Gold — and not only gold — takes a powder

At the start of this year, the mavens at Goldman Sachs — who had called the price movement of gold quite closely in 2014 — predicted it would finish 2015 as low as $1200 an ounce.IMG_3692

Maybe it will, but already in July it is plunging near $1,100. We think it is fair to say that no one foresaw this. Certainly at our little pawn shop, we didn’t.

But it isn’t only gold. Bloomberg News reports that world commodity prices have fallen to levels last seen in 2002. Gold, by contrast, has fallen to 2010 levels.

Raw materials are losing favor with investors as the dollar gains amid signals from Federal Reserve Chair Janet Yellen that the central bank may raise rates this year on the back of an improving U.S. economy. Higher borrowing costs curb the attractiveness of commodities such as gold, which doesn’t pay interest or give returns like assets including bonds and equities.

The other commodities include things like iron, natural gas, oil and wheat. At Kamaaina Loan And Cash for Gold, we like to say we will buy (or make a loan on) “anything that doesn’t eat. But we don’t buy (or lend on) oil or wheat. And salesfor that, just now, we are thankful.

 

Crooked lawyers? Say it ain’t so!

The post below is copied from my other blog, Restating the Obvious Maui, at The Maui News. For Kamaaina Loan blog, the key point to add, if you are a borrower, is that pawn loans are “non-recourse loas, which means that if you do not repay, the pawnbroker can keep your collateral, but he cannot go after any of your other goods or income. He cannot ask the courts to make you pay.

And he does not report your default to a credit reporting agency. Something to think about if you have ever had trouble repaying a loan in the past.

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The NY Times has a story about the New York attorney general going after corrupt practices of buyers of bad consumer debt. If you have consumer debt, it’s worth your time (and one of your 10 monthly Times looks if you are not a subscriber) to read.

When I say “going after,” I mean candy-assed sweetheart settlements, amounting to mere hundreds of thousands in frauds that appear to total billions. And no hint of sanctions against the lawyers involved for their culpability in perpetrating frauds upon the courts.

Eric Schneiderman is no Eliot Spitzer.

But unlike mortgage foreclosure lawsuits, consumer debt collection cases often play out far from public view, consumer lawyers say, because borrowers seldom show up in court to contest the suits.
As a result, an estimated 95 percent of debt collection lawsuits result in default judgments against borrowers, an automatic victory for the debt buyers that enables them to garnishee consumers’ wages or freeze bank accounts.

That’s half true. I’ve never seen a debtor show up at Circuit Court to contest a credit card collection action. There are typically 3 to 6 in a morning session. (These are usually suits by the lender not by a buyer of bad debt.)

But I’ve seldom seen anybody show up to contest a real estate foreclosure action either, at least in the years since the Crash of ’08.

In either case, very often the borrower has left Maui long before the lender goes to court.

(Style points to the Times copy editor for getting the correct verb — to garnishee, not to garnish.)

#mauiloan #mauipawn #mauiborrow #borrow

Boulevard of Broken Promises

Among the smaller items in the Maui County budget — which will far exceed half a BILLION dollars, we are not a small, rural place any more — but one close to Kamaaina Loan’s interests is the Iao Minipark (or whatever its final name turns out to be).

The historic Wailuku business district, which we are proud to be one of the oldest existing veterans of, was designed for horse-drawn buggies and walkers. North Market Street was not paved for many years. Then after World War II, everybody got wheels.

Congestion.

The county took a bold step, buying up several blocks and closing a couple of streets (alleys, really) to create the large Wailuku municipal parking lot. Since then, it’s been all downhill as far as parking has been concerned.

In other older places struggling to adapt to modern  habits, the county has added significant public parking: a million-dollar lot in Makawao and a similar one in Paia. Presumably these are partially responsible for the full storefronts and higher commercial rents in those towns. (Having top drawer tourist draws helped, too, of course.)

Wailuku languishes. Commercial rents in Paia are about four times higher than in the North Market Street area.

Much follows from low rents. Non-profits, which are attracted by low rents, swarm in Wailuku but are absent from Paia and Makawao. In those “country towns,” merchants compete vigorously for shop space and there are few vacant buildings. There has been new construction in Paia and lots of investment in keeping up the old buildings in Makawao.

Not in Wailuku. Space goes begging and comparatively less sprucing up occurs. Green Lotus has recently upgraded and reopened a vacant gas station on Main Street that had been vacant for over a decade (despite having its own parking). Only one new-from-the-foundations building has gone up in our district in the past decade.

What construction has occurred has chipped away at our parking.

Now the county proposes to chip some more.

No question the vacant, unpaved lot between the Iao Theatre and our building (in which Maui Sporting Goods is a tenant) needs to be addressed. Right now, it provides  nearly two dozen precious, in-the-middle-of-things parking spaces.

When rebuilt, paved and made to conform to 21st century codes, at least 10 stalls will disappear, maybe more.

The area lost at least 23 when North Market was gentrified. In our view, we have gotten down to a point where 10 or 12 fewer spaces is a really big deal.

Don’t get us wrong. We support the minipark, for safety reasons. People we know have stumbled and fallen and been injured there.

But the history of the county’s work in the historic business district has been to promise more parking and then not deliver. Before the devastating rebuilding of North Market, the business owners and managers were promised that before North Market was to be taken in hand, something would be done.

That something was prominently to be a parking garage on the municipal lot. Never happened. Nor did anything else.

People really do need parking. A big fraction of the activity in the area is governmental. The county’s own staff grows year by year, till it has overflowed the nine-story county building into the One Main Plaza building.

Those people don’t (for the most part) walk or bicycle to work. They drive. Then they park.

The Chinese used to practice a form of slow execution called the “death of a thousand cuts.” That’s what’s happening to business in Wailuku.

#mauitraffic #mauibudget #mauibusiness

Hey, wassup? Silver and gold. that’s what

It’s kinda puzzling. The Dow is up sharply, which usually has a depressing effect on metals. But gold is up, too. It was  briefly over $1,337 an ounce today. Silver, too. It got over $22 for the first time in a long while before slipping all the way down to $21.99.

Nowhere near the $1800 and $38 of a couple years ago,  but the trend is up not down.

Not only do we at our Maui pawn shop not pretend to understand what moves gold and silver prices, we find stock prices puzzling, too. Especially stocks in pawnshops.

Most of America’s 12,000 or so pawn shops are quite small, but there are a few  big chains.  Big  being relative compared to banks. Even local banks often have assets over a billion dollars. Pawn chains are not that size.

One of the ” big” ones is EZ Pawn, which reported an 8% gain in same-store sales over the holidays. The stock bounced up by 27%. How very nice for them, but hard to understand since “The company’s profit and sales actually fell during the quarter, by 27% and 1%, respectively.”

Profit down 27%, stock up 27%. It must make sense to somebody.

Bring us your old surfboard. We know how to value that.

 

 

‘Marketplace’ explores pawn business

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.

Fair’s fair

You may not realize it, but Hawaii law requires second-hand dealers to follow the same rules as pawnbrokers — keep records of all incoming merchandise, and of the IDs, addresses and other information about the sellers (or borrowers in the case of pawn customers).

The reason you may not know this is that island second-hand dealers routinely ignore the law and enforcement is slight. Pawnbrokers, and our Maui pawn shop for sure, follow the rules strictly.

Why not? Our owner helped write that statute decades ago.

If you think it makes little sense to require pawn shops to keep careful records to discourage fences but to allow second-hand dealers a free pass, the idea is gaining some currency. For example,  this Boston Globe story explains the outcry when police advised consignment stores — often selling expensive goods like Prada — that they, too, needed to cooperate in deterring thieves.

Reporter Beth Healey provides a good overview of the competing arguments, including one from a defense attorney about civil liberties. He’s going to lose that one.

Unusually, though, Healey ends by revealing one of the dirty little secrets of the anti-pawn shop mindset — it’s about scorning working people:

 

Goldstein [a pawnbroker] said that out of fairness, consignment stores should follow the same rules.

If stricter measures are being applied to people in less affluent neighborhoods with lower economic means, he asked, “Are they being implemented with people on Charles Street and Newbury Street?”

Parking, parking, who’s got the parking?

North Market Street is a great place to do business in many ways, but it was even better before the county started eliminating parking spaces.

Saturday, Kamaaina Loan sent an observer out to see what more parking means for business. The locale: the Upcountry farmers market.

The market used to be held at the Eddie Tam Community Center, which has maybe a dozen parking stalls. And it used to attract about 6 vendors and perhaps two dozen customers over the course of a couple of hours every Saturday morning.

If somebody was setting up the meeting room in the center for a baby luau or birthday party, which was usually the case, there was even less parking.

Over a year ago, for reasons unrelated to parking, the market was moved to the private parking lot next to Longs at Kulamalu Town Center.

It took a while for people to get used to it, but nowadays, the farmers market draws at least 5o vendors and we don’t know how many customers. But last Saturday, the parking lot — we didn’t count, but it has probably 300-400 stalls — was full. Overfull.

People wanting to get at the locally-made jellies, just-picked avocados, fresh greens and sausage biscuits (among many other things) had to park along the access road, and the overflow of cars reached nearly to Maikalani (the offices of the Institute for Astronomy).

We cannot think of a clearer example of what you need for business stimulation.

 

 

 

 

Wonk alert! A hot issue in the pawn world

All pawnshops are regulated by the states, and some municipalities add additional regulations. The national government is not involved.

But there’s a move to create a national pawn structure. It would be similar to the situation with commercial banks, which can seek either a state or a federal charter. (The majority of banks have state charters, including the big ones in Hawaii.)

The National Pawnbrokers Association is against http://act.nationalpawnbrokers.org/7851/federal-charter-hr-6139/ national regulation, but there is a minority of the membership that disagrees:

The National Pawnbrokers Association opposes any legislation that grants authority to the federal government to charter, regulate, supervise and examine non-depositary providers of credit services and products to consumers. These responsibilities have traditionally been managed by the states. The NPA has been monitoring, H.R. 6139, which authorizes the Office of the Comptroller of the Currency to grant “federal charters” to non-depository providers of financial services who meet fairly exclusive requirements.   

This may not seem to be much of an issue for customers, but it can be.

Think of it like you do credit cards. Your credit card issuer is almost certainly domiciled in South Dakota, which has VERY credit card issuer-friendly laws. S.D.’s laws are not so friendly to credit card holders, though.

 

 

 

We have regular stuff for sale

One shade of gray

One shade of gray

Last week we mentioned that we have weird stuff for sale, for example, an irradiated dime. But we also have good regular stuff. More regular stuff than weird stuff, really.

For example, for just $24.99, you can get a nice pre-owned pair of Oakley Flak shades, gray lenses on gloss black frames, in a case.

 

 

 

 

 

Bring us your gold

We will buy it for top price.

Don’t have any gold? This is the time of year when Maui produces its own gold.

Maui’s gold