Real secrets of reality TV pawn shows revealed

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One of the newer entries in the unending stream of pawn shows, Hardcore Pawn: Chicago, started out its latest program this way:

The first person on this episode wants to sell cemetery plots, and although they are worth the money, nobody wants to buy a plot at a pawn shop. Randy knows that being buried alongside his brother Wayne would surely be hell. No sale!

We have had customers offer burial plots at our Maui pawn shop, and we turned them down, but not because nobody shops for gravesites at a pawn shop — although that’s true enough.

No, the real reason is that pawn loans are made on portable collateral. That’s why Kamaaina Loan And Cash For Gold will give you money for your gold or silver coin but not for an equally valuable spot at the memorial gardens.

Now, the secret is revealed. Although it is not impossible that Hardcore Pawn: Chicago really was offered a chance at a plot, it’s much more likely that this little incident was dreamed up by screenwriters.

Get out! Do you mean to tell us that reality TV is scripted?

Yes. If you subscribe to iMDB Pro, you can read off the names of the scriptwriters. And not only for Hardcore Pawn: Chicago. For all of them.

 

 

 

Arizona loves to pawn

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Nationwide,  about one American in 5 uses a pawn lender to raise cash, according to the private financial regulator FINRA.

But for some reason, in Arizona it’s 1 in 4.

Old West Indian trading posts were, among much else, pawn lenders. But there couldn’t be enough trading post business to account for the difference.

Our Maui pawn shop has active accounts for around 1 in 10 Maui residents. The FINRA survey asked whether respondents had used a pawn loan in the past 5 years.

There are other pawn shops on Maui besides Kamaaina Loan, and we have some turnover in customers over 5 years, so Maui people might be close to Arizonans in using pawn.

Nationwide, there’s more pawning in the South. But that’s because most Southern states raised the ceiling on interest, not because Southerners are specially attuned to pawning.

 

 

. . . and what about diamond investing?

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With gold breaking back from its 9-year runup — as this is written, New York spot is $1372 or about $180 less than it was just a couple weeks ago — investors are wondering what other things there are (aside from mutual funds) they could put their money in.

What about diamonds, for example?

For starters, the last few years have been the only time in a century when it didn’t matter that diamonds (and gold, too) don’t earn interest. Neither does cash in the bank nowadays.

On  the other hand, a graph that shows a steady rise in diamond prices over half a century can be misleading.

A graph of Hawaii housing prices over the 50 years from 1955-2005 would look similar, but as Paul Brewbaker, the well-known local economist used to remind us, the rate of increase was only about the same as for a passbook savings account. (This situation has changed since the crash of 2008; today passbook savings accounts don’t grow, and housing prices went over a cliff.)
Anyhow, the point is, you have to watch out for money illusion and always remember the power of compound interest. $500,000 sounds like a lot more than $50,000, but $50,000 compounded at 4% gives you $500,000 in half a century. We should all live so long.
Here at Kamaaina Loan, a big move in the world price of gold brings in more business. Why?
Different strokes for different folks. The gold optimists think the price is unusually favorable and want to buy more. The gold pessimists have decided the gold bull market is over and want to cash out and get into something else. Should it be diamonds?
Here are some things to think about diamonds.
Diamonds are rated by the  “5 Cs” — cut, color, clarity and size (carat) and cost.
Cost is not an inherent character of a stone. It varies. And the other 4 Cs are subjective.
There are different diamond grading services because people have different opinions. This is not true for gold. A .9999 gold bullion coin is the same whether it comes from Australia or Austria (ignoring the very slight premium paid for especially popular coins).
Let’s consider a one-carat, internally flawless, round cut diamond of good (d) color. Rapaport, the leading price service and a big buyer and seller of  diamonds, reported the asking price for such a stone was $27,000 in April 2011. In August 2012 it was $28,00o. The latest report has the asking price as $28,400.
Not a lot of change over two years.
Now let’s look at gold. It was selling at $1556 in April 2011, and a report of the time said the recent changes “had the look of past silver and gold price peaks.”
Wrong!
In August 2011, gold was up to $1861 and it briefly passed $1900 a few weeks later (though only on intraday trades; gold has never closed over $1900).
Today, gold is $1372.
So, would you rather have put your money in gold or diamonds?
Inflation has been low over the past two years, and diamonds have just about kept up. Gold was way ahead of inflation for a while, now it’s way behind.
So, if you think you were so smart you would have realized gold was peaking last autumn and would have sold, you should have bought gold.
There’s more to consider if you want to try diamonds. Besides the 5 Cs, there are other factors, like scintillation, that strongly affect the value of a stone. Unless you are an expert yourself, you need to have a GIA-certified gemologist along with you. And while you may see some dealers pushing stones that have ratings from other sources (like EGL), know that GIA is the (ahem) gold standard of diamond grading.
So if you are considering selling your gold and getting into diamonds, or selling your diamonds and getting into cheap gold, or if you just need cash, we stand ready to buy and sell.
Know this. Kamaaina Loan has a graduate gemologist on staff and is GIA-certified.

Keeping up with Chumlee

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The Las Vegas Review-Journal says Chumlee of “Pawn Stars” is giving up his lease at a toney mansion where, among others, Elvis’s manager Col. Tom Parker once lived.

No word where Chumlee is going, but the paper goes on to report that the popular pawn program has been extended 80 episodes (4 years), and that Chumlee gets $25K per, or a total of $2 mil.

Gossip site TMZ says Chumlee is a pretty good tipper: $2,000 on a $10,000 tab for champagne at a Mississippi saloon, along with his bodyguard.

Bodyguard? Fame is hell.

Living and dying in the information age

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Because we track our customers and how they are reached by our advertising, we at Kamaaina Loan are sharply aware that young people don’t read newspapers. So we spend time and effort trying to reach them other ways — this blog is one way.

An initial thought when the news arrived of the Brazil nightclub fire that killed over 230 young people was, things you don’t know can kill you. Don’t they know that setting off fireworks inside a building — especially if the building is a crowded nightclub — is a bad idea?

Today’s Star Advertiser carries a list of some of the most disastrous nightclub fires: Perm, Russia, fireworks ignite ceiling, 152 die; Buenos Aires, flare ignites ceiling, 194 die; Rhode Island, pyrotechnics ignite ceiling, 100 die.

But the partiers at the Brazilian club were mostly university students. Let’s assume they were around 21 years old. Those fires were prehistory to them: a 21-year-old was 18 when the Perm club burned, 13 when the Buenos Aires fire happened, 12 when the Rhode Island club burned.

Even news junkies, at age 21 today, wouldn’t have much sense that letting off fireworks in nightclubs often leads to bad outcomes. You’d think people could figure that out without lessons from history.

Apparently not.

And where were the adults?

A Washington Post picture from the fire

 

 

Stupid ways to die, a continuing series

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There’s an old joke that condo politics are so vicious because the stakes are so small.

Not always the case.

From Bloomberg News, a story about a man who tried to prevent the condo from towing his car off the grass and paid with his life.

And they say there’s no ham in hamburgers

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News reports say horse DNA was discovered in beef hamburgers sold in Ireland and England. Up to one-third in one sample, according to the Los Angeles Times.

This reminds us of an old joke.

During the Depression, a restaurant was famous for its rabbit stew. Then came World War II and meat rationing.

A loyal customer continued to order the stew but he became suspicious. At length, he asked the chef if there wasn’t some change in the recipe. The chef said:

“I wouldn’t admit this to anyone else, but you’ve been my most loyal customer, so I’ll tell you. Yes, it’s true. Because of the rationing, we had to mix in horse meat with the rabbit.”

But, he hurried to add, “But only 50-50. One horse to one rabbit!”

 

Tales from a Pawn Shop: Our coin maven visits

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One event we at Kamaaina Loan look forward to each year is Dennis Ryan’s winter visit to escape the snows of his home in Albany, New York.

Dennis is a man of many parts. During his two months or so on Maui, he consults on archaeological digs, visits antique dealers (“They’re all disappearing” on Maui) and sorts through a year’s accumulation of strange and oddball coins and paper money for us.

He is also an expert in African art, works on the archaeology of the Erie Canal, and holds a master’s degree in Russian history — for which he wrote his thesis in French. There’s never a dull moment when Dennis is around.

Over the course of a year, the pawn shop accumulates bags and envelopes of hard-to-identify coins. Typically, we buy somebody’s collection based on one or a few valuable coins, and along with it comes a plastic bag of odds and ends.

We rely on Dennis to spot the unusual rarities in this pile of junk. This year, we presented him with a large shoebox of coins.

He’s still working his way through it, but so far this trip his prize find has been a J.F. Souza merchant token.

Souza had a shop on Luso Street in Honolulu. Shopkeepers in Territorial days would pass out brass tokens as advertising and promotions, or to use in slot machines, or sometimes as a form of store credit — like today’s gift card. (These tokens still exist; think of the Maui Trade Dollar.)

The token Dennis found — and it was in a jumble with a bunch of dross, so we don’t know where it came from — is not dated, but it must be from the earliest Territorial days around 1900, since the store credit it offers is for “half a cent.”

Metcalf and Russell’s “Hawaiian Money,” the standard reference, considers the Souza token among the most valuable of the island commercial tokens, along with the Lunalilo Home and St. Francis Hospital radio tokens — a generation ago, these were valued at $100. Recently, one sold for $150. Only the very first, the Hawaiian Gazette Co., and one or two other Hawaii tokens are rarer.

The Souza token is by no means the most valuable coin Dennis Ryan has rescued from the junk pile, but the reason we value his visits is not the money he finds. It is the stories.

Some of the interesting finds are worth nothing. Monday, for example, his eagle eye spotted a faked Liberty dime. He immediately noticed the bronze showing through the silver plate. At the end of each visit, Dennis accumulates a small stash of counterfeits and fakes.

About 99% of the shoebox was uninteresting coins: some contained enough silver to be worth melting down; some still pass current (you can spend them, if you’re in the right country); and some are worth from half a buck to a dollar to a collector. That accounts for about half.

The other half end up in the scrap metal pile.

Dennis Ryan sorts coins

 

 

 

 

 

 

‘License to Pawn’

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Our friend Rick Harrison, the star of “Pawn Stars,” has a book out, called “License to Pawn.” Can the Rick Harrison bobblehead doll be far behind?

If you follow the link you’ll come to an 8-minute interview with Rick plugging his book. But he also is given a chance to debunk some of the myths and legends about pawn shops and pawn brokers.

One is that pawn shops prey on desperate gamblers in Las Vegas who have tapped out. Harrison says 90% of his customers redeem their pawns in good times, and even now, when times are far from good in Vegas, 80% do.

That matches Kamaaina Loan’s experience, and also tracks surveys of pawn shops across the country.

Most people use pawn shops like people with bank accounts use banks — to move money in and out according to their need for cash from day to day. But because up to 25% of Americans do not have a bank account, “alternative lenders” like pawn shops are how they do it.

Do you find it hard to believe that one American in 4 does not have a bank account? Survey after survey finds this to be a fact, and it has not varied a whole lot over at least the past 40 years.

Another point Harrison makes is that he has 22,000 items in his warehouse, all one-of-a-kind. It makes for inventory-taking nightmares. But for customers, the lesson is, if you see a bargain at a pawn shop, grab it.

 

Subdividing your pawn loan

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The other day, a customer came in with a problem that could have easily been avoided with a little forethought.

She had four pawn loans outstanding, each one a mixture of gold jewelry (chains, earrings, rings etc.). Each loan was for over a thousand dollar. That made her a big customer, since the average pawn loan – both at Kamaaina Loan and nationwide – is under $100. (Sometimes way under. While the woman was working out her problem, a man came in and took out a pawn loan for $3.)

Her loans were not only a miscellany of objects. She had mixed items of sentimental value – “things I treasure,” she described them – with common jewelry of no special significance.

As sometimes happens, the customer did not have enough money to redeem all her pawns, or even to redeem one and extend the other three (which would have required less money now). She was faced with losing at least one bag of jewelry.

She could have stood that, she said, if she could have let the common stuff go and kept the treasures. Her problem was, the treasures were mixed in with the ordinary.

If she had had some extra cash, a resolution would have been simple: She could have redeemed one, taken out the treasure, then pawned the rest back for cash to repeat the sequence with the next.

She wanted to go into each bag and pull out the treasures, compensating us for that value. Unfortunately, the pawn contract doesn’t allow that.

It has to be closed out and returned to the customer, who can then re-pawn if she wants.

The simple precaution, if you are presenting both treasures and common goods, is to have the treasures written up as separate pawns. Then, if your expectations of being able to redeem don’t quite pan out, you can redeem the treasures and let the rest go.