There is always a bull market somewhere

by on April 16, 2009 at 1:26 pm in Economics | Permalink

Uh-oh:

…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.

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."

I thank John de Palma and James Solier for the pointers.

8 April 16, 2009 at 2:07 pm

The best policy to reduce gun ownership would be to shut down the gun control organizations, elect pro-gun Democrats, and then have a Supreme Court ruling strike down the gun control laws of the 10 or so strictest states. NRA membership would plunge.

Nylund April 16, 2009 at 2:17 pm

Shorter America: “So the last lunch turned out not to be free after all, but maybe the next one will be!”

After the ammunition bubble bursts, can we just go back to tulips? At least they’re nice to look at.

But in all seriousness, America will never be right again until people stop expecting there to always be some commodity that will magically double their money risk-free in under a year without requiring any work effort whatsoever.

Noah Yetter April 16, 2009 at 2:45 pm

It’s no joke. If you had just stockpiled ammunition 5 years ago, 7.62×39 and 5.56×45 in particular, and sold now, you would have more than doubled your money. Slightly lower returns and less convenient than gold, but more useful in case of zombie apocalypse.

B.B. April 16, 2009 at 3:25 pm

Well, Obama did promise to stimulate the economy. Guns are part of manufacturing. If GM started to make guns, it could sell a lot in Detroit.

Next stop, have the FDA threaten to ban Vitamin C tablets, and watch sales soar. Then threaten to outlaw cigarettes, and watch the stockpiling.

It is fun to manipulate the economy by scaring people.

MW April 16, 2009 at 3:48 pm

Hmm, I wonder if I could allow less credit-worthy buyers of automatic weapons access to capital through assault-weapon-backed securities. After all, their prices will always be going up.

Jim April 16, 2009 at 4:42 pm

Ironic isn’t it that Federal legislation is an economic driver in the gun market. I would bet that most pro-gun types are also small government, state’s rights, regulation minimalists.

Many of those gun rights advocates might also be anti-bailout types.

Now here’s a Federal bailout program designed just for them. Wicked cool.

athelas April 16, 2009 at 6:00 pm

Clearly we need to collateralize these futures to better manage risk. Anyone want to sell insurance against accidental discharge?

Sigivald April 16, 2009 at 6:22 pm

8: “Anti-gunners give up” would certainly take the wind out of the NRA’s membership… but that isn’t directly correlated to gun ownership. I can’t think of anyone I know that owns guns solely because they’re worried about guns being banned – bans mostly spur existing gun owners (or people who were thinking about buying one) into buying more.

There are a few people who are spurred into doing it “because the State wants to stop me being allowed to” who otherwise would not have, but they’re very marginal in terms of overall number.

Jim: That’s an (unintended, indirect) subsidy, not a bailout. Bailouts are what failing businesses need to stay in business. Gun manufacturers and dealers do pretty well even without panic-buying… the increased profitability is a nice pseudo-subsidy, though. (Is it technically a subsidy if it involves no expenditure by the supposedly-subsidising entity, even indirectly?)

Me, I’ll just wait for the bubble to burst before I buy much more.

MW: Automatic weapons haven’t increased in price. The stock of those that civilians can buy hasn’t increased since 1986, and has remained consistently high since then. It’s getting to the point where it’s almost cheaper to buy an NFA-regulated submachinegun than a non-NFA-registered self-loading rifle, at least if it’s a Really Nice One.

Dave April 16, 2009 at 9:41 pm

I can’t do much more than agree with Nylund. I found it hilarious how the quoted people seemed to think investing in weapons and ammunition is a risk-free get-rich-quick scheme. I suppose there will always be people that believe in such schemes, and they’ll never make sense. At least a gun bubble shouldn’t affect the rest of the economy much.

valuethinker April 17, 2009 at 8:24 am

Sigivald

The fall in automatic weapons prices is implicated in their wider use.

Most of the studies show that the Ingram MAC10 type weapon, which uses cheap plastic and stamped metal parts (as dones the Armalite) have substantially lowered the barrier to entry and increased adoption of these weapons as against cconventional hunting rifles, revolvers and shotguns which were much more expensive.

See the Frontline documentary ‘Ring of Fire’: most of these guns are made by a handful of manufacturers in a neighbourhood in Los Angeles Basin area.

There are also marked consumer preferences (best demonstrated by the Samuel L Jackson riff on the 9mm Browning High Power in ‘Jackie Brown’) towards guns which are popular on TV and in film. So the MAC10 after Miami Vice came out.

An ironic sideline of this is that the Mafiosi in Italy, who watch ‘Scarface’ insisted on firing their guns the wrong way (as Al Pacino is seen doing in the iconic poster).

Andrew April 17, 2009 at 1:27 pm

Markets overshoot.

uptown April 17, 2009 at 4:16 pm

There’s a sucker born…

AJP Laptop Battery May 18, 2009 at 10:55 am

Shorter America: “So the last lunch turned out not to be free after all, but maybe the next one will be!”

After the ammunition bubble bursts, can we just go back to tulips? At least they’re nice to look at.

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