From a summary of a new episode of “Hardcore Pawn,” set on a day when gold has taken a big drop (although the claim that it dropped 5% is bogus — that would be around $75 and gold doesn’t move that much in a day):
When a woman came into pawn her gold bracelet, she was told she could get $250. She had received $300 in the past for it and demanded the same. When she was told that the price of gold had dropped, she told the woman at the window that it was not her problem and wanted to see a manager. When Ashley came to confront her, she called her out to the parking lot, without Byron. Ashley handed her back her bracelet and told her to have a good day.
At our Maui pawn shop, we have a lot of customers who pawn the same item over and over. They know and we know what the loan value is, and writing up those loans goes really fast.
Maui is a tourist island, and plenty of workers in the visitor industry have busy and slow periods. They use pawn loans to smooth out their cash flow so they don’t get behind in their bills.
Most of these regular customers are quite sophisticated about the value of their collateral. Unlike the lady in the “Hardcore Pawn” episode, they don’t get bent out of shape when they’re told they cannot get as much as usual.
On the other hand, sometimes when gold is rising, a Kamaaina Loan pawnbroker will be asked for, say, $100 and will check the New York gold price and say, “You know, you can get more for this now.”
Some take more, some say, “No, that’s all right. $100 is what I need.”
The really sophisticated ones recognize that some lendable items can lose a lot of their appeal overnight. This is true, for example, of video game systems. When the new Xbox or Playstation comes out, the old ones lose a lot of their value. Since the game system makers usually announce new versions well in advance, the value actually starts adjusting well before the new version is released.
Something similar happens with cellphones. They are very lendable, but every new version of the iPhone makes the old ones worth less. There have been so many versions of the iPod that it takes a maven to keep straight the market value of the various models and features.
Gold, silver and diamonds are less predictable. They aren’t coming out with a new version of gold.
Gold today is under $1,300 an ounce. It was over $1,300 a few days ago. No telling where it will be next week, particularly since the issue of the government shutdown is still unsettled as this is written.