Is pawn lending fringe or mainstream?

pawnFor years, students of pawn lending have described it as an alternative to regular banking or — in the words of economist John Caskey — a form of “fringe” banking. Caskey, for one, is friendly to the pawn business, and even pawn lenders themselves have taken to calling themselves fringe lenders.

Unlike some other fringe groups, the designation is generally positibve.

Gold price is down; reasons to feel good about that

Gold futures have declined, trading near the bottom of their recent price range, which is $1240 an ounce. (The spot price, which is what Kamaaina Loan uses to buy or lend on gold, is a little higher, about $1253 this morning; silver is below $19, which is the low end of its range, too.)

Thank goodness somebody is buying this stuff

Thank goodness somebody is buying this stuff

When the futures price is lower than the spot price, that suggests the big traders are expecting the price to continue to decline, according to Kitco.

So why should anyone feel good about that? Well, as pawnbrokers dealing in gold, we don’t feel especially good about it; but there is a bigger world out there, and falling gold prices generally (but maybe not always) suggest that people feel pretty good about the future. Despite bad news — fighting in Ukraine and Iraq and Syria, disease wrecking the already not-too-good economies of west Africa, nervousness about elections in America and Scotland, apparently “people” are feeling pretty chipper.

Well, what people? People who control the bulk of the world’s gold exchanges.

And why should we think they have an especially good handle on the future? Now, that is a complicated question. The short answer is that studies have shown that among people who make predictions (which is what futures trading is all about), the trend among the many tends (but only tends) to make a better forecast than any one particular guru.

In the Financial Times, Tim Harford reports (“How to see into the future”) on a study that supposedly supports that idea. Of course, for every trader who offered a pessimistic price, there was another who disagreed with him, but the trend is supposed to be the thing. And the price trend is down.

(There are some real problems with the study, the main one being that its time frame is so short, with participants being asked to make predictions one year out. As we know too painfully, someone who forecast in 2006 that the stock market would crash [and there were such people] was only too right, but he would have looked wrong for the next year and more.)

Anyhow, so the theory goes, precious metals are a refuge in times of trouble, and so when people are expecting trouble, they should be bidding the price up. Instead, the big money is bidding it down, which ought to forecast rosy dawns and blue skies ahead.

#mauipawn #mauiloan #mauigold #gold



Save those receipts

A customer came in today with a Niihau shell necklace she was interested in selling.  We, of course, were interested in buying.

Niihau shell jewelry is particularly tricky because without documentation  there is no direct way to tell whether it is authentic. Fortunately, she had retained the Certificate of Authenticity that came with the necklace when she bought it.



Certificates can be copied, however, so a sales receipt helps add value. The more documentation , the better. A sales receipt, by itself, proves little, but a collection of papers for an item adds value. This is also true of designer bags and similar items.

The receipt might seem like clutter, but if you paid hundreds of dollars for an item, and someday you might want to sell it (or use it to raise a pawn loan),  that slip of paper might add many dollars to the amount you realize.

Anti-scam for Internet sales

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.


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


Searching for Mr. Goodpawn

OK, so this is a little bit Inside Baseball, but if you cannot navel-gaze about pawnshops on a pawnshop blog, where can you do it?


When searching for news to use on the Kamaaina Loan blog, several times a week, I use Bing and Google to search for “pawn shop news.” Curiously, most of the time the first 2 pages of results on the 2 engines have almost no overlap.

Today, for example, both engines return hits for police stories from North Carolina and Michigan involving pawn shops. (In each case, crooks came to a pawn shop with stolen goods — a theme covered at Kamaaina Loan many times — and got caught.)

But those fresh police blotter stories are the only overlap between Bing and Google for that search string. Although I seldom use Yahoo’s search engine, just for kicks, I tried Yahoo as well. Same outcome: Yahoo knows about the N.C. and Michigan police blotter stories, but after that, not much similarity in the search results.

Since “pawn shops” is not one of the hottest topics, the rest of the results pages are filled out with older stories about “Hard Core Pawn” and whatnot, but not the same whatnot.

As far as pawn news goes, this is not too consequential, but students ought to be aware (as too few are, I think), that there is more than one search engine out there, and more than one query is possible.

Some years ago, my brother told me this sad story:

He was filling in for another teacher who had fallen ill, in a college course about technology & culture. He assigned a paper on “the technology of chocolate.m,” thinking that might capture the interest of the students.

The first paper was fairly interesting, as was the second, but as he read the submissions, it became apparent that “research” for these students amounted to typing “technology chocolate” into a search engine and using to top 3 hits.

In my brother’s research courses, when he assigned a topic, he expected his students to make an exhaustive study of what was available. As it happens, chocolate, like most things, involves more than Google’s first 3 hits.


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.


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

Seedy maybe, but not dark

Reporters who show no interest in the millions of ordinary working people who patronize the nation’s 13,000 pawnshops are endlessly fascinated by the small number of threadbare millionaires who — when down to their last Patek Philippe — do the same.

Few show much evidence of ever having visited a pawn shop themselves.

Kamaaina Loan -- neither dark nor seedy

Kamaaina Loan — neither dark nor seedy

Take, for example, a story that got nationwide exposure yesterday on National Public Radio.

Ashley Milne-Tyte — sounds rather posh, doesn’t she? — of the Planet Money team did a segment about a “new” (not really) sort of pawn shop that caters to the well-off. These shops are not, she said, “dark and seedy” like other pawnshops that deal with the “desperate.”

While traveling around the country, I stop in pawnshops of all sorts. Some are really gun shops that do a little loan business, others are really jewelry shops that take in a small amount of household goods. Others are primarily second-hand goods stores that will buy a gold ring or two.

Most are like Kamaaina Loan, full service lender/traders whose customers are primarily working people. They may need to even out their cash flow (especially if they work on a tourist island where many jobs are intermittent or subject to wide swings in income) but are hardly desperate.

Some pawn shops I have visited are definitely seedy. These tend to be on the outskirts of town, in areas of low-paid work, cheek by jowl with mobile home sales lots, dealers in not-too-new used cars, second-hand furniture stores and apartments and houses that have not been repainted since the Reagan administration. The people they deal with seldom acquire high-quality merchandise in the first place, and what they have to offer for a pawn loan will not impress the likes of Ashley Milne-Tyte.

But dark? Never dark.

#maui #maui gold

What in the world is gold doing?

First, our regular disclaimer whenever we blog about gold and silver prices: We have no idea what the trends will be. At our Maui pawn shop, we buy and sell metal every day but we are completely at the mercy of the world price.

Each day, when we open the computer to see where gold went, it is a surprise.

That said, we read the opinions of those who do claim to be trendspotters with interest. Late last year, the smart guys on Wall Street were pretty much agreed that gold would drop during 2014, probably to a price near $1,200 an ounce.

For a while, they looked like soothsayers. On Dec. 30, the price dropped below $1,200 for the first time in a long time.

So what did the world say to the smart guys? So far, it’s been a big Bronx cheer. Gold is up well over 10% even after taking a bit of a dip today.

Of course, most of 2014 is yet to come and maybe gold will start dropping in a big way.  There’s a scary report from the International Monetary Fund (summarized at Bloomberg News) warning about deflation, especially in Europe and emerging markets.

Deflation is generally bad for gold, as when you make fiat money (dollars, money that is money because the government says it is and everybody agrees to go along) more valuable, metal becomes less valuable. In fact, deflation is generally bad for everybody because it becomes harder for everybody to pay their bills.

Very low inflation, “if below target for an extended period, could de-anchor longer-term inflation expectations,” the IMF economists wrote. It “also complicates the task in the periphery where the real burden of both public and private debt would rise as real interest rates increased,” they said.

Translated, this gobbledegook means that inflation, which is good, or, at least, essential to a modern economy, has been tamed all too well and if luck is not with us, we could experience another crisis like we had in 2009.

Of course, some people think the IMF has been prescribing bad medicine since, oh, forever; and it would be a good thing to ignore those guys.



Bad press for pawn

So, at Kamaaina Loan blog, we are quick to pass on just  about any news item that untarnishes (is that a word?) the widespread image of pawn shops as sleazy, predatory businesses. Fair’s fair.

Sometimes the old image crops up Paul Bunyan-size, as it just did in Flint, Michigan, where a pawn shop planning to deal in auto titles was denied a special use permit. (Pawning cars is not allowed in Hawaii; laws vary across the nation.)

liberty bell


The decision by the Flint Planning Commission was unconstitutional, a point we will expand on later, but first let’s look at some of the objections to the Cash for Keys pawn shop.

A preacher said,

“I’m against pawnbrokers and pawn shops,” said the Rev. Allen Gilbert. “I want to know: Who are they? Where did they come from? Is there anything in their background (that would be) a major concern?”

A citizen said:

South Flint resident Barbara Griffith Wilson said the proposed Cash for Keys Pawnbrokers would be another business that doesn’t help the neighborhood its in.
“We have an overflow of pawn shops and (gentlemen’s clubs),” Griffth Wilson said. “We should take a real microscopic look” at this business.
And while the comments on the All Michigan news site cannot have influenced the commission, they were as negative as could be:
They are businesses that the majority of their customer base is convicted felons. You’ve got to be a little shady to run one.

Pawn shops encourage criminal activity and cater to the desperate. It’d be nice to see them go. Most use them as a way to get quick cash after ripping someone off.

We need not go into the inconvenient facts, except to say that most pawn shop customers are not convicted felons. But quite likely some members of the commission think so, too.
Should the applicant have the resources to challenge the decision, she’ll win. Although we have not seen the contents of the decision and order of the commission, most of the testimony as reported by All Michigan was not germane. So what if the area has a lot of strip clubs? A pawn shop is not a strip club.
More to the point, there has to be a rational nexus between the action of any government body and the facts on the ground. Vague suspicions like those held by Rev. Gilbert don’t meet the test. Unless the applicant has a criminal record, character doesn’ count either.
Some places deny pawn licenses to convicted felons but most don’t. Even if an applicant was an ax murderer, the conviction might not rise to the level needed. If, however, she had been convicted to auto theft, that could be a rational reason to at least question her qualifications.
But, since she had operated a used car lot on the same site until recently, it seems unlikely she was boosting hot cars.
And there lies the real rational nexus. The application proposed to replace a used car operation with another used car operation. The financing of the deals would change, but not the use.
Pretty generally, equal protection of the laws don’t allow governments to discriminate on that basis. You cannot allow a Ford dealer on a lot but disallow a Toyota dealer because (for example), Toyota is a foreign company.
So it looks like we have an out-of-control planning commission in Flint. One wonders what the corporation counsel was doing. Nothing would be our guess.

To catch a thief — or several

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:

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.