Guns as investments

Lately I’ve been trying to cut back on gun-centric posts and limit myself to one every Friday. Oddly, I missed last Friday’s.

Ever see people post about ‘guns as investments’? They’ll point out that if you had bought [gold/index funds/California] a certain number of years ago and at the same time bought a [AK/AR/case of ammo], the gun stuff would have realized a higher percentage profit than the other stuff. Thus, guns are a sound investment.  At least, that’s the argument.

Let’s establish a few terms. An investment is putting capital (money usually) into something with the intention that after a certain amount of time you’ll be able to get back your capital and then some. Contrast this with items that are purchased not to increase in value but rather to hold a value (or a purchasing power)…like gold.

Buying guns as an investment can make sense if youre buying something truly funky and perhaps one-of-a-kind. Pat Garrett’s Colt revolver, the handgun Clinton lieutenants used to kill Vince Foster, Annie Oakley’s .22 rifle, a toolroom prototype from S&W, etc, etc. Sometimes, if you’ve got your finger on the pulse of things you can predict something will be on the market a very short time and therefore become quite valuable..a Colt Survivor, Ruger Hawkeye, Winchester 88, S&W 76, etc, etc. Or…if you like to gamble, you can invest in something that isn’t rare, isn’t hard to get, isn’t too expensive but someday will be. For example, the HK93 I bought in 1986 for $600 would bring about $4000 now. An AR bought in 1993 became worth two or three times its purchase price in 1995.

The biggest drawback to guns as investments is the regulatory aspect. By and large, trading an ounce of gold among people in the US is fairly benign…you can sell it to convicted felons, ten-year-olds, or pretty much whomever youd like, wherever you like. Guns, on the other hand, come with a whole bunch of regulatory strings attached. The longest string and the one likely to wind up choking off your daylight is that if you sell enough guns or make enough money you might come under the BATFE’s definition of being ‘in the business’ which means they will expect you to have a license. Now, every one of us has at some time or another picked up a gun at a gun show for a song, walked to the other side of the show and sold it to someone else and pocketed a good profit. Seems reasonable to me but I saw a fella at the Helena gun show get in trouble with ATFE for that sort of thing. I don’t have all the details, I just know that they paid him a visit and while he didn’t go to jail it pretty darn near wiped him out and shaved a few years off his warranty.

In short, guns as an investment is a mediocre strategy for high returns in normal times. The only way you can really make it work is if you have a huge amount of money to lay out and you can afford to tie up that money for years before seeing a return. If you can afford to head down to your local gun shop, buy five AR-15s, seal them up in a box and shove them in the closet and not touch them for ten years….yes, you’ll make money. Of course in the meantime you probably could have made more money by investing in other things during those ten years.

Now, to be totally inconsistent, there is at least one circumstance where during normal times firearms are good investments for realizing high returns. That circumstance is if you are thoroughly knowledgeable on the guns, have the opportunity to buy them at very low cost (garage sales, gun shows, ‘motivated sellers’) and have an avenue to sell them (GunBroker, a shop, etc.) However, in those circumstances you’ve gone from ‘investor’ to ‘having a job’. Scouring classified ads, Craigslist, gun shows, auctions, estate sales and then purchasing, cleaning and pricing firearms to be sold, if you can find a buyer, is work. At that point, surprise, you’ve pretty much become a dealer. I’ve done it before…I had a guy come in with a Savage 110 in .300 Win. With a Leupold 3-9x on top of it. Gave him $250 for the package. The scope brought $150 and the rifle brought $275. A good investment? Absolutely. Repeatable with any predictability? Not at all. You can go a long time between deals like that. You can also wind up buying a package like that and have it sit on the rack for several long, hungry weeks or months.

But…that’s during normal times.

When the LA Riots occurred, the demand for firearms and ammo was amazing. I’ve no doubt that in the aftermath of Katrina you could pretty much name your price and get it for a Mossberg 500 and a box of shells. If another more oppressive and permanent assault weapon ban comes down the pike you can bet that the price of pretty much anything with a trigger will go up. A fella with a footlocker of cheap AR carbines might wind up making quite a bit of coin.

Is it worth buying guns strictly as investment tools to be cashed in after things get weird? Maybe. A used SIG 9mm will run about $400 right now. When the end of the world occurs you could trade it, quite easily Im sure, for food, medicine or fuel. On the other hand you could also take that $400 today and buy food, medicine or fuel and stockpile it for later. There are folks who feel that should civilization truly run off the rails things like gold, silver, ammo and such will become the new currency. There might be some truth to that, after all civilization is still limping along and you already have plenty of people who are willing to take those things as currency for goods and services.

I almost never pass up a deal on ‘cheap’ (pricewise) firearms. Even if it’s a caliber I have no earthly use for, I’ll go ahead and pick it up if the price is right. Someday that oddball bastard-caliber handgun or rifle, with a box of appropriate ammo, may wind up being just as valuable, to me, as a stack of greenbacks is today. I remember reading a fairly forgettable post-apocalyptic book years ago called ‘Wolf & Iron’. One of the characters was a fella who traveled with his daughter as a sort of traveling merchant. They had a wagon full of trade goods and theyd do a circuit through various towns and villages. Tied to the back of the wagon were horses that were always saddled and ready to be ridden off in case they were attacked or ambushed. Each horse had a pack on it that contained all the essentials of survival including a couple small handguns to be used for trading purposes. For some reason that always made an impression with me.

Years ago I had the opportunity to buy a bunch of police trade-in revolvers. This was back when the transition from revolvers to Glocks was in full swing at many police departments. I think I paid between $150 and $200 for each S&W .38 Special I picked up. Some were in great shape, some were not. All worked, though. I remember thinking that I could take one of these pistols, add a cheap holster, a box of ammo, a cleaning kit and a speedloader or two, throw it in a small ammo can and it would make an ideal package to use for trade someday if I ever needed it. Of course, it also makes an excellent package to hand out to an undergunned friend who may not have a pistol.

“Waitasec, wouldn’t it be foolish to trade guns and ammo to someone who may wind up using them against you?” Yup. So don’t trade them to someone like that. There’s only two ways that’s going to happen – either youre so desperate that you cant be choosey or youre doing it from a position of overwhelming strength.

Are firearms a good investment? If your goal is to spend 100% of ‘x’ on firearms and a year later get 125% of it back, no. It might happen but the risk and opportunity cost probably isn’t worth it. If your goal is to have some sort of high-value ace-in-the-hole for the day you need to bribe someone, get desperately needed [medicine/food/fuel], or equip a trusted friend…then, yeah, it’s a good idea.

26 thoughts on “Guns as investments

  1. To me, the definition of an investment is anything that holds or appreciates in value. When I see my friend’s stock investments which fluctuate, I don’t consider that investment – I consider that gambling. Maybe it will go up and you score big time – maybe it will tank and you loose the whole kit and kaboodle. To me, it makes more sense to buy items that will hold value, no matter what.

    Firearms are one of those items. It is item that can be used to protect other assets you have, or hand to another to protect their lives and / or assets. It puts food on the table if it is required. And it is mobile.

    Whats not to like? Well, big banker dude may not like them – where’s his cut? Governments who are afraid of their citizens don’t like them – could cut cut their party short, and just gives the riff raff ideas if the government gets a little heavy handed.

    Its really hard to go wrong with having some extra .22 rimfires, those things are extremely handy and useful. Ammunition is as useful if not more than the firearm – I’ll bet a whole lot of firearms will last longer than the ammunition they gobble.

  2. Hope for the best, prepare for the worst. Meaning I still throw cash (away?) into my retirement savings accounts, but also prep. That includes buying some silver has a hedge rather than an investment.

    I think the notion that a few weeks after a hard collapse we’ll be paying in pre-1965 junk silver for whatever is way off base. A large percentage of the population doesn’t know what’s silver and what’s not, or how much it’s worth. And who’s going to want silver when they’ll likely need any number of other items, on top of food.

    – Precious metals as a hedge = good idea.
    – Precious metals just after TSHTF = not gonna happen.
    – Precious metals 5 years after TSHTF = I’ll buy that.

  3. Great post… I actually wrote about this subject recently myself:
    http://armaborealis.blogspot.com/2010/03/gun-safe-as-investment.html

    My bottom line is that I prefer to think of firearms (and most commodities) as insurance (specifically, insurance against inflation — considering fairly normal circumstances), not investments. While you can occasionally make a killing on a great deal, as you say, it is not predictable or repeatable — and it probably requires you to be a dealer.

    JR above says that he believes stocks are not an investment because their value fluctuates. Unfortunately, greater long term reward usually comes with greater short term volatility. TANSTAAFL. Many people cry about the “lost decade” of stocks — i.e., there have been few capital gains in the last decade. If you look up quotes for ^GSPC you will see inflation adjusted returns for the S&P 500 that show that indeed, there have been no capital gains since the mid-1990s for a buy-and-hold index fund investor.

    What this misses is that profitable companies also pay out dividends every year. Once you factor in dividends and the favorable tax treatment you can get such as tax-loss harvesting and reduced rates on qualified dividends, $10,000 in stocks invested in the mid-90s would likely be a much better investment than $10K invested in guns and ammo. Remember, any profit on collectibles — including profits solely from inflationary gains! — is subject to 28% collectibles tax… Unless, again, you are in the business, which now requires an FFL, and we’re back to being a full-time dealer.

    So, bottom line, to me, Guns & Ammo = Insurance against inflation and threats to personal safety, not an “investment”

  4. Good investments = land, gold, and pink diamonds, guns maybe good for the future as well.
    Also a 50 BMG Vulcan’s or Noreen’s are good investments. Cheap enough for some serious long distance moose :)) hunting.

  5. I tell people that I invest in precious metals. Copper, lead, brass and steel (stainless or otherwise). That $550 I spent on my last Glock still holds its value some 10 years later, same with my AR (I absolutely “stole” it from the dealer at $510 in ’08) now that DPMS wil get me 2-3 times that price.

    I’ve stopped aquiring new firearms (unless as you mentioned they are rare, unusual, absolute steal) as I have most bases covered. How many M-14s do I need? I try to invest in parts now. And food. And rainbarrels.

    An “investment” to me need not be about a financial return, those rain barrels mean water for the garden, which puts beans in the canning jars. I’ll put money into something so I don’t have to put money somewhere else int he future.

  6. In the 1920′s George Patton used to vacation every year in France. He would tour the back road and small towns, knowing that one day he would fight a war there. My point is, Patton was a forward thinker, it pays to be one. Wars will always occur, guns will have value during wartime, buy food, guns, ammo, ect.

  7. Like the author of this article; I question the acquisition of weapons as an investment vehicle. Ammunition, on the other hand, seems to be a different story. I can easily see .22 cal. long rifle ammo being used for barter in a SHTF situation.

  8. I think you hit the nail on the head. (As do some of the other comments).

    Seems like many in the perparedness community are unclear about the differences between an investment vs. a hedge (inflation).

  9. It’s all according to the guns you buy. For instance I bought three guns in the mid 90′s for a total of $10,600.00, today they will bring $57,500.00, a little better percentage than my gold with alot more uses in the meantime.

    • I purchased 4 S&W Model 29′s in 1969 for around $200 a piece and today they are going for about $800 to $1000 a piece. If the stocks that I had invested in had done that well I would have bought more stocks. But by investing in the guns I also got some enjoyment out of shooting them also. I also purchased 3 German Lugars for around $125 a piece in 1970 today they are worth around &1000 a piece. If my stocks had done that well I would think I had some smarts. But that is nowhere near true.

      • A dollar from 1969 is worth 6 today with inflation so you would have needed to do 6x your $200 investment… You lost money inflation adjusted.

  10. “I can easily see .22 cal. long rifle ammo being used for barter in a SHTF situation.”

    Think about any other prohibition type issue. Booze and rumrunners, drugs today, whatever. The little guy usually does not get rich. The little guy is at high risk of being arrested by the authorities or robbed by other criminals. The money in these schemes usually flows to the kingpins, the top smugglers, and the bosses (whether they be mob bosses or corrupt politicians).

    In any sort of disaster situation, trading in items such as ammo is going to be severely restricted early on — prohibition. Unless you are willing to become the local crime lord or mafia don I doubt that you will profit exorbitantly by becoming an arms dealer in a crisis.

    “Seems like many in the preparedness community are unclear about the differences between an investment vs. a hedge (inflation).”

    Agreed…

  11. If society does go off the rails. Guns are a way better investment than gold. If someone wants to trade gold for a gun, the guy with the gun is going to end up with both. The ones with the gold don’t make the rules, it’s the one with the guns.

  12. Yeah, but when the SHTF no one is going to give a rat’s arse about a $18,000 gun, when all they want is protection…it won’t fetch much more than the used service revolvers in the article. And depending on what kind of gun it is, it ,might fetch less.

  13. I have a hard time with the “guns as investments” concept. Mainly because as you noted if I had the time and inclination to do all the stuff to “buy low and sell high” it is a lot more like a job.

    I purchase firearms for the protection and use of my family. My belief in redundancy and semi obsessive compulsive collecting leaves some additional weapons to equip relatives or friends. Also if I needed something unanticipated in a dysfunctional situation I could swap a spare gun for it.

  14. I just happened upon this thread. Interesting and varied ideas. I have to agree that while guns tend to hold their value, they tend to appreciate slightly more than inflation on the whole and depending on the guns. That being said, they are indeed my retirement investment for leaving the grid.

    I think one fallacy of thinking as guns as an investment stems from the idea that guns are being collected for an eventual and higher cash return. That is one possible investment, which probably isn’t the best idea in the so-called normal societal condition. Investing in them as goods with functional value, rather than ascribed value might be a better way of looking at it.

    I decided to collect brass and lead over silver and gold a few years back because I already don’t believe in money, see the stock market as gambling, and know I can use firearms to hunt for food as well as barter if absolutely necessary.

    Money is just paper and metal and it’s value has to do with the military might and/or political connections of the nation that prints or stamps it. It is already useless, in the most real sense. And while I, like most, prefer the numbers in my bank account to be positive they are simply a measure of my value to my immediate civilized community.

    What I find difficult is limiting myself to the number of firearms and ammo that I can reasonably transport anywhere.

  15. Investment dividends go up…nd they go down. Are guns going to go down? No. Buy…a scare will come along and you can sell for a profit.

  16. “I can easily see .22 cal. long rifle ammo being used for barter in a SHTF situation.”

    Sorry, I’m italian and we don’t use so many guns here, but honestly I wouldn’t try to protect my family with a .22 caliber gun!

    Even here though guns start to be seen as a long term “investment”!

    P.S.: fresh and happy owner of a H&K USP Compact .45

    Im not sure where he said anything about protecting his family with a .22 caliber gun. All he said was that he could see .22 ammo being used for barter, he made no indication of what it would be used for..hunting, plinking, self defense, etc.

  17. Im sorry but this whole blog is completely wrong. The guns that you were reffering to would probably be in a historic musem somewhere. Guns are alot like cars. You have your everyday car, and you have your 67 corvette. I had a gun I purchased for a grand and recently sold it and made around 3 grand. I had the gun for 10 years. Thats a good investment. The author of this nonsense blog probably doesnt know what a fox sterlingworth or a francotte boxlock is, but any kind of rare piece in mint condition is always a promising hefty investment.

    It says, rather clearly, that guns as investments work best when one has the larger outlay of capital to tie up for a fairly lengthy amount oftime. I’d say paying a grand and then sitting on a gun for ten years probably fits that description.

  18. BePrepared, the reason your Ar15 is still the same as it was ten years ago, is becuase you can practically buy an ar15 at any gunshop. All an ar15 is, is a simple semi automatic with a high capactiy round clip usually in a 223. caliber. Its nothing to it. If you smarten up and buy, lets say a ruger redlabel today for 1,200, in about ten years or so you can pocket around 3,000 dollars or more.

  19. Sks’s were $75 in 2003ish and now are going for $400+. Wish I would have bought 10 of them. Diversity is the key. Snagging some police returns or a buddy hurting for some money kind of gun is a “good investment.” If you can afford to grab a gun here and there do it, but it would be a gamble to be buying and selling to retire. Plus it would take a ton of time.

  20. I treat my guns more as a security than an investment. I don’t own or sell large amounts of guns due to the regulations. However, I can count on my firearms being there if an emergency hits. Say I lose my job and rent comes due. Say the stock market crash wreaked havoc on my retirement and savings, I know I have value in that collection that can be liquidized very quickly at high value (and certainly not at a loss for what I paid). While not an everyday, day trader, type investment, Guns can provide an excellent safety net and have practical benefit (which Gold really doesn’t). My 12 gauge can pay the rent, or put dinner on the table, or defend my home. That, is a sound investment.

  21. Well, as of 3-2013 (the Sandyhook shootings) this is not a dead thread. Anybody priced AR’s lately? ($1300 to $3000) or SKS’s ($400 to $1000). High capacity magazines? standard 10-shot .22 Ruger magazines going for $45?, or .223 ammo at almost $1 a round? Yeah, there will always be profit in firearms whether you buy them as hedge, for use, or to sell at profit. Anyone who says otherwise is in denial — MU

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