Want bang for your buck? Invest in guns
The Civil War anniversary may drive up prices of firearms, which beat most tech stocks for returns.
By Joe Mont, TheStreet
Seeking more bang for the buck?
Set aside your views on gun control or perceptions of survivalist arsenals. People who collect and sell firearms, many of whom are white-collar and affluent, often have turned a profit from their hobby.
For example, a small pistol that the gangster John Dillinger was carrying in a sock when he was arrested in Arizona (six months before he was fatally gunned down in Chicago in 1934) sold for $95,600 at an auction held by Heritage Auction Galleries, a Dallas auction house that is the nation's largest. The winning bid was more than double the pre-auction estimate of $35,000 to $45,000.
With firearms, collectors are drawn to more than just a piece itself; they are paying for history. Pieces with relevance and context command the most money. Wartime relics are among the most valuable firearms, according to Dennis Lowe, the director of militaria for Heritage Auction Galleries.
"I've never seen firearms do anything but increase in value," he says. "Those increases are sometimes not as fast in one period as they are in another, but certainly they never go down. If you began collecting this stuff 30 years ago, unless you had gotten into an IPO of something like Apple (AAPL), you couldn't have put your money in a better place."
Tuesday marked the 150th anniversary of the start of the Civil War, in which the new Confederate States of America fired upon the Union's Fort Sumter outpost in South Carolina. Lowe suspects that observances will bolster an already booming collectibles market. The availability of Civil War artifacts, from belt buckles to pistols, has made the period a popular obsession for collectors.
"I can count on one hand the number of well-heeled Revolutionary War collectors who are out there," Lowe says. "Why? There isn't anything to collect. They are too rare. The great advantage of collecting Civil War material is that they are out there."
A Confederate revolver in good condition can fetch from $20,000 to $30,000 and up, he says.
"I have a Dance Brothers Revolver in an upcoming auction that will be $40,000 to $60,000," he says. There were only 550 made.
Lowe says cost often is not a concern for modern collectors, who have changed over the years. The wealthy have gotten into the collecting game, pushing up prices even more. As a result, the economic recession didn't derail sales of collectible firearms, even as art and wine prices dropped. Lowe's best auction ever was in 2008, at the worst of the downturn.
"Collectors are more comfortable with tangible assets they can hold in their hand, with a track record," Lowe says.
Even as values soar, some collectors find it hard to part with their treasured pieces, Lowe says, adding that it often takes the prospect of buying better, more expensive firearms to push them to do so.
Still, Lowe urges new collectors to prepare and protect themselves before making a purchase.
"My recommendations for collecting and investing in collectible firearms are the same as they would be in terms of investing in stock," he says. "Do all the research possible."
Don't leave home without one.
Protect yourself and your family.
I'd rather be tried by a jury of twelve for a concealed weapons charge than being carried to my grave by six of my friends.
Most guns will never turn a profit unless you can buy them really cheap from a private owner. If you buy guns from dealers or at auctions you better spend some time understanding what drives prices up and have some idea where/when you are going to sell. For the beginner, stick with reasonably priced Winchesters and you should do OK. Unless you have big money to compete for the Old West six shooters and Geronimo's Winchester, stick to the local auctions and private sellers.
For me, guns are a far better investment than stocks and your not dealing with insider trading and brokers who game the system. Firearms auctions and collectors are much more trustworthy than your local stock trader. Unless you really go overboard, they will hold their value very well. Just about as good as gold.
I don't know if guns are such a good investment. My father was a collector of antique guns, both real and reproduction. He had quite a collection, and traveled frequently to gun shows to buy/sell/trade. It was a hobby to him as well as an investment. He purchased a reproduction black powder rifle that was featured on the cover of "Rifle" magazine that was reportedly worth about $4,500...he didn't pay that much for it, but figured it was a sound investment. When he passed away a few years ago, my mother was afraid to keep the guns in her house, as so many knew about the collection and she had received some questionable phone calls and visits regarding 'the' rifle in particular. A close re-enactor friend of my dad, a collector himself, and my uncle arranged for an estate auction with an auction house that dealt in antiques and antique weapons. My father had meticulously catalogued everything and left instructions for my mom, but the guns had to be re-assessed for current value. Once that was done and the guns were delivered, they advertised the auction among the interested collector and re-enactor communities. The final total from the auction was about $35,000...after the auction house's cut, it was just enough to pay off a second mortgage on the house just months before the housing crisis began. That would seem like a good investment...but the actual worth of the collection was about $10,000-$15,000 more than what it sold for. The $4,500 rifle everyone was so hungry for went for about half of it's worth...I think she said the Colt pistol went for more. Granted, the collection may have gone for more if sold off little by little...and that might work as an investment if you plan to do that yourself over time, but don't look at it as an investment for your spouse or children. The sale may have benifitted my mom tax-wise (because the estate was willed to her) and by the sheer timing of it all; but, had my dad been alive when the recession hit, those guns would likely still be sitting in a closet in a house with a second mortgage amid rising medical bills. Any investment in a collection is a crap shoot (no pun intended).
Myself, I tried collecting comics once. All it took was a Marvel artist running his mouth reckless to drop the value of one of my comics from $80 to $8 the week before I was to sell it.
Of course, you should invest in collectible guns, such as are not registered by the collectivists, just like your gold investment should be artworks (jewelry) and numismatic coins, so another communist like FDR cannot confiscate your investments. The Communist Manifesto mandates that the State shall control gold and weapons, in all cases, absolutely. Only free people have their wealth and the means to defend it, their homes, property, and families. Slaves have privileges like housing, clothing, training, health care, food; free people have rights such as life, liberty, pursuit of happiness and absolute ownership of their property. If you don't know the difference, and do not really care, you belong to the former set, subjects instead of sovereign citizens. George Soros ("Spooky Guy" immigrant) loves Americans who are brainwashed so that they don't know or care what their real rights are. He thinks real Americans with guns and gold are the greatest obstacle to worldwide social justice!
Would you rather be judged by 12 or carried by 6? Pretty easy question.
Thing is, in a related collectible field I'm familiar with, I have observed that everybody who goes into it with the investement idea invariably loses money, and everybody who passionately does it, and really understands what they are doing (i.e. research, and networking with collectors) invariably make money.
Guns are really no different than fine cars, and it's easy to write about something that has gone up incredibly in value as most every other fine line of pop-culture collectibles in the past 30 years that have been popular with baby boomers. Part of the reason is that the market is at its prime cash-flow. We'll see if this is true when baby boomers are gradually replaced by the next generation
To look how investing can be disasterous, one only needs to look at philately. I've read through numerous sources, that the average age of a stamp colletor is over 60 years old. Just how, pray tell, do you resell a collection into that kind of market (who is looking to sell themselves)? Unless you have the top shelf items everybody is looking for, forget it.
Which also proves, that you need to get kids interested in the hobby for it to have staying power.
Valuable guns are like valuable art, few and far between. The article homes in on collectables. Run of the mill current production will not get you any gain. Collectables are the rare ones, or an oldy tied to an historic figure. For example, an 1860 long rifle which is document to of belonged to Gen. Grant would have considerable value, while the same rifle in so-so condition used by a foot soldier would be of little value. The author is right on one point, research all you can before tossing away your money.
AnnDroid's account shows that the only one who makes any money on replicas and commemoratives is the maker. The person who buys such items at the inflated prices for which they are initially offered can seldom get the original cost back, and almost never can expect appreciation. Those interested in buying the "Rifle" magazine cover gun expected to acquire it for a bargain price because they knew how poor of an investment such a replica was.
Selling as a collection rather than selling each individual piece can also reduce the return by at least half. There are a lot of people who might bid a little over what a $500 gun is worth when caught up in an auction, but they cannot afford to buy a collection for tens of thousands of dollars, even if the final figure is a bargain.
Colts and Winchesters in original condition (NOT "redone" as so many are) are where the rapid appreciation is taking place. Colt boxes are a hot item on eBay, with many boxes bringing hundreds of dollars.
Inability to recognize a refinished gun is where many neophite collectors get taken. If entering the field, get help from an experienced collector. There are online collector forums for most brands that can help with questions about correctness and the like.
There are a lot of sharks in the deep water so start in the shallows and learn before venturing into the deep water of high-priced guns.
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