Firearms as investment vehicle

[drewtam]

I searched for this topic. I either didn't use the right keywords or the info is not here.

I am becoming more convinced that firearms has the potential to be a good hedge investment vehicle. In other words, it won't appreciate in value except around inflation rate, but is also well insulated against depreciation. In my consideration as an investment vehicle, the firearm would never be shot. It would remain in climate control, in a safe, "new in box".

Although this idea is laughable by some, here is what convinces me:
Firearms don't go bankrupt and lose all value like corporate, city, state, and national gov't bonds.
Firearms don't have wild gyration in speculative pricing like commodities (gold, copper, oil, wheat, corn, etc).
Firearms are pretty liquid. Theoretically, they could all be sold in less than a month regardless of economic conditions.
Firearms can't be debased by the printing press (cash, bonds, ).
Reasonable maintenance can preserve an unused firearm for 100+ years.
Firearms have utilitarian value (compared to gold, silver)
Firearms are relatively portable. A van full of guns is easily $100's of thousand of dollars in assets.

Of course, this would never be more than ~2% of my portfolio. I am a big believer in diversity.
In summary, it seems like a low risk - low return asset; IF the right items are chosen. I suspect that my WASR-10 is NOT the investment grade firearm. 

Here is a list of items I was thinking. I'm hoping you have more suggestions...
M1a - Springfield
Rem 700
1911 - need to select reputable manf.
12ga - I know nothing about shotguns other than they are popular, need to pick model/ manf.

It is reasonable to me that multiple copies of the same item could be bought/stored.

Thoughts?
Suggestions?

[charby]

12ga - I know nothing about shotguns other than they are popular, need to pick model/ manf.

NIB common model isn't going to appricate much, such as an 870 Remington or Benelli Super Black Eagle.

Best thing to do is do what I have done, buy cheap play with a while sell it for a profit.

Once example is I bought a used Remington 870 Express Combo for $150, shot a few deer with it and other critters then sold it a couple years later for $225. I needed a few extra $$ to pay for my new bird dog.

I turned around 6 months later and bought a older used Remington 870 Express (all metal one from the 1980's) with a Hastings cantilever rifled slug barrel w/scope and bird barrel for $200. I'll probably hang on to that one for a while since I can hit playing card all day at 100 yards with my sabot slug hand loads.

I'm always looking for firearm deals that I can hang on to and be able to sell to finance a larger purchase down the road.

[Phantom Warrior]

I'm trying to wrap my head around this but I can't see any non-shooting use for firearms except possibly as trade goods when the zombie apocalypse happens.  Guns won't earn you any appreciable interest.  A $300 Remington 870 in 100 years will probably be worth...about $300.

Buying a van full of guns as an investment is the financial equivalent of sticking the money under your mattress.  Put the money in a bonds or a savings account where you'll at least earn some interest.  If you are really worried about losing your money literally stick it under your mattress and save yourself the hassle.

My two cents.

[Monkeyleg]

Looking back, I can see some common patterns with guns that appreciate in value.

First are guns that get banned (as long as they can still be purchased legally). The days of $700 HK91's are 20+ years ago.

Quality contemporary guns that are desirable. Examples would include Colt Pythons, Colt SAA's, pre-64 Winchesters (especially in rare calibers), etc. They're not unobtainable, but they're not ubiquitous like Glocks. I can't think of a gun produced right now that would meet this criterion, but I'm sure they're out there.

Classic guns. Examples would include (again) the Colt Python, Colt Gold Cup, Smith and Wesson Model 27, and maybe some of the semi-custom models from Ed Brown, Wilson Combat, etc.

Trying to pick a winner, though, is as hard as picking the right stock.

[MechAg94]

There is also the problem of actually selling them.  You have to find the right buyer to pay what you want to actually get as much or more than what you invested.  It is not a liquid asset.

[mtnbkr]

I wouldn't buy guns as an investment vehicle, but if you buy classic and desirable models, you won't lose any money and you may make a few dollars in absolute terms.  A couple years ago, I decided S&W revolvers were my one true love.  I went about horsetrading and selling less desirable guns to get the S&Ws I wanted.  I either broke even or made money in every case and this was after years of significant use.  I was upfront about the usage and priced the guns on the low side of current market value.  In addition, I tended to shop around and get the S&W models I wanted at the low end of the price scale.  I could flip all of my revolvers for a decent profit.  Did they keep up with inflation?  Maybe not, but I would make a few bucks.

For example, I recently sold a GP100 I paid $350 NIB over 10 years ago for $400.  I shot the heck out of that thing, but took care of it.  They're about $500 NIB around here now and used models sell for $400-$450.  I sold a 10/22 I had significantly modded (with quality parts, not cheap bolt-on crap) for about what I had in it, but after several years and several thousand rounds.

Keep in mind, the S&W M10 that was $150 5 years ago is now $250+.  $300 M19s are now $450+.  I paid $450 for a very nice M17-2 in 2009, it wasn't unusual to see them for $700+ this past summer.

Chris

[zahc]

It was only a couple days ago I was also thinking about what I could do with my savings except let it rot and be inflated away in a savings account, and I decided that buying AR-15s and literally stacking them up like cordwood is actually not that bad of place to put money. I have a hard time envisioning a likely future where guns are significantly cheaper than they are now.

[French G.]

Highly collectible or bannable guns kept pristine? Maybe.

I know if prices ever hit 2003 levels I am buying precious metal. Brass and lead. I already made a crap ton of cash selling scrounged brass, too bad I was broke and had to spend it. So, if primers ever go back to $70/5000 and .223 hits $150/1000 I am getting enough for me and the rest of the board.

[drewtam]

[..] For example, I recently sold a GP100 I paid $350 NIB over 10 years ago for $400.  [...]  They're about $500 NIB around here now and used models sell for $400-$450. [...]
Keep in mind, the S&W M10 that was $150 5 years ago is now $250+.  $300 M19s are now $450+. [...]

Thanks Chris!! His specific examples certainly build my confidence.
For those of you who do the math on the examples in this one post...
r = ln(Fv/Iv)/t

GP100 'NIB' would have yielded 3.6% annual rate of return over 10 years.
M10 'NIB' yielded a whopping 10.2% annual rate of return over 5 years. 
and the M19 yielded an amazing 8.1% annual rate of return over those 5 years.

I recall that I bought my WASR-10 for $350 <4 years ago. Now they go for $400. That is a >3.3% annual rate of return.

Considering an index fund would have broken even or lost over that same time period  that is surprisingly good!
It is so good, I am afraid to believe it. The past 3 year run up in gun prices is probably a historical fluke. I just don't expect prices to go down, maybe plateau for a while as manufacturing costs decline and material prices rise. My expectations/goal is just to keep with inflation like the GP100 did.

This idea is intended to be an alternative to commodities, CDs, bonds, treasuries, and asset backed securities. NOT an alternative to equities. The problem with sticking with cash is that it debases away. The idea is NOT to replace the above, but to supplement. A hypothetical portfolio of $100k, 2% investment would only be $2000. That is not very many firearms.

[Monkeyleg]

I bought a Spas 12 folder in the late 1980's for $450 new and sold it two years later for $650, not knowing I could have gotten close to $1000 for it.

The Python I bought for $895 in 2003 I sold in 2008 for $2500.

The Colt Delta HBar I bought for $700 in the late 1980's is now worth about $1700.

The NIB Colt SAA 2nd generation from the 1950's that I bought and sold for $1800 in the late 1990's is now probably worth three times that or more.

The Thompson subgun I bought in 1988 for $1800 and sold in 1996 for the same amount is now worth $15,000 or more (that one is an anomaly).

Now, if we take the guns that I sold at a loss, it probably breaks even.

[S. Williamson]

The question remains, however.

What can be purchased NIB at present that has a strong chance of increasing in value over X years?

Other areas to consider are bulk ammo, accessories, and optics, too.

Look at the current rate of Greek surplus ammo (HX) over what it was five years ago; same could be said for SA .308.   OpticsPlanet has the new & vastly improved Streamlight TLR-1s for a heck of a lot less than anywhere else, enough so that one might be able to turn a profit immediately.  And something like Aimpoints, ACOGs, and so forth don't stand a chance of dropping in price anytime soon, either.

[Jim147]

I remember being able to buy Mac 90's for $80 or $90 each by the pallet load. Now they are going for what $300 or $400 each. I only had enough at the time to buy a couple. And I sure didn't see the future to hold them for 10 or 12 years.

I have the original receipt for my Combat Commander. It was less then $150. But $150 was a lot of money almost 40 years ago.

jim

[Monkeyleg]

And something like Aimpoints, ACOGs, and so forth don't stand a chance of dropping in price anytime soon, either.

Last year finding an EOTech sight at any distributor was a real chore. Now there's so many sitting in distributor's warehouses that EOTech has been forced to do a rebate program.

Depending upon the model, there's a lot more ACOG sights in distributors' inventories than I've seen in a long time.

[French G.]

Ammo, I am currently still happily buying GP-11 at $250 a case wherever I can. Certain jackwagons on here rub it in how they bought theirs for $70. 

I used a fair amount of Port. .308. In 2002 I could pick up a 200rd battlepack for $29.99. At the height of teh stupid it was going for $120 a pack.

I bought my small supply of M855 5.56 for $200/1000.

If prices drop again I think ammo and components are where it is at. With every panic, especially one that comes with a war there is a huge price jump in ammo and usually something like the great primer famine of '94.

[mtnbkr]

The question remains, however.

What can be purchased NIB at present that has a strong chance of increasing in value over X years?

IMO, NIB is a loosing proposition unless you're looking way far into the future or intend to use it a lot until you sell it.  You're better off buying currently desirable guns in F2F sales from people who either don't know any better or don't care.  Look for the young guy selling Grandpa's old revolver to buy a Glock...

Chris

[De Selby]

Buying guns as investments is like buying cars as investments - a terrible idea, sustained only by the fact that a select few appear to be lucky with collectables. 

[mtnbkr]

It was only a couple days ago I was also thinking about what I could do with my savings except let it rot and be inflated away in a savings account, and I decided that buying AR-15s and literally stacking them up like cordwood is actually not that bad of place to put money. I have a hard time envisioning a likely future where guns are significantly cheaper than they are now.

I built my AR in 2004 right after the AWB sunsetted.  I built it with all of the scary features (flashhider, adjustable stock, bayonet lug, etc).  I put a few thousand rounds through it between 2004 and 2009.  I sold it in early 2009 for more than it cost to build.  I also included the ammo and mags I had at the time (was done with ARs).  Total cost to the buyer was lower than current market, but still a few hundred more than I had invested in the entire kit.  We both walked away happy.

I turned around and bought a SxS 20g shotgun and an early S&W M17-2.  With what was left, I bought a chair for our den.

Chris

[mtnbkr]

Buying guns as investments is like buying cars as investments - a terrible idea, sustained only by the fact that a select few appear to be lucky with collectables. 

Yup, you have to know what you are buying, what your associated costs are (especially with cars), and be a patient seller.  Personally, I wouldn't buy any gun (or car) that I wouldn't own as a personal toy.  I won't buy a gun just because it's cheap (such as the cheap milsurps, Mosins, Tokarevs, ect).  I have to "want" the gun for my own collection first. It just so happens that my favorite guns are classics that are currently rising in value.

I have a friend that does this with classic hot rods, but he does all of the work himself and can turn a beater into a jewel.  He also owns and runs a hot rode shop.

Chris

[HankB]

It's rare that firearms as investments outperform inflation - as a previous poster said, you have to find the right buyer. Firearms aren't as easily bought/sold/traded as gold or silver coins, and going through a dealer means that he is going to snag a good bit of the profit.

I know a guy who in the course of a couple of years purchased 3 Thompson SMGs, including an original Colt; his total investment was around $7k back in the mid '90s. They're worth considerably more now, but like Monkeyleg wrote, these are anomalies.

I think there's still some upside in pre-lock, pre-MIM, S&W revolvers, but good ones are getting harder to find at a price that leaves room for appreciation. Will they outperform other investments? Good question - and I don't know the answer. My gut tells me they're great to own, maybe not so great to buy at today's prices. (Unless you want it as a gun, not as an investment.)

[Jamisjockey]

IMO, NIB is a loosing proposition unless you're looking way far into the future or intend to use it a lot until you sell it.  You're better off buying currently desirable guns in F2F sales from people who either don't know any better or don't care.  Look for the young guy selling Grandpa's old revolver to buy a Glock...

Chris

Plus right now people are selling extra guns off to make mortgage payments.


Now, guns as investments?  I dunno.  You'd have to buy alot of them to make much money.  Lets say you have a gun that apreciates 10% in a year.
10% of $500 is $50.  To turn that into much, you'd have to have alot of them.  10 $500 guns averaging 10% a year only gives you $500 a year.  Not much of a return. 
Then, there is the risk of an eventual partial or full gun ban.  Even just the possibility of F2F sales being banned (IE, the gunshow "loophole".).  You risk losing a way to capitalize on the return of the firearm.

[Tallpine]

All I know is that I have bought several used guns for way more than they sold for new 

[mtnbkr]

All I know is that I have bought several used guns for way more than they sold for new 

Same here, but they were sold "new" decades ago and aren't available "new" today. :)

I still got them cheap enough to flip for a profit, however small, if I wanted to sell them.

Chris

[Tallpine]

Same here, but they were sold "new" decades ago and aren't available "new" today. :)

Which is the whole point 

[MicroBalrog]

Then, there is the risk of an eventual partial or full gun ban.  Even just the possibility of F2F sales being banned (IE, the gunshow "loophole".).  You risk losing a way to capitalize on the return of the firearm.

I'm rating that to be as likely as a zombie apocalypse.

[Tallpine]

Then, there is the risk of an eventual partial or full gun ban.  Even just the possibility of F2F sales being banned (IE, the gunshow "loophole".). 

Worth a lot more on the black market then