This article has been generously contributed by Commander Zero of Notes From the Bunker for your reading pleasure.
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.
This article has been generously contributed by Commander Zero of Notes From the Bunker for your reading pleasure.
© 2010 Notes from the bunker
My favorite “bargain basement investment” right now are Marlin Camp Carbines (I like the 9mm, but they come in .45 too) with as many Mec-gar 20 round mags as I can afford. Â Not a main battle rifle, but then I don’t need a main battle rifle.
Hey! Wolf & Iron was pretty good! It’s the only post-apocalyptic novel I’ve ever got my wife to read. Besides, it didn’t have a nuclear war or a pandemic or zombies, just a society falling apart, which is pretty much what’s happening to us.
I wish that I’d “invested” in a case of those $80 SKS carbines back in the day. Right now, I’m mostly “investing” in ammo to feed my other “investments” when the time comes.
@ Gringo Malo – yep…my brother bought a Norinco SKS in the late 90’s for under $100. I routinely give him crap about not buying twenty of them…
Anyway, good article.Â
As I’ve said before, I feel every bit as good about my money in guns, ammo, etc. as I do about my money in the bank.
…and not because I think I’m going to one day sell an AR for five times what I paid for it…I’m just confident that if I ever do need to sell (or barter it), it’ll always be worth something.
…and I’ll also reiterate that I, personally, can not say the same thing for precious metals. Yeah, yeah, I know…gold has always been worth something, etc., etc…and it goes up when people get scared, etc., etc…but IMO, that will only go so far…
What if, just if, we really go “Mad Max?” As unlikely as that may be – what would you rather have – a couple pounds of gold coins or an SKS and 1000 rounds of 7.62×39?
Right now, sure – a couple of pounds of gold is worth A LOT more…but what if…
Yes, I know I’m insane.
“What if, just if, we really go ‘Mad Max?’ As unlikely as that may be – what would you rather have – a couple pounds of gold coins or an SKS and 1000 rounds of 7.62×39?”
My point exactly. I’ve been putting extra cash into those things. I buy silver and gold too. Things that do not “grow in value” are not good investments. Guns and Gold do not. They are poor investments but they are a great store of value.
In 1920 you could take a $20 gold coin and buy a colt revolver. That was approximately a one ounce gold coin. Today? Guess what? You can take the same amount of gold and buy an equivalent revolver. What does that say? It says that dollars are not value. Because we use them as value, we think they are but they are not. Gold has value. A revolver has value. The banksters would be screwed if the people would realize this. THE DOLLAR IS NOT VALUE! The US Government and the Federal Reserve (that is no more “federal” than Federal Express) has stolen 98% of the value of the dollar.
Guns store value approximately as well as gold bars, silver bars, etc. The only difference is you can USE a gun for something. It has less innate value than gold. If you take a $1000 gun and a $1000 bar of gold and you beat them both up with a hammer so they are barely recognizable, the gun is worth almost nothing. The gold is still worth probably $800. What does that say? It says that the value of the gun comes from the utility, what it can do.
Guns that are collectors items can be a better investment and/or a store of value in good times. As they become older they become more highly prized. Pre-64 Winchester bolt guns are an example of this. But, in really bad times, the $2000, engraved Winchester 94 might only be worth double its standard $400 counterpart because you need it to shoot, not set.
My rule of thumb is this: The cheaper the gun, the worse condition it is in, the better store of value it is. Buy a $200 Marlin 336 in 30-30 or 35 Remington today and it will be worth that forever if you don’t let it rust up or wear it out. However, the opposite is probably true for investment. The more collector value, the finner the conditions, the more unusuality it has, the better the investment.
When TSHTF, people won’t give a rat’s ass how much it was worth as a collectors item. They only care how well it takes down that deer or kills that squirrel.
The value of standard guns is pretty much flat. The value of collector guns is bumpy. As mentioned in the article, there is the regulatory aspect, however, where I live there is little regulation as long as you don’t sell to anyone under 21 (18 for long guns). That could, however, abruptly change.
Guns are excellent investments when you consider you can use them and not devalue them. As long as you take reasonable care of them their use won’t devalue them.
…and, faced with an uncertain future, adequate available arms is worth more than gold, MUCH more. But, like storing money in gold or silver, it can be over done. One could also say that food is way more important than guns or gold. You can’t eat those guns, right? But, how are you going to protect your food? …or get more?
The fact is, like investing of any type, diversification is your only free lunch.
So, what is diversification? Here is what I would recommend. You need a shotgun, a 22 rimfire rifle, a high powered rifle and a reasonbly high powered pistol. In each class there is a range from utility to defensive. There are also crossover calibers. If that works out for, that would be great too.
THE NETRANGER START FROM SCRATCH FLEXIBLE PREPPER PLAN
Over the next 6 months dedicate enough funds to buy the following. Will call this the NetRanger Start From Scratch Prepper Plan:
3 months worth of food using the store what you eat / eat what you store method. Do this while you are doing the gun purchases.
Build up a fuel supply and start rotating it. With each gun purchase below, buy a 5 gal gas can and fill it. Set it in the garage in a safe place (check local ordinaces). After you purchas the 4th gas can, dump the first one in the car, and refill it. At minimum, use one can per month and refill it.
Purchase first a 12ga shotgun. Break, pump or auto, doesn’t matter. You can easily keep it under $300. But 100 rounds with the gun. Can be used for awesome short range defense.
A 22 rifle. Again, break, pump or auto. You can easily keep that under $300 as well. Buy 1000 rounds with the gun. Small game harvesting and pest control. Low end “much better than nothing” defense.
A high powered rifle. AR, Mini14, AK, Levergun, bolt. If you get something with higher rate of fire, it can be used as a defensive weapon. Lower rates of fire are more accurate and can be used better for game or long range defense. $500 is middle of the road. You can easily keep it under $200 and you can easily go over $1000. Buy 1000 rounds with the gun if a high rate of fire, 200 rounds if a lever, break or bolt. Big game harvesting. Hardened target defensive weapon.
Now get yourself a pistol. 9mm or more. Good serviceable 9mm autoloaders can be had for $175 (HiPoints) to $700 (M1911s, etc) Buy 500 rounds with the gun. Personal, portable “anytime” defense. Much less effective than a shotgun but much less obvious also.Â
As you complete this, back off on your food money and purchase some long term storables. Maybe a months worth of grains, mres, etc. Also, double your ammo stores.
Now you’re set! Keep it all rotating and you’re ready for anything. I’ll improve on this later. If you want an updated version, e-mail me at [email protected] and include the subject as “start from scratch prepper plan”.
PS: Please excuse the grammer. I would proofread better but my neighbor just called and needs me to help him run a water line!