It can be a controversial topic — much like investing in medical marijuana. But are guns a good investment? They definitely can be.
High-quality, well-maintained guns rarely depreciate. However, nothing is certain. In the past several years there has been a ton of talk of tightening gun laws and even banning certain guns altogether. Since you can’t predict the future, just like anything else, investing in guns can be a gamble.
Buy Low, Sell High
Have you heard the saying that Obama is the best gun salesman?
A report released by the ATF shows that gun production has dramatically increased. In George W. Bush’s 8-year term as president 28 million guns were produced. In Obama’s first term as president 26 million guns were produced.
My family owns two small department stores known for their sporting goods department. Customers come from all over the state to buy guns and ammo.
When Obama was first elected as president there was a frenzy. With expected gun laws to dramatically tighten nationwide, the sales of firearms and ammunition soared. Sales more than doubled across the country. And for our little stores they more than quadrupled.
Then last year when there was talk of banning assault rifles like AR-15s and AK-47s, prices quadrupled and whatever inventory was on the shelf soon flew off — overnight.
If you were in the place to sell at the time you would’ve made a hefty profit. Demand for firearms and ammunition is still at such a high rate that it’s hard for stores to keep a good inventory in stock and manufacturers have had a hard time keeping up with production.
While most well-maintained, high-quality guns don’t depreciate, buying guns as an investment while they are at top dollar isn’t a good idea. Just like you would do when investing in the stock market, buy low and sell high.
Investing in Collectible Guns
Right now, investing in assault rifles would be a gamble. And in my opinion you’d probably lose money if you were investing for the short term. While prices have deflated since last year, they’re still high compared to just three years ago.
But if you’re looking to invest in guns for the long term, then collectible is the way to go. Different collectors look for different things in firearms. But history is the most desired trait.
A gun from a popular maker that is in pristine condition (preferably never been shot) and has a history will command the most money. But most important is that you feel good about the investment.
If you know absolutely nothing about firearms, learn first. You need to know what you like.
Collectible guns can also cost a pretty penny. So, before you make any purchases, it’s important to be as educated as possible.
Invest in Gun Stocks
For those who like the idea of investing in guns but don’t want to hold physical firearms there are two publicly traded firearm companies: Smith & Wesson Holding Corp (SWHC) and Sturm, Ruger & Co. (RGR).
However, it’s important to consider that as legislation comes into play, these stocks could be volatile.
Another option is to invest in ammunition companies. From 2008 to 2012 it was nearly impossible for stores to get in any type of popular ammo. In fact, our stores can still barely get 22 ammunition. Ammo is often backordered and the day it comes into the store, it’s gone.
This has been going on for almost six years now and it doesn’t look like the demand for ammo will be dying down anytime soon. This means that investing in a company that manufactures ammunition could also be a solid strategy.
Important: You Have to Feel Comfortable
When it comes to investing in guns, I’m a bit biased. I feel like guns can be a great investment but they’re also something I’ve grown up around.
I’m well-versed in gun safety and target shooting is actually one of my favorite hobbies. But I want to reiterate the fact that it is extremely important that you feel comfortable with the investment you’re making.
If you know nothing about firearms, then taking a gun safety course is essential before purchasing a firearm — even if you don’t have any intent of ever using the gun. If you want to get into firearm investing without owning a physical product, then buying gun stocks is the way to go.
Know what you’re investing in and feel comfortable about it.
Would you invest in guns?