Have you ever compared prices for similar jewelry in a mall’s jewelry store and in a pawn shop? Shocking, isn’t it?
How can the pawn shop charge so much less for, say, a diamond ring of similar cut, clarity, color and carat weight (the “4 Cs”) than a retail store? Are the two pieces really the same?
They are not merely the same, they are, in effect, identical. Pawn shops do not (usually) buy their jewelry direct from a manufacturer. They buy pieces from people who no longer want them, or they take in jewelry as collateral for loans that people then do not pay off.
It may surprise some people, but unclaimed pawns are NOT the big source of jewelry. Most borrowers – 80% in most places – redeem their pledges. But fashion is fashion, and people get tired of their old jewelry, and a pawn shop is a good place to make an “exchange.” It is very common at our Maui pawn shop for a customer in our jewelry store at 98 North Market Street to spot something she likes, and then walk over to our Kamaaina Loan And Cash For Gold pawn shop at 52 North Market Street to unload an old piece she has to raise money for her new bauble.
If it’s gold jewelry, she will get a high percentage of the New York spot price for the metal, and something in addition for what we call “artistic value” if her jewelry is attractive enough to go into our retail store (most of our retail stock is also offered through safedeal, our eBay store).
But, to tell the truth, only a minority of pieces make that cut. A lot of what we get is damaged (one earring from a pair, a gold watch that doesn’t work, a pin with stones missing, etc.). Most of the pieces that come over the counter are broken up (diamonds in one container, colored stones in another, metal in a third).
The first thing that happens to the keepers is that they are cleaned in a steam cleaner. Jewelry, especially chains that lie on the skin, pick up oils and dirt. If you have an old piece that doesn’t seem to have the sparkle it once did, try cleaning it. You might find out you still like it. If you don’t still like it, by all means bring it to our Maui pawn shop and turn it into instant cash.
Gold and silver chains then go right to the retail display cases. Jewelry with settings of precious or semiprecious stones make a stop with our Graduate Gemologist for evaluation.
The pawnbrokers used a 10X loupe to determine what to offer for the piece. Our gemologist uses a much more powerful magnifier, and other tools, to assess the quality and condition of the stone. Diamonds can chip and crack.
Occasionally, a piece is given to a jeweler for repair. Clasps and earrings are the most common things.
Rebuilding an elaborate gold and stone setting would be a rare event, but for the very best pieces, it can be worth it. Generally, however, only pieces in basically complete and undamaged condition escape the melting pot.
Engraved jewelry (like wedding rings) are almost always melted down. But if the pawn shop happens to have an item just in with your initial on it, you might get a real bargain. Ask.
But we still haven’t answered the question of how the same item in a pawn shop can cost half (or sometimes less than half) of what it would go for in a store for new jewelry.
Overhead is part of it. Pawn shops tend not to be in high rent areas, and malls are very high rent districts. (Notice that the crossing of walking areas at Queen Kaahumanu Center, Maui’s biggest shopping mall, is occupied on all four corners by jewelers. That’s no accident. It’s the most expensive real estate in the mall. You will find this to be true for most malls across the country.)
Also, the mall jewelry store has to make all its profits from sales of jewelry and repairs. A pawn shop usually gets most of its turnover from loans; the retail section doesn’t have to support all the overhead.
Then, a pawn shop’s selection will be random and, even if it is large, probably not as complete as a retail jeweler’s stock.
Part of the fun of buying pawn shop jewelry is the patient hunt for what you want – even if you don’t know what that is until you see it.
When you find the just-right piece and then see that the price is way low, then WOW! You are one smart shopper.