Gun collecting: Worthy investment or risky business?
Millions of Americans own firearms for sport, protection and collection. But are they a good investment? It depends on what the laws do.
Would you want to own a gun not just as a weapon, but an investment? Gun sales have been rising for several years, and prices for assault rifles and ammunition have gone up.
In the video below, Money Talks News founder Stacy Johnson takes a look at whether guns are worth approaching as investment. Check it out, then read on for more.
Pros of investing in guns
There’s plenty of demand. In the beginning of 2013, background checks for prospective firearms buyers through the National Instant Criminal Background Check System increased 44% from the prior year, according to NBC News. There were 9.5 million more NICS checks in 2012 than in 2006, says the FBI.
Also, says The Street, more wealthy investors are taking an interest in the market of high-end collectible guns.
It’s an investment you can use. While it’s not recommended to regularly take unique, antique or collectible guns to the firing range, a gun likely won’t lose its value if it’s well-maintained.
Some weapons are a solid bet. Time magazine says British shotguns by makers like Holland & Holland increase in value by 3% to 5% a year. The value can get a big boost depending on who previously owned the gun. Time added:
At Holt’s December sale, a 12-gauge Purdey once owned by champion U.S. shooter Russell B. Atkins had an estimated value of $24,000 to $32,000 — and sold for $52,800. Then again, the Boss gun that Gardiner sold for $134,400 in December achieved its record price because of the quality of the firearm, not because the seller was legendary guitarist Eric Clapton.
A small pistol that John Dillinger carried in his sock auctioned for $95,600, more than twice the original estimate, according to The Street.
Cons of investing in guns
There’s no guarantee values will increase. When it appeared that Congress might re-enact the 1994-2004 ban on assault weapons like the AR-15, demand spiked, pushing the price up by hundreds of dollars, according to The Huffington Post.
However, price spikes don’t last. In a study that evaluated a two-year period after the ban was originally enacted (weapons already in existence were grandfathered in), according to the National Institute of Justice:
The research shows that the ban triggered speculative price increases and ramped-up production of the banned firearms prior to the law’s implementation, followed by a substantial post-ban drop in prices to levels of previous years.
This isn’t surprising. When something is relatively simple to make, like guns, supply will ultimately meet demand. If Congress outlaws AR-15-style rifles, less supply will lead to higher prices if existing weapons are grandfathered in. But if if Congress doesn’t, supply will catch up with demand, making price spikes temporary.
- Traditional investment vehicles, like an individual retirement account or 401k, can offer tax deductions. As with other collectibles, there’s no tax advantage to investing in guns.
- You’ve got to spend more for proper, safe and secure storage.
- If the law is changed so no new guns can be made, but those remaining are legal, prices will go up. But if a gun you own is entirely outlawed, its legal resale value may drop.
There’s a big difference between buying an AR-15 because you think it will be outlawed and investing in collectible guns: One is a gambling on what Congress will do, the other is buying something unique and hoping its value increases over time.If you’d like to gamble on Congress, you don’t need expertise: just knowledge of Federal gun sale laws. But if you’d like to collect guns, make yourself an expert or find someone who is.
Then learn which guns are likely to increase in value. Generally speaking, those who invest in collectible guns recommend you look for old guns by famous makers that are in like-new condition and include the original box. The gun should not be fired.
Be patient. Adds MadOgre.com in a detailed tutorial about investing in guns:
If you want to get into investing in guns … it’s all about research, education, and jumping on it when the moment strikes. Then you have to have patience. Decades' worth.
Still interested? An article in Outdoor Life about investing in shotguns offered these three tips:
- “Trust your sense of style and taste.” Author Jim Carmichel says if you do, you’ll still enjoy owning it if it proves to be a lousy investment.
- Buy guns that have a track record of value. Take the Model 21 Winchester, he says: "Nowadays you’re lucky to find a good used 12-gauge for $3,500. If you had bought the same gun new 10 or 20 years ago, you would have made a solid 10% per annum on your investment, in addition to owning and using a shotgun that says a lot about who you are."
- “Buy the best you can afford plus a little.”
Karen Datko contributed to this post.
More from Money Talks News:
For future investments, I would say when Democrats are in office, yes :)
Especially if you suspect the idiot in charge has no clue about guns.
Buy as many guns as you can afford. When the civil war starts you will neeed them. With this idiot in office it could be sooner than you think. I think the last election was fixed. There is just no way there was that many stupid people in the United States that voted for the half black one from Kenya the second time around. He needs to be impeached today. He is intentionally destroying our country.
A great way to make money. Buy retail & sell wholesale. In addition there is sales tax & in many states other fees to consider.
In the People's Demokratik Republik of Kalifornia for example there is an 8% sales tax, & a wide variety of state fees especially on handguns. Then it is likely they will outlaw whatever you have & you will have to sell it to a dealer in another state.
When you need a gun, it is the best investment you will ever make. When you need a gun, and don't have one, the cost can be quite high.
I have never lost money on guns that I have purchased. Then again I rarely sell a gun. I have seen the better quality guns I have owned increase in price, better than the stock market. The AR-15 rifles that I own were purchased prior to the ill-advised 1994, so-called "assault weapons" ban. The price rose to as much as $1500.00 dollars. When that farce ended, the price dropped to about what I paid for them.
As an investment, if the liberal government trend continues (and there is no hope that it will not) eventually the government will restrict the sale of firearms between individuals and render firearms an unattractive investment.
This is the one Industry that President Obama has grown while in Office. The Industry thanks him but will not vote for him or his far left policies.
Kudos to our founders who gave us the 2nd Amendment
I have a rare win 375 mag, that my dad bought for me when I was a teenager. He paid less than $200 for it. I've seen them go for over $600 in private sales today. Many of them weren't even near the condition that mine is in.
I also have a couple of shotguns that sold for $75-200. They have tripled in price (in used condition) over the past 20 years.
You may not get a grand slam return or anything, but one thing is for sure, they don't depreciate in value like most things you buy today.
I have many weapons, and all will make me money if I choose to sell. right now the big money is in ammo. 3 months ago, a box of .22 longs were about $6.00 now..$12.00 to $15.00. 30 round clips are also tripling in price. .223 ammo is very hard to find at a reasonable price. better hold on to it...
If they get more restricted and old ones are "grandfathered in" it will be a strong investment. Or, as long as the worry among potential buyers keeps up.
If a new Administration comes in or the possibility of a new "Assault Weapon Ban" is seen to drop, they could end up like Beanie Babies.
We'll see, As with all booms, the people who bought before the big run are in the best position.
Whatever happens if you get a gun learn to use and store it safely.
" A drooling goose stepping Nazi base called Democrats" You are truely a brainwashed moron Ohbummy! You need to live in a real nazi society to get a perspective of reality!
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
ABOUT SMART SPENDING
LATEST BLOG POSTS
Tired of your wallet taking a beating at the grocery store? Here are some creative ways to save big on food costs.
VIDEO ON MSN MONEY
BLOGS WE LIKE
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'