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Old bugbears

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wind

It is amusing to watch Mauians, even newcomers, rushing to stock up on rice and toilet paper in anticipation of storms Iselle and Julio.

Buying bottled water makes no sense either.

Batteries, yes. Tank of gas? Half a tank ought to be plenty for most people. Cash? Maybe, where are you going that you will be spending money? If it really does rain 4 to 8 inches Thursday and maybe again Sunday, I am not going anywhere except in an emergency. Nor will I be calling for pizza delivery.

It’s been over 20 years since we’ve experienced a big storm and nearly that long since even a moderately big one. With a population turnover in the neighborhood of 4% a year, probably half the people on Maui (not counting the tourists) have never been through even the outliers of a hurricane.

Stocking up on TP has more to do with memories — second hand at that for most people — of dock strikes over 60 years ago. Distribution methods have changed a lot since, and a TP or rice famine is hard to take seriously now.

But rushing to the stores to stock up doesn’t hurt anybody and probably has more to do with socializing than real preparedness. It gives people a chance to ask each other if they are being prudent and to reassure themselves that, 1) it won’t be that bad; and 2) they’ve done what they can (short of offering a bed indoors to a homeless person, something I haven’t seen or heard any concern about, although the shelterless are one group that could have a rough time even if Iselle arrives as nothing much more than a winter windstorm).

Sustained winds of 55 mph, if that’s what we are going to get, are no scarier than the usual winter nights, where 60 is common.

Should either storm turn out much worse than current forecasts (always possible, remember that the Butterfly Effect means that forecasts more than 5 days out are pretty much imaginary), or if you have the rotten luck to have a tree fall on your car in even a moderate blow, make sure your insurer will honor its contract.

After Iniki, a lot of people on Kauai and Oahu got stiffed. Amongst all the precautions I have seen being passed around, no one has mentioned that one.

And bottled water. Fill a jug from the faucet. County water is just fine.

Anti-scam for Internet sales

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Another insight from this year’s National Pawnbrokers Association convention. This one came during the roundtable on Police Confiscations, but the speaker did not identify himself, so I don’t know whose good advice this is.

When selling electronics, like a laptop, over the Internet, he said he puts an identifier somewhere hidden on the item. He uses Whiteout or a scratch tool.

He also photographs — not just writes down — the serial number.

That way, if a “buyer” has a broken laptop, then buys a good one from you, then “returns” the broken one for credit, you are in a strong position to defend yourself when Paypal or eBay starts a dispute.

burglar

This won’t protect you from someone sophisticated enough to swap the good memory module in your machine for the bad one in  his, then return a “broken” machine to you, but it will screen out the less akamai scamsters, and that’s most of them.

Good to know.

#mauipawn #mauiretail

 

 

 

New but old pawn shop guitar treasures

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OK, we love this essay  by Jol Dantzig at PremierGuitar.com, but nowhere does he tell what the prices of these “pawn  shop treasures” have gotten  to. Just that they are up.

Music to our ears.

The times are certainly a-changin’, with inexpensive department store guitars of the ’60s (like this vintage Danelectro) becoming highly collectible.

The times are certainly a-changin’, with inexpensive department store guitars of the ’60s (like this vintage Danelectro) becoming highly collectible.

The headline is:

Esoterica Electrica: Pawnshop Plywood Chic Comes of Age

It’s all about the collectibility — and even musical desirability — of cheap guitars from Sears and similar places. Dantzig says:

Additionally, economics have been shifting the landscape around us. The handmade, classic instruments made from old-growth woods have been steadily climbing in price since the 1970s, and modern recreations aren’t inexpensive either. It’s difficult to find a 1950s or ’60s instrument for a working musician’s wage unless you turn to student guitars from the likes of Silvertone, Harmony, and Kay. But wait, you say they’re making those guitars again? The “mystery wood” warriors of yesteryear have increased in value to the point where new production is viable.

Well, we learn something new everyday. Until reading this, our pawnbrokers would not have considered a ’60s-era Silvertone electric,  but now we know better. If you have one, we’ll make an offer and try to find it a good home with some impecunious bluesman or -woman.

#maui #maui music

The risk the pawnbroker takes

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All lenders take a risk,  but pawnbrokers live with an unquantifiable risk that most other lenders do not have to worry about: the possibility that gold will crash.

We have written often about how our

Some of Kamaaina Loan's gold inventory.

Some of Kamaaina Loan’s gold inventory.

Maui pawn shop is at the mercy of the world gold market on the Kamaaina Loan blog. Today, the lesson is driven home in an example from England: Albemarle & Bond, a chain with 180 locations, was caught holding a lot of gold when the price started falling last year. Now it’s bankrupt.

Albemarle’s situation was partly of its own creation. According to earlier news reports, it chose to hold gold.

Kamaaina Loan’s situation is different in important respects. First, we are not a stock company. The stock market can act with  brutal swiftness when it perceives that a company has bet wrong. While gold is down about a third from its recent peak, Albemarle & Bond’s stock went down 97%.

Second, we do not hold a lot of gold. We have some in inventory as jewelry at our retail store at 96 N. Market St. And we have quite a lot  being held as collateral for loans at our pawn shop at 52 North Market Street.

State law requires us to hold pledges for 60 days. Right now (according to the historical charts at Kitco.com), gold we lent against 60 days ago is worth a little more than it was then: $1310 an ounce this morning compared with $1260 then.

Over the past six months, the net change in gold has been almost 0, although there have been many ups and downs in between.

We prefer that our customers redeem their gold pawns, as most do. First, a redeeming customer is probably a satisfied customer who might want to do another loan someday. Second, if we have to take over the collateral, there are overhead expenses, so even if gold has gone up a few  bucks, we might not cover our costs by selling. And if gold goes down over 60 days, we for sure cannot cover our expenses.

Over the long haul, the best way to play the world gold market is not to try to beat it but to go with the flow: Sell gold as it comes in and live with the ups and downs. As we understand it, that is not what Albemarle did. They held gold when they didn’t have to and got  burned.

Pawnbrokers in India, who are even more tied to gold than even American pawnbrokers, apparently are caught in the Albemarle trap, too.

It’s great when gold goes up. Everybody feels happy, and those who are holding “physical gold” as the speculators like to call it make windfall profits. If that sounds like the real estate business in the early 2000s, that’s because the situation is parallel.

Leverage works just as much in down markets as in up markets, though.

 

Presidential diamonds

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At Kamaaina Loan, we like to say we never know what will come over the counter next. But we have never had a First Lady’s diamond tiara yet. The famous Rick Harrison at Gold and Silver Pawn has beaten us to it.

Mrs. McKinley wearing tiara (Photo from Akron Beacon Journal)

Mrs. McKinley wearing tiara
(Photo from Akron Beacon Journal)

The TV pawn superstar obtained a diamond tiara once worn by the wife of President McKinley.

He has offered to sell it at his price, $43,000, to the McKinley Museum in Ohio. Presidential museums and libraries are not tax-supported but depend on donations by (usually) supporters who backed the man in office.

That’s why money is being raised for a Barack Obama library — with Hawaii and Chicago expected to compete for the location — right now. But it is only in fairly recent times that  big political money has flowed into presidential libraries. There is nobody around now who backed McKinley, who was shot in 1900.

So the Ohio museum seems a bit dubious about whether it can come up with the $43,000.

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.

Do we have too much aloha?

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The short answer is no. But a story at the National Pawnbrokers Association website got us to thinking about our experiences with reality television.

We have been approached four times by producers, and have done a “sizzle,” which is a short, hot pitch to be shopped around. Well, we are still sitting at the counter of Schraft’s, sipping on a malted and waiting to be discovered.

Our little Maui pawn shop is not alone.

Nancy Cejudo, the woman owner of Ben’s Pawn (yeah, Ben; she bought the business from a man), also had a look-see with a producer and, like Kamaaina Loan, was left waiting at the altar.

In an interview for the NPA blog, she declared the producer (also a woman) told her:

 “She’s just too nice.”

Not the worst kind of rejection note, but a rejection all the same.

The producer told her:

 

“Reality TV will continue to be exactly what it is. Some shows will be more compassionate than others.”

Probablky the best way to get picked would be to act like Jerry Springer and throw chairs, but we don’t plan on doing that. Farewell fame. It was nice to meet ya.

Just as well, maybe. The other day, we were looking at a reality TV fan site (www.tv.com) and reading the fan (if that’s the right word) comments on Hardcore Pawn. Now, we know the Hardcore Pawn folks and they are as nice as could be. All the nastiness on the tube is an act.

Some watchers don’t get it, which, we guess, the producers and advertisers count on. Anyhow, if this is what it would mean to get on the tube, maybe we’ll pass:

Ashley u r the worst person on the planet you rank right next to Satan that’s how evil you r

Next to Satan? Man, that’s harsh. The rest of the comments are just about as cruel. And, they don’t speak very well for the schools the Hardcore Pawn audience went to.

Greet each customer with a smile

Greet each customer with a smile

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.

 

To catch a thief — or several

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We have surveillance cameras at our Maui pawn shop, but we DO NOT do what Portland pawnbroker Mike Fink does:

Fink, who owns Guitar Grave, has been posting YouTube videos of customers who are trying to sell stolen items or have stolen from him.

Read more: http://www.wmtw.com/news/pawn-shop-owners-videos-help-police-fight-crime/24353626#ixzz2t8hddQU8

He does more than that. He posts videos from his shop about anything that strikes him as funny, and he is a humorous man. Some are what you might expect — stoners; but others are just Portlandians who seem to hear a different, more uncertain trumpet. You can watch a bunch of them by going here.

Portland Press-Herald photo

Portland Press-Herald photo

Fink also marries people. This is not that unusual. A number of pawnshops (but not Kamaaina Loan) will tie your knot. We have not watched all his  videos yet,  but our favorite so far is “A Very Guitar Grave Wedding.” The bride, Nikki Rae, who seems to be having a very good time, says, a few minutes after Fink ties the knot, “I want to be on top.”

For some reason a local radio reporter walked in during the ceremony and recorded it. It must have made for curious radio. He ended up being the witness for the marriage, too.

Guitar Grave is not the most obvious name for a pawnshop, but there’s a story behind that, too.

Fink says he started out selling games and was looking for a name. Marketing advice said to find something alliterative, so he started searching the database of available names for Game G-something.

Among the choices was Grave, and he picked that because it was the only one that his son, who was then 7, could spell.

Later, an employee persuaded him to expand into collectible guitars, and Guitar Grave was born.

Really, Kamaaina Loan (Hawaiian for “child of the land,” meaning native-born or, loosely, old-timer) seems pallid by comparison.  And nobody but a kamaaina can spell it.

 

 

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.