Fear and Greed - WSJ article on guns and ammo as investments

[mkemmerl]

Did anyone see this? It is an interesting article on how people are buying up guns and ammo not just for personal use but in hopes of turning a profit should the AWB be reenacted.

http://online.wsj.com/article/SB123984046627223159.html

[jrainer]

Wow interesting article while I can't fault anyone for buying so many rifles at once. It sure does suck to be the little guy trying to get a dependable rifle just for personal ownership with out breaking the bank.

[Misc Ex-Member]

I won't fault someone for planning to make a buck, but this thinking in regard to firearms is alien to me.

[HAMMERDROP]

Like Hyenas on a carcass !
It's no wonder so many are on the ' man-rag ' these days.
I am down to one carbine which I have a few thousand (conservatively and then some) invested in and when I first got BRD ammo was $12.00 for 50 rounds of Black Hills 55gr that price has nearly tripled. I buy is 75gr or heavier when I can find them and it pisses me off to no end that I cannot shoot as much as I used to but I guess that is pretty much the current adminstrations plan.


Michael

[psdiver102]

I just saw a story like that on CNN. Good part is, they showed a doctor, lawyer, and nurse who are EBR owners. Actually looked good for us

[Joe Mamma]

Here's the text of the article:

* * * * * * *
By ALEX ROTH and BETSY MCKAY

Kendrick Brinson for The Wall Street Journal
Jay Chambers has been collecting guns for years as an investment. Recent gun-ban worries have made inventory scarce, and speculation of an assault-weapon ban has raised the prices and value of his collection.

FAYETTEVILLE, Ga. -- The way Jay Chambers sees it, the semiautomatic weapons in his firearm collection might be the most promising investment in his financial portfolio.

Like many gun enthusiasts, Mr. Chambers, a manager for a door wholesaler here, believes President Barack Obama and the Democrats in Congress soon will reimpose a version of an expired federal ban on the sale of so-called assault weapons. If such a law passes, he figures his collection -- enough guns, ammo magazines and weapon parts to assemble about 30 AK-47s, AR-15s and other semiautomatic rifles -- could triple in value.

"A guy could easily make a lot of money," says Mr. Chambers, 47 years old, while at Autrey's Armory, a gun store about 20 miles south of Atlanta.

Purchases of guns and ammunition are surging across the country. Nearly four million background checks -- a key measure of sales because they are required at the purchase of a gun from a federally licensed seller -- were performed in the first three months of 2009. That is a 27% increase over the same period a year earlier, according to the Federal Bureau of Investigation.

No one knows exactly what is behind the gun-buying craze. Some buyers say they are stocking up for themselves in anticipation of new gun-control laws, while others say they're worried about deteriorating public safety as the economy worsens.

But it's also clear that part of the gun-buying rally is driven by people like Mr. Chambers who are buying weapons the way others invest in a hot stock. The buying is pumping up prices. Many popular models of guns are back-ordered for a year or more. Some manufacturers are operating plants 24 hours a day. According to the 2009 edition of the Blue Book of Gun Values, the average price of European-made AK-47s -- the famous Soviet-era military weapon now made in several countries -- doubled from $350 last September to more than $700 by the end of 2008.

Ammo Investments
Bert Collins, an Atlanta commercial real-estate manager, recently bought two AR-15 rifles for about $1,600 each. He's keeping one in its box, untouched, with the hope of selling it at a profit should Congress re-enact the law, which expired in 2004. "It's certainly a better investment than my 401(k) has performed," Mr. Collins said.

Bubba Sanders, owner of Bullseye Supply LLC, in Brandon, Miss., said he has "a number of doctor clients whose financial advisers have told them to invest in ammunition. Beats the hell out of money markets and CDs. You can double your investment in ammunition in a year."

Many gun dealers are fanning the fear on the Internet and in other advertising that President Obama will try to restrict the Second Amendment right to bear arms -- despite signs that major changes in federal weapons regulations are unlikely. The White House says there are no imminent plans to reinstate the federal assault-weapons ban. "The president supports the Second Amendment and respects the tradition of gun ownership in this country," a White House spokesman said.

Restoring the ban on assault weapons has limited support in Congress, even among Democrats. Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi have signaled reluctance in recent weeks to renewing the ban.

During the federal ban between 1994 and 2004, the value of popular firearms such as the AR-15 semiautomatic rifle -- a civilian version of the M-16 used by the military -- soared. During that time, it was illegal to manufacture weapons in the banned categories, but weapons already in circulation could be resold. The law also prohibited stores from selling ammunition magazines able to hold more than 10 rounds.

Inventory Scarce
As gun-ban worries have made inventory scarce, Joshua Works, president of Mission Essential Inc., a large gun store in Hinesville, Ga., has flipped some of his own stock for a profit. Last year, he says, he sold a variant of an AK-47 for $400. He bought it back from the owner in January for $550, then quickly sold the same gun again for $750. AKs are a particularly good investment, he says. His company's sales have risen about 30% since the election, he says.

Mr. Works ran ads on local television highlighting fears of a weapon ban before and after the November election and says he's planning a new spot that promotes guns as a good investment. "You can buy gold or silver, but they go up and down," he says.

On a recent weekend, Ray Delashmutt, a 28-year-old flooring contractor in Auxvasse, Mo., bought parts to build 15 AK-47 rifles. He says he spent about $6,000 but figures he can eventually sell the 15 weapons for at least twice as much. "Military weapons have always gone up in value and those are the only guns I invest in," he said.

Ups and Downs
Of course, like all investments, guns do fluctuate in value. Weapons whose prices rose during the previous ban fell once it was lifted. "People I know in 2000 were buying Colts for $2,300 or $2,400," says Dennis Williams, the owner of Guns & Leather Inc. in Greenbrier, Tenn. "Now you can buy a new Colt for $1,400."

That the bubble could burst doesn't appear to be fazing buyers. "Right now even used semiautomatic rifles are selling like crazy," says Lawrence Keane, senior vice president and general counsel of the National Shooting Sports Foundation, which represents manufacturers and retailers.

Randy Luth, the founder and president of DPMS Firearms LLC, in St. Cloud, Minn., one of the country's largest manufacturers of AR-15s, says he recently saw rifles similar to his company's at a gun store in the Phoenix area priced between $1,200 and $1,500, compared with a manufacturer's suggested retail price of $800 or $900. "It's difficult to find any AR-15 at a retail show or gun store selling for the manufacturer's suggested retail price," he says.

Mr. Chambers, the door salesman, figures he has spent $40,000 to $50,000 collecting guns and ammunition over the years. He says his 401(k) has been decimated in recent months. Real-estate values in his neighborhood have plummeted. His former employer went out of business. Medical benefits at his new job cost "twice as much and aren't as good." He's worried about supporting his wife and two young children. Even without a new assault-weapons ban, he figures he could sell his entire collection at current market rates and live off the proceeds for a year.

"They'll be worth what I paid for them at least," he said. "I look at it as a savings account."
* * * * * * *

Joe Mamma

[markm]

Originally Posted by The_Katar

I won't fault someone for planning to make a buck, but this thinking in regard to firearms is alien to me.

It gets dangerous because you have dickheads who need the ban to turn their profit.

[RogerinTPA]

Interesting read. As far as ammo is concerned, I find it a better investment than a 401K or firearms. You don't need a ban. Just the perception of one in an unstable economy. I look at my stash and see ammo I bought a few years ago, more than double in price today.

Example: Case of Wolf ammo, 125.00 then, 330.00 and up now.
Privi m193, 325.00 then, 450.00 now.

I wish I would have known back then, I would have quadrupled my purchases! It has done far better than most of the stocks I've owned in the past. It almost makes me not want to shoot it. I don't want to think in terms of, every time I pull the trigger, that's a quarter or more, going down range, but it's getting close!

[Ed L.]

The Wall Street Jouurnal complaining about greed is like Hustler complaining about promiscuity.

As far as the fear part, I have seen many news stories about fears of gun owners of Obama. But I have yet to see any of them delve into the depth of Obama's antigun past statements.

[mkemmerl]

Originally Posted by Ed L.

The Wall Street Jouurnal complaining about greed is like Hustler complaining about promiscuity.

I didn't interpret the article as complaining. They were merely pointing out that people are hoping to take advantage of the current gun/ammo-buying panic to turn a profit if/when one of the AWB or ammo registration/serialization bills get some traction.

I don't agree with the article's use of the word "greed" as that implies someone is getting more than they deserve. I see nothing wrong with making a profit. The Greater Fools Theory says if there is someone willing to buy something for a ridiculous price, there is someone else willing to buy it from them for an even higher price (the greater fool). So, good for the first fool if they can find a second.

Is what they are doing illegal? No. Unethical? It's not my place to judge, but I don't like it and think it is a big part of the reason the shelves are bare and prices are so awful. It's a similar mentality, although not as malicious, to the people that hoard plywood before a hurricane to sell it at $100 during the storm.

BTW - The WSJ is one of the very few major publications that has been fair to gun owners.

[A-Bear680]

Spot on:
QUOTE=markm;351347]It gets dangerous because you have dickheads who need the ban to turn their profit. [/quote]

Greed and Reynold's Wrap could be a very bad combination. Some people seem to keep stirring up panic for money , others for political power , a combination of both can be a real problem.

[Gentoo]

Originally Posted by markm

It gets dangerous because you have dickheads who need the ban to turn their profit.

This is what concerns me the most. You have plenty of people who are buying in just because they heard somewhere that during the ban years magazines and guns went up drastically in price.

[Renegade]

Originally Posted by markm

It gets dangerous because you have dickheads who need the ban to turn their profit.

True if you invest in a lot of NIB guns, you want a ban, and the longer you have had the guns, the sooner you need it.

Thus, each day there is no ban the buyers lose money, and are no different than house flippers, and will eventually have to dump what they have onto a saturated market, driving prices down, and probably putting a lot of gun companies out of business.

So what happens first? The ban or the crash? Time will tell.

[Cold Zero]

Why can't a buyer just buy guns now and sell them, at a profit and not have a ban?

Guns can't be sold for a profit without a ban? People are still buying guns right now, everyday, even without a ban.

[A-Bear680]

Good question.
QUOTE=Cold Zero;352123]Why can't a buyer just buy guns now and sell them, at a profit and not have a ban?

Guns can't be sold for a profit without a ban? People are still buying guns right now, everyday, even without a ban.[/quote]

Because current prices on EBR's , defensive handguns & shotguns , ammo and magazines are inflated by blind , unrealistic political panic. The last decent , sustainable prices were last summer. Huge numbers of people -- many of them complete noobs-- are trying to grab a lifetime supply , just as fast as they can.

Once people realize just how strong the 2nd Amendment movement has become--
prices will drop to normal market levels.
It's one thing to get active in politics , write elected officials , join the SAF , NRA , state & local club , recruit new shooters , etc. Paying a crazy price for a couple of cases of ammo for short term use might just be a cost of doing business .

Expecting to make a profit by buying at crazy , peak retail prices is something else. Running out and buying another 10 cases of Wolf for $400.00 a K every time some gun-grabber politician or TV talking head has delusions of adequacy is not a rational , informed choice.

[markm]

Originally Posted by Renegade

So what happens first? The ban or the crash? Time will tell.

Now the goofball administration is claiming they don't want to spend the political capital on a BAN.

Maybe the crash is near.

[Nathan_Bell]

Originally Posted by markm

Now the goofball administration is claiming they don't want to spend the political capital on a BAN.

Maybe the crash is near.

Nope, EPA will get into the act and backdoor an ammo manufacturers' regulation that makes them all pretty clubs.

[Left Sig]

To major glaring errors in the article:

The AWB did NOT ban the sale of new military style rifles. AR-15 derivatives with fixed stocks, no bayonet lug, and fixed muzzle brakes (or no muzzle device) were freely available. AK's with single column magazines were also available. All of these came with 10 round mags, which gets us to the next error...

IIRC hi-cap mags could be sold anywhere as long as they were produced before the ban date. They weren't cheap, but they were available.

The rifles that were sold were all just as deadly and shot the same ammo, you just couldn't buy a newly manufactured hi-cap mag, fix a bayonet, or hide your flash.

These two errors show the author does not understand the AWB. The only thing truly banned from new sale were things like Tec-9's and other semi-auto pistols with mag wells separate from the grip.

The fact that the media refuses to accurately report what the old AWB actually actually did and didn't do shows their bias. They continue to imply that you couldn't buy a new AR or AK at all for those 10 years which is simply untrue. And the public herds believe it...

[Rider79]

I don't think I'd allow myself to be quoted in a newspaper article about purchasing guns to resell for a profit privately. Can't you get hit with dealing without a license by the ATF or something?

As for this phenomenon, my FFL friend has a local guy, former strip club owner, in the process of purchasing $100K worth of EBRs and related items.