chancy that in a sense new entrants rely on the lack of success of previous risk-takers. Restaurants have a very high closure rate, much higher even that the generally high failure rate for all small businesses. So there is always a lot of used equipment for sale: professional refrigerators, mixers, coolers etc. Since it’s commercial-grade, it tends to be rugged and if it hasn’t been abused,   reliable. But the depreciation rate is worse than for cars. We have seen a commercial mixer, in good shape, that goes new for $60,000 go at auction for about a grand. Some pawn shop operators do get involved in used restaurant equipment. Kamaaina Loan occasionally buys at foreclosure auctions, rather than direct from restaurateurs or as forfeitures on loans — most collateral we accept is hand-carried to the counter, not possible with most restaurant equipment — and resells to new hopefuls. But it seems unlikely that Hobart will be coming out with a “Pawn Shop Special” line of slicers. There’s no inherent reason that musicians should feel more attuned to shopping at pawn  shops than hot dog-stand owners, but they do.)

Which brings us to today’s special pawn shop news, a real breakthrough — as we see it — in the image of pawn, and due largely to the impact of reality pawn shows, especially top-rated “Pawn Stars.”

In fact, the Pawn Stars are the stars of the new TV commercial by Microsoft that uses Rick of  “Pawn Stars” to bash Google Chromebooks. The theme is that a used Chromebook is not worth anything to a pawnbroker because it’s “not a real laptop.” This digs at Chromebooks’ bargain-basement approach which means it can do work if you are on-line but not so much if you are not connected to the Web.

Well, being used as authority for dissing other brands is not quite in the league of being called the Cadillac or Tiffany of whatever, but it’s a big step up from being seen as the resort of down-and-outers and burglars.

The way we see it, pawn shops haven ‘t changed very much. Most Americans have  never been inside one. Maybe one in four have used pawn shops for one purpose or another. TeeVee has given the rest of them a look inside, and what they saw was far different from what they saw when Rod Steiger played
The Pawnbroker.”

All this could lead to some long thoughts about how mass opinion gets formed. No question the movie “The Pawnbroker” had as much to do as any other episode to form the public reputation of the pawn business, even if nine out of 10 Americans never saw it.

But the ones who did spread the meme of pawnbrokers as avaricious, hard and unscrupulous. Nine out of 10 Americans have never watched “Pawn Stars,” either, but the one-tenth have brought it up in conversations with friends, and print and on-line media have written about the phenomenon. So that a new ingredient in the froth of public perception has been added, and overall a positive one.

Thanks, Rick.

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.

One place pawnshops get respect

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Pawnbrokers — including Kamaaina Loan blog — often lament that the image of pawnshops with the public is generally low. But there’s one place where we rank high. In fact, as far as we know, the highly-regarded Fender company is the only business that uses “pawnshop” as part of its branding.

Fender has just announced an addition to its fairly new Pawn Shop Special series, a small amp called the Ramparte that

looks the part of the perfect pawnshop prize.

Who knows how many now-famous musicians would never have been heard of if they hadn’t scored cheap used amps and guitars and mixing boards from a pawn shop when they were starting out poor, hungry and working gigs for free? Many, we think.

Tools 086

Maui, whose tourist business supports a high concentration of talented players, is awash with quality instruments (and some of middling goodness), and there are always a few in our retail store at 98 North Market Street.

There are even more in the warehouse, but most of those you’ll never see in the store. They go back to the owners, who have pawned them. Not because they needed money but because they are off on a tour or for a recording date — as the pros so often are — and the akamai ones have figured out that it’s a whole lot cheaper and safer to pawn their instruments with us than to put them in storage.

Our bonded and insured warehouse is climate-c0ntrolled.

The musicians may have come on this cool trick on their own, or they may have learned it from Jerry Clower’s Uncle Versie Ledbetter.

Luxury asset lending

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One thing Kamaaina Loan blog hasn’t covered much is how pawnbrokers do business with small businesses.  Usually, the actual transaction is with an individual, as with the vast majority of pawn loans, but “luxury asset lending” differs because it is a loan for much more money than a typical pawn loan, and it is taken out to tide an operating business over a financial hump — like making a payroll, which is much different from asking for a few hundred dollars to cover an emergency car repair.

Our comfortable Private Transaction Room

Our comfortable Private Transaction Room

This sort of loan has been a part of the pawnbroking business right along, but only with the increased attention paid to pawn (thanks to cable TV) has it acquired a name — personal asset lending, luxury asset lending or collateral-based lending.

None of the terms is especially well chosen, but that’s what the financial press has decided to go with.

Collateral-based lending, also called personal asset, luxury asset lending, is small but fast-growing, part of the shadow-lending sector that has emerged since traditional credit dissipated after the financial crisis.

The Wall Street Journal estimates it could soon grow to a multibillion-dollar segment, which sounds big but would be trivial compared to the big sources of short-term business money, like commercial paper.

Here’s a typical example of how it works: Let’s say a small general contractor has to make payroll but, for some reason, a progress payment on a project hasn’t come in on time. He needs several thousand or maybe a few tens of thousands of dollars, and he needs it fast.

Banks and other lenders cannot react that fast. Credit cards might work  but only if the borrower has a lot left on his credit lines.

Who can give a businessman $25,000 in cash in 15 minutes? A pawnbroker can. If the businessman has a gold Rolex, or something similar. A safe deposit box of gold coins will do. Even a stamp collection, although it would likely take more than 15 minutes to value that.

Now, let’s say our general contractor also does not want to be seen handing his Rolex across the pawn counter. People might talk. At Kamaaina Loan, we have him covered.

Call 242-5555, explain you want to do a “luxury asset loan” and we’ll open our Private Transaction Room, which is accessed via a private entrance well away from the pawn entrance. We’ll even send a limousine to bring you and your Rolex (diamond tennis bracelet, Krugerrands etc.) to us.

 

“Small business owners are not willing to extend themselves further into debt without more assurances of an economic recovery and stability,” says Paul Aitken, CEO of personal asset-based lender Borro Inc., in a press release, noting that small business borrowing has continued to decline. “The macroeconomic picture shows indications that the recovery should be on its way, but small business owners don’t share that same sentiment. “The consequence of accumulating too much debt has become more than people are willing to accept,” he adds. “Personal asset lending continues to be a favorable option as it avoids the potential pitfall of damaging credit scores.”

As with all pawn loans, we don’t care what your credit score is. Your Rolex is good enough for us.

 

 

Canonization for Big Rich

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When correspondent Emily Bott of Maui No Ka Oi magazine asked if she could do a profile of Big Rich for the November-December issue, Rich had no idea he’d be portrayed as the “St. Nick of Market Street.”

talk-story-pawn-shop-richard-dan

Emily riffed off the fact that Saint Nicholas is the patron of pawnbrokers (and sailors). She didn’t tell  Big Rich, however, about St. Nick’s other characteristic: Throwing bags of gold through the windows of poor fathers so they could provide doweries for their marriageable daughters.

Rich likes being St. Nick but he is not planning on throwing bags of gold through anybody’s window.

Nationally, 80 percent of pawnshop clientele reclaim their collateral on time. Dan’s average is 93 percent. “People pawn items they have an attachment to. They prefer to redeem them.” Dan makes it easy to do so. A wall filled with testimonials backs up his claim that “I hear ‘God bless you’ all the time.”

(Photo by Sue Hudelson, courtesy of Maui No Ka Oi magazine)