Without a doubt, it was the gaudiest thing I ever saw in my life. We made it to his specifications, and we charged him $10,000.
The pimp ended up losing it in a pawn. He didn’t claim it, so it came off pawn and I was left to deal with it. The only person in the world who would even consider putting this thing on his finger is a pimp. Every other human in the world would just laugh at it.
So I sold it to another pimp. The second pimp pawned it and lost it, so I sold it to another pimp. Same thing happened. This ring bounced pimp to pimp. It ended up being in and out of the shop for five years, and it found itself on the finger of at least five pimps.
At some point that nobody could determine, crown rings lost their cachet among pimps. They moved on to some other talisman of success, and I was left with a shotglass-sized pimp ring and no pimp to buy it. In other words, I was stuck with it. We tried and tried, but we were repeatedly turned down.
In the end, the most famous pimp ring in the history of Gold & Silver Pawn met its demise. We ended up scrapping it. But who knows? Its parts might have found themselves onto the fingers or necks of some other group of pimps somewhere. I guess you’d call it the ultimate in recycling.
Here are a few more: The world’s fastest motorcycle is a Suzuki Hayabusa GSXR 1300. These bikes go 200 mph and are the gold standard for speed-freak bikers. Somebody came into the shop about a year ago and sold us one, and word spread among the speed-freak bikers that we had a Hayabusa, and a guy came in and said he wanted to buy it. We have to wait thirty days before we sell something to make sure it doesn’t come up stolen, so Corey told him he had to wait. He was a speed-freak guy who was also a member of a motorcycle club that was known for doing stunts on city streets and freeways, like doing stand-up wheelies down I-15 at 100 mph for two miles.
Corey told him, “I’ll be glad to sell it to you after it clears.”
The guy didn’t want to miss out on this, so he told Corey, “OK, but let me put a deposit down on it right now.” He handed Corey $10,000 on the spot and said he’d pay him the other $10,000 when the bike came off.
No problem, good deal for us, and the guy was planning a trip to the Bonneville Salt Flats to do some racing.
Before the thirty days passed, the guy was killed in a motorcycle accident that happened during one of his stunt rides. We’re legally obligated to hold the merchandise for sixty days before someone forfeits their deposit, but we held this bike for six months waiting for someone from the family to come in and claim it. Nobody ever did, though, so after six months we put it back out for sale.
* * * *
During the building boom in Las Vegas, a guy walked into the store and proceeded to tell us he had a connection that could get us DeWalt grinders. His uncle owned a tool company and he had storage sheds full of these things that needed to be moved. He over-ordered or something, but the guy had a story that he told pretty well.
This became an obsession for this guy. His whole life revolved around selling us these DeWalt grinders. He came into the store four and five times a day to pitch us on the idea of buying his DeWalt grinders. I was intrigued but wary at the same time, because construction supplies and tools often turn up stolen. I had no idea where he was getting this stuff.
I called the cops and told them the story and asked them if they had any reason to believe the grinders might be hot. They got back to me and said no. I asked them if they would come down to the shop and talk to this guy directly, and they sent a guy down while he was here.
Grinder Guy greets the cop like an old friend. They shake hands and talk and laugh. He repeats his story the same way he told it to me, the cop listens to him, asks him a few questions, shrugs his shoulders at me, shakes Grinder Guy’s hand, and leaves the shop. Everything checks out.
Over the course of the next three months, I buy five hundred brand-new, still-in-the-box DeWalt grinders from this guy. Five hundred hand-held grinders, and during that time I could sell each and every one of them.
And then one day at the beginning of the fourth month, the cops come into the shop and say, “All those DeWalt grinders are hot.” This is after I’ve done everything I can think to make sure I’m not getting stuck with stolen merchandise.
“Wait a second,” I tell the cop. “You guys checked him out. I had you talk to him. What else could I do?”
“Yeah, I know, but the company he was working for didn’t know they were missing until now. They just reported it.”
* * * *
Here’s how changes at the macro level of the economy can trickle down to the micro level:
About five years ago, Home Depot and Lowe’s switched from selling American-made MK tile saws ($900 apiece) to Chinese-made saws ($200 to $250 apiece). The company that supplied the Chinese tile saws had to agree to buy all these MK tile saws off the shelves and inventory of Home Depot. And if you’re selling a certain brand of saw, you can’t also be carrying a different brand. To put it another way, if Ford was forced to buy up all the Chevys, Ford would want to get rid of the Chevys as quickly as possible, because they wouldn’t want it to be known that they were holding both brands.
I had done a little bit of business with this company that made the Chinese tile saws; I got some saws cheaply and sold them on the Internet. One of the guys who was a contact with that company called me up to tell me the Chinese company was going to be looking to unload all these MK tile saws for a pretty good price, as long as they could be promised that I would buy them all. I agreed, then negotiated the price: $125 apiece for brand-new MK tile saws that had been selling the previous day for $900 at Home Depot.
I sort of knew what I was getting into, but it’s hard to visualize three semi loads full of tile saws. Well, the semis showed up at the pawn shop, and after we filled up every available space in the shop—which wasn’t that much—we moved on to the other buildings I own that are adjacent to the shop. We filled every available space in those, too—and we still had two full semis sitting in the parking lot.
The next stop was my house. We filled my garage with MK tile saws. We filled Corey’s garage with MK tile saws. We filled my aunt’s garage with MK tile saws. When Tracy came home from the store that day, she almost had to walk sideways to get into the house.
(And the kicker: On the day when I could finally move the saws out of my garage, which might have qualified as one of the happiest days of Tracy’s life, I moved some of them only to find that a family of rattlesnakes had decided to make its nest at the bottom of one of the pallets. So not only did I have a garage full of tile saws, but I was also providing a home for rattlesnakes.)
I sold the saws for $400 apiece, and this was back when there was a ton of construction in town. I sold them for $300 to guys who sold them in swap meets all over California. I sold them over the Internet. I sold them on the showroom floor. I’d pay guys that work for me to take them out to the local swap meets and sell them. Wherever you could imagine buying or selling a tile saw, I was there.
The beautiful thing was, the Chinese company had to agree to take all the returns from Lowe’s and Home Depot. If someone returned one after the stores stopped carrying them, they were sent directly to the Chinese company. And when they came to me and asked if I was willing to take on the returns as well, I said, “Sure—for $25 each.”
They agreed, and I hired two guys whose sole job it was to stand out in the back lot and fix these returned MK tile saws. Sometimes there was a piece missing, or a blade broke, or something simple. They were out there swapping out parts and fixing saws. A lot of times people buy a tile saw, do a quick job, clean it up, and return it. They might tell the store there’s something wrong with it, but there isn’t—they just don’t need it any longer so they take it back and figure Home Depot can deal with it.
You might not expect to find new tile saws at a pawn shop on Las Vegas Boulevard. Then again, you might not expect to find $30,000 paintings or a ring the size of a shotglass. (You might not expect to find that anywhere, probably.)
I’m always getting calls from people with connections, and I’m always willing to listen. I might not always jump in, but if there’s a deal—and a buck—to be made, I’m there. That’s another one of the lessons of the pawn shop: There’s a market for everything.
CHAPTER 7
Research in Action
My ideas don’t always work. Maybe it’s equal parts fearlessness and arrogance, but I’ve never embarked on one without completely believing it would succeed. I’ve always looked at the conventional ways in which business is transacted—the payday loan business is a good example—and tried to turn it on its head. If there’s an alternative route to the same destination, I’m willing to take it.
This holds true for big endeavors and small. One of the most unusual, and potentially dangerous, ideas I came up with in the nineties was to refine my own gold from our jewelry department. Here’s how it works: Every time you get your gold jewelry cleaned, a little bit of gold comes off. A busy jewelry store will polish off a lot of gold every day, and every jewelry store has a very expensive buffing machine with filters and vacuums on it to collect the residue. There’s a practical reason for this: For every pound of used buffing powder, you can reclaim anywhere from a quarter ounce to an ounce of pure gold.
At the time, I was selling our bags of powder for seventy-five bucks each. As you can see, there’s a reason a good jewelry store will always offer to clean your jewelry: It’s money in the bank. And the harder the buffing compound, the more gold will come off.
Rick being Rick, I read a book on refining gold. I developed my own buffing compound, and I found out there’s a lot more gold left in buffing powder than they say there is. I was getting screwed at seventy-five bucks a bag all those years. So from there I took the logical next step: I went around buying everybody’s buffing compound.
I didn’t have the same kind of lab equipment the pros had. I was going by the seat of my pants, learning chemistry by reading a book. I probably had $500 worth of lab equipment when I should have had $20,000. When I first started, I remember I’m in the garage refining my gold and I’m nearly passing out in the middle of a cloud of blue smoke. So I went to the book, flipped through a few pages, and found the problem. “OK, I get it. I didn’t get all the nitric acid out of the solution.”
This process creates a lot of toxic waste that needs proper disposal. For the limited amount of gold I was refining, it got too expensive to get rid of the waste, so I had to quit after a year. I’m glad I did it, though. After all, if you’re going to read all those science books, you might as well try out the science inside them, right?
My reading list looks more like the typical mad professor’s than a pawn shop owner’s. I’ve read all four volumes of Asimov’s Understanding Physics, and each volume is dog-eared and annotated. Some of the more interesting books I’ve read in the past couple of years include: Diagnosis: Mercury, about the history of mercury poisoning; The Battery: How Portable Power Sparked a Technological Revolution; Thirteen Things That Don’t Make Sense: The Most Baffling Scientific Mysteries of Our Time; Professor Stewart’s Cabinet of Mathematical Curiosities; The Ten Most Beautiful Experiments; Against the Gods: The Remarkable Story of Risk; and The Monty Hall Problem: The Remarkable Story of History’s Most Contentious Brain Teaser.
I’m not a passive consumer, either. When Corey was about thirteen, he came into the garage during my cold fusion stage of lab work. You read that right: cold fusion. This was back when it was the craze, making its way onto the cover of Time magazine as the newest form of cheap energy. Cold fusion was supposed to create more energy than you needed to put into creating it. Again, I bought a book and read about it, and I came away thinking I could do it. Well, Corey walked in one day, took a look at me, slammed the door, and ran into the house yelling to Tracy, “Mom, Dad’s doing some weird shit in the garage.”
Just then, they hear Boom! Near as I could figure, slamming the door separated the palladium from the hydrogen sulfide in my jar. I got a mushroom cloud. I swear to God it was working—I was on my way to successful cold fusion—when Tracy pulled the plug on me because she was convinced I was going to blow up the house and everything in it.
Of course, I was convinced I was a few steps away from making it happen. It’s similar to the feeling I had a year before we got the television show, when I was equally sure I had discovered the world’s greatest loophole, and it was going to allow me to get filthy rich off nickels.
Yes, nickels.
Hear me out.
First, a little background: There is money lurking in the strangest places. The catalytic converter in your car is full of precious metals. Catalytic converter production is the largest market for platinum, and a converter in a large eight-cylinder car has two grams of platinum inside. A small amount—probably a quarter gram—of rhodium is in there as well. At the peak of the metals boom, rhodium was $10,000 an ounce. People who knew this were crawling under their cars with a Sawzall and cutting the catalytic converters out. Prices have come down since then, but if the catalytic converter in your car needs to be replaced, make sure you get your old one. A junkyard will give you $75 to $80 for it.
Back to the nickels: At the time I devised my scheme, the price of nickel had risen to twenty dollars a pound. Copper was $4.50 a pound.
A nickel scrapped for ten cents.
I went out and bought $10,000 worth of nickels, hoping to scrap them for eight cents apiece. That’s more than a 40 percent margin for a product that’s easy to get, and I considered that pretty much a foolproof deal.
I would go into a bank and ask for $100 worth of nickels. I would go into another bank and do the same thing. I had my employees go into banks to get $100 worth of nickels. I went to vending machine companies and told them I’d buy all of their nickels. I bought so many nickels I had one of the employees at the shop load down a one-ton pickup with nickels. When they went to move the truck, the bed was sitting on the tires. There were too many nickels for the truck to hold.
Hey, they make something like a billion nickels a year; I just wanted a quarter of them.
And I found someone to buy them. I found a scrap dealer in California. I told him what I had and the guy said, “I’ll take all you’ve got.” Well, this happened about a week before Congress passed a law that outlawed scrapping nickels. Just my luck—Congress figured out it cost the mint thirteen cents to make a nickel, and they knew people were catching on to it.
Now I’m sitting there with a ton and a half of nickels and nothing to do with them. Now they’re all just worth five cents, not eight. There’s no margin in these nickels.
So I reversed the process. Every day I would walk into the bank and get a $100 bill for a bag of nickels. I don’t know—some of the bags still might be being used as doorstops in the back room of the pawn shop. God only knows what lurks in some of those darker corners.
Now it’s a felony in the United States to take more than five dollars’ worth of nickels out of the country. So much for my plan.
In my business, I have to be familiar with a lot of arcane and mind-boggling laws. For instance, I bet you didn’t know that every single transaction that takes place at a pawn shop gets downloaded to Homeland Security, did you? It does—it’s a little-known clause in the Patriot Act.
Another one relates to the sale of firearms. I sell guns, but only antique guns, those that were made in 1898 or before. Federal regulations for antique guns are vastly different from those governing non-antique guns, and in a lot of ways the laws are completely nonsensical.
I have an 1895 .45-caliber pistol in my shop. You can put modern ammunition in it and it’s a deadly weapon, but it’s exempt from the strict regulations that cover non-antique guns. I don’t care how old it is, you could use it right now and it’s as lethal as a brand-new Glock. And if you want that 1895 gun, you can walk into the shop and buy it from me without an ID and without a waiting period. As far as the federal government is concerned, it’s scrap metal.
If you tr
y to buy the world’s worst piece-of-shit .25-caliber handgun, it’s a three-day waiting period and a ton of taxes and a mountain of paperwork. But you can go out and buy a fully functional 1898 Gatling gun without someone even asking you your name. And not only that, but any muzzle-loading weapon of any vintage can be purchased without paperwork of any kind. They’re considered antiques, or at least antiquated, and they’ve fallen through the cracks of the weapons laws. In fact, I have a mortar in the shop that can fire a bowling ball over a mile, and because it’s muzzle-loaded, it’s yours without any required paperwork or a waiting period. Buy it today, roll it out of the shop, and fire it to your heart’s content. It’s nothing short of insane.
Weird contradictions, especially in government, have always fascinated me. Partly because of these odd gun laws, I read a book about strange laws. One of the passages typifies what I find to be true today: In the 1700s in England a guy walking down the street yelled at someone across the way, “Thoust are a thief. Thoust has stolen my dung.”
The guy who was accused of stealing took the accuser to court, citing slander. His argument was that dung is real property and therefore cannot be stolen, hence the slander. English common law differentiated between personal property and real property, and real property was considered “property of the land” or what we would consider real estate. The judge listened to both sides and then ruled in one of the most confusing ways imaginable.
In the end, he decided this: If the dung was piled—in other words, placed in organized piles—then it was personal property, but if it was spread across the land it was real property.
Clearly, the United States isn’t immune from quirky laws. Take Prohibition, which produced some of the best law-breaking stories in the history of our country. I have a few bottles of medicinal whiskey that were produced during Prohibition. They’re rare and unusual, so they’re worth quite a bit of money to the right person. In truth, they’re not really bottles; they’re more like metal containers, similar to lighter-fluid cans.
License to Pawn: Deals, Steals, and My Life at the Gold & Silver Page 10