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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.

By Smart Spending Editor Jun 4, 2013 10:00AM
This post is by Craig Donofrio of partner site Money Talks News.

MSN Money partnerWould 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 In a study that evaluated a two-year period after the ban was originally enacted (weapons already in existence were grandfathered in), according to the National Institute of Justice: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.
Image: Money © Russell Illig/Photodisc/Getty Images
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.

Other disadvantages:
  • 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.
How to invest in collectible guns
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:

34Comments
Jun 5, 2013 7:17AM
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Nice article  BUT  it is nice to know a bit more about guns than what the mainstream media has said. TRUE assault weapons were banned in 1938.  The AR-15 IS a semi-automatic rifle that is LEGAL for hunting in several states.  The "anti-gun politics" have said a gun that "can accept" a hi-capacity magazine, or "looks military" is an assault weapon.  IF the truth were known AND stated, guns do not kill people... BAD PEOPLE with guns kill people.  Any crook or thug can get a gun "on the street" just like they get drugs. FACT. Disarming the general public will only make unarmed victims easy target for crooks.  Bank robbers and street thugs are expected to register their guns ??? get real. The trafficking law prohibits "straw purchases".
Jun 5, 2013 6:44AM
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I have never lost money on a firearm... Even cheap firearms will go up in value if you take care of them and hold on to them for a few years.  If they have the original box when you get them make sure you keep it. Clean and inspect them to make sure they don't rust.  Depending on the brand and  type I usually see a 25-50 percent increase in value every 10 years or so.
Jun 5, 2013 7:15AM
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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.

Jun 5, 2013 7:46AM
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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.

Jun 5, 2013 4:57AM
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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.

Jun 5, 2013 7:25AM
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I didn't buy any of my guns as investments, however they have increased in value over the years. A 1649 Dutch brass either naval or coach gun has gone from the $200 I paid for it too a couple of thousand. Same with several other antiques I have in the collection. Even the AR I bought in the 1970's , is worth several times what I paid for it. And I have had the use of it. Great rifle to teach with. Light, minimal recoil and the stock can adjust to fit the shooter. With a 30 round magazine a new or novice shooter does not have to move the rifle or manipulate the action and can concentrate on marksmanship over reloading and re-aqireing the proper sight picture.  The civil war guns I have are worth a small fortune now. When I bought them most were just old guns, of no particular value other than being old.
Jun 5, 2013 7:37AM
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One thing for sure, the prices never go "down."  You could say prices for AR15s spiked due to the fear mongering they'd be banned.  But, as you saw in the outcome to Feinstein's proposed ban.  She was the one banned and the prices returned to "normal" not below.
Jun 5, 2013 8:26AM
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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.

Jun 5, 2013 8:03AM
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To invest in guns with the only purpose to increase later capital is a risk. If you have guns that are really old then yes they are worth more. If you think you are gunna buy an AR for $1500 or up now you will be sitting on it for a long...long time. To buy ammo now to increase your capital will be the same. But if you have thousands of rounds that have been sitting in your basement you can still sell them for a good profit to rotate stock and buy more again in 6 months to a year when things get back to reality. No different then all the cars that you could have bought cheep in the 80's and early 90's that are going for 3-10 times what you would have invested in them at that time. AR's averaged from $700-$1500 before the last panic. The instantly went to $2000 plus...Now you see that legislation didn't pass that their are a lot on various web sites that guys are just trying to get some of there money back to pay off those credit cards they put them on and not getting any bids on them. Guns are tools. Being a gun person forever (many handed down from gerations that I never met) I would say guns are not an investment but do have the potental to make money.
Jun 5, 2013 8:13AM
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Forget about the value of guns.  Start collecting ammo, that is where the real gold is.  Of course we may be about 10 years behind that curb.
Jun 5, 2013 7:45AM
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Right...they're restricting the supply from US citizens, but exporting them like crazy...still made in America...right?
Jun 5, 2013 8:18AM
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Damn RIGHT they are a good investment !!!  They are fun to hold, fun to shoot and when your wiping your back side with dollar bills because it's not worth the paper its printed on, GUNS will become the new GOLD Standard.
Jun 5, 2013 8:11AM
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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.  

Jun 5, 2013 9:04AM
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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

Jun 5, 2013 8:21AM
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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.

Jun 5, 2013 9:00AM
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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...

 

 

Jun 5, 2013 8:43AM
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There's speculation in everything.

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.



Jun 5, 2013 5:17PM
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Collectables of any kind are risky.  For example antiques such as china or furniture pieces saw their value tank with the demise of our economy beginning in 2008.  I have an antique dinning room set that is at least 100 years old with a unique curved front on the china cabinet.  I had an antique dealer offer me $8000.00 for it in 2004.  I should have sold it then.  In 2009 I called that same dealer and he basically said "good luck" because the bottom had dropped out of the antiques market.  He wouldn't even make me an offer because he had closed down his antiques business.   
Jun 5, 2013 10:41AM
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" 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!

Jun 5, 2013 3:52AM
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There is no such thing as a good investment
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