Originally published at Notes from the bunker…. You can comment here or there.

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.