There is very good information above, but I'll add a comment on a few vague points, and some thoughts on Victories (US) in particular:
Carbon 15 said:
It is a navy gun. Its marked on the left side of the topstrap.
These were frequently faked, that is what they mean. But see the notes and photo below and you can be almost certain it isn't faked w/o a letter. The fakes were designed to fool noobs at gun shows in the '80s, not the collector or educated observer in the internet age. While they exist, they are pretty obvious.
Value: I think you got a good deal, but not crazy - but it might proove to be that good over time, depending upon where the market for these fantastic guns really goes. I do NOT see Victories trade at what is stated in the
SCSW. I have seen two
Naviesoffered in the last nine months in as good a condition as yours, from different vendors, both $300 delivered (take a guess where they were delivered).
And I have seen some collectible dealers ask $900 for non-Navy guns as nice as yours. So it's all over the map. $500 for a gun that nice and Navy is indeed a good deal, and safely under the nose-bleed collectors that your money is safe. Compared to WWII 1911 prices, US Victories are WAY undervalued - there were only around 1/4 million made in total for the US in .38 Special during the war (compare this to the 2 million or so 1911s made). The quality on them is generally higher than most war time 1911s, and they are much more pleasant to shoot (I LOVE my 1911s. I'm just being honest here). They are ridiculously undervalued and I think any original, very good or better condition true US .38 Special victory 4" revolver you find under $400 should go into your collection, Navy marked or not. Beware of cut-downs, 5" barrels and converted .38 S&W calibers ones - skip those. Keep in mind non-US victories outnumber US ones 2:1. Once the market wakes up to this, I expect more consistently high prices.
Provenance: As to getting it lettered, it will enhance resale, but to a someone who knows these guns, it will be obvious if it is a real Navy on examination. The reason is that the Navy roll markings were under the proprietary S&W "Black Magic" finish. This finish is just not possible to easily "fake" as it is not like parkerizing, and it appears your gun has the original finish (partly this is proven by the negative - the ejector rod is blued, which is how they came). If the marks are under the finish, and they look like the one below, you can relax about faked markings. Faked markings are usually cruse, and left in the white or filled with a different finish.
Grips: Remove your grips and make sure they serial to the gun (inside right panel, samped into the wood). That the grips are shrunken a little is unfortunate, but it doesn't mean they aren't authentic - some shrunk over time, others didn't. It just wasn't consistent.
Of quite a few S&W's I've owned and shot, the most consistent in accuracy was not a 28, 27, 29, or any other high-end or target gun. It was a 1942 Navy marked Victory.
If you have any interest in occasionally carrying it in the field, a WWII "Pilot's Holster" is good. Vintage ones are pricey, Vietnam era ones still affordable. Either is a better option than the reproduction ones Pacific Canvas and leather has children in China make and they import (these are the ones Cabela's sells). They look right at a distance, but the fit is bad (it is too large 0 it actually fits a 5" L frame (if such a thing was common), but not a fixed-sight 4" K frame. Custom makers can create a very nice one for you too, like El Paso Saddlery.
US Navy markings (most common; other variations known), from coolgunsite.com. If you look carefully you can see clearly how the finish is even and consistent between the flats and the engraved areas. This is just not possible to fake without refinishing the whole gun, this a) defeats the purpose of creating a cheap fake, and b) isn't actually possible without it being totally obvious and mismatched to the real Black Magic finish.: