Guns as Investment?

If you buy certain collectible firearms, hedging on that they traditionally increase in value, to be sold at some unknown future date for profit (i.e. think of it as a functional retirement plan) ...

.. does that violate the FFL laws? (Selling for profit)

Ergo, would you need to obtain an FFL before disposing of such collection?

Or, perhaps, go through a dealer, as opposed to private sale or auction?

Does the fact that there is a 5, or 10, or even 20 year interval between acquisition and disposition play in to the matter whatsoever?

Does the size of the collection have any relevance?

Does the frequency at which the collection is eventually sold have any relevance? (I.e. if you sold, say, 100 guns in a year that you'd accumulated over 15 years, vs. spacing them out 10 a year for 10 years?)

Just seems to me that given how firearms appreciate in value over time, it makes sense, from a certain standpoint, to have a "functional" retirement plan that you can both enjoy now.. and benefit from later..

I was more concerned with when I decide to sell the collection off. I mean, if I sell a collection of 80 or 100 guns in one short time period (which I'd accumulated over 15 or 30 years), using today's laws, where would that place me? I say today's laws, because I realize things can change between now and the year 2030 or whenever I sell my collection to buy my yacht or mountain cabin or whatever.

And... You have to pay capitol gains?!!! That's annoying.

Since I opted out of renewing my FFL in 2009, I haven't sold much. One here. A trade there. I've sold 6 guns since 2009 - having waited almost two years after my FFL before selling ANYTHING. I've bought 4 guns. Since '09, any gun sales I make are to gather money for upgrades (out of the old.. in with the new).

I'm still sitting on a LOT of firearms though, all of the unsold inventory from my shop went "To Personal" on the books I turned in. If I decided to sell a large(ish) quantity of firearms, is there any set limit?

The relevant reason I ask, is there's some (rather) expensive guns that I'd like to buy for my personal collection and enjoyment, but would need to sell quite a lot (quantity wise) to get the money together for them.

I'd rather NOT go through the hassle of an FFL to do this - don't think I'd even qualify for it given I don't plan on making a livelihood out of selling guns (not again, was a pain in the ass, and I didn't make much money at all.. certainly not enough to live off of).

So, if I were to sell, say, between 30 and 40 firearms within a year's time to fund those other FEW firearms I want in my collection... what's the ramifications?

The only things I see go up, usually, are short-run imports. But only AFTER the imports dry up (and you never really know how long those will run).

Sometimes, less often, the opposite happens though. The Yugo M76 started out at what, 1800? 1900? Now it goes for about a grand?

Wish I had a pile of Garands, M1 Carbines, SKS's, etc from when they were dirt cheap.

Even those $90 Mosin Nagants will go for a lot more... someday. I remember when I was buying them by the gross for $48 ... selling them for $69 like popcorn at gun shows. Same with the Romanian AK's, I remember ordering them wholesale for $275. Of course, at the time, they were selling for $300-325. So there wasn't much money in them.

Now? Yeah, if I'd held on to them a few years I could turn some money.

That's one of the things that always irritated me, massively, about the gun business. Such astonishingly LOW margins.

One way around capitol gains, on collectors stuff.. (I think, would have to double check with my accountant), would be to incorporate (S corp or LLC) and sell them through the company. Then it just becomes normal income tax on a schedule K. But, I'd need to have an FFL to sell as a company (again). Even so, depending on how things go, it might be worth the money to file the articles of incorporation and pay the FFL fees for a year or two, to reduce the tax bill.

Art -

So if the guns appreciate in value significantly?

Let's provide an example to work off of. (Not real life example, just a hypothetical one)

To start with, say over the next 10 years, I buy a quantity of each type of "surplus" import & collectible firearms that's created. I use those, since those tend to appreciate over time, once the "import run" is through and supply dries up. Basically, a demand has been created, but there is a finite supply (the recipe for appreciating value).

Say, I buy a batch of Mosin Nagants (hand selecting what I want to keep and selling the remainder at cost - not profit), 1 each of the "belt fed" semiautos (MG34, RPD, 1919, MG53, etc. One each of rifle for those such as Suomi, Yugo M76, etc. One or two each of the AK variants. And so on. And this continues over a long time span. Sometimes buying an extra two or three rifles so I can pick the "best" quality and sell the rest at no profit.

With each, after the import run dries out, prices will climb. We've seen this with everything, almost across the board - just takes TIME. (Lots, and lots of time, yes, but I'm patient).

Then I turn XX years old, decide I'm going to retire. I sell the collection.

At any point in time during this have I violated BATF rules?

Reason I ask, in particular, is I'm not against buying 3-5 of a type of import firearm to get one or two "keepers". Did it with mosin nagants (had an FFL at the time) - ordered about 60 of the buggers in and I went through every last one of them to decide which one I wanted to add to my "personal" collection. Sold the rest at profit (had an FFL at the time).

If I do the SAME now, perhaps in less quantity, of course, but I do not sell them for profit (break even)... where does that place me?

I guess the intention here is - I'd be buying firearms with the SOLE intention of keeping them in my collection for the purposes of increasing value, and SOMEDAY selling them for profit. But does that place me on the wrong side of a "business" or is this just considered a natural, and normal, byproduct of "collecting"?

Thanks

One thing which is more or less certain, is guns will AT LEAST keep pace with the dollar.

For a point of comparison, the stocks I own, this year, have really been in the dump. I'm down about 5 grand overall. They "may" come back up, they may not. (Yes, they are dividend bearing, so I still have some income from them, but all that really does is keep pace with inflation; about 4% a year). Interest rates on bonds and CD's are in the crapper. Even high-end corporate bonds suck (for lack of a better term).

Guns - and ammunition - meanwhile will tend to at the very LEAST keep pace with our economy. As costs of metals, labor, and so on go up, so will guns.

Imports and limited-run firearms, to ME, have shown a much higher than normal return IF factored in over a long period of time - say, 5, 10, or 15 years. Look at the prices of SKS's, M1 Carbines, M1 Garands, Springfield '03's, Enfields, and EVERY other import or surplus item that where supply has since CEASED. ALL of them have gone up in value (at least, all that I can find).

I'm too late on K98's, M1's, and so on. But there's ALWAYS some odd thing getting built and sold (MG-34's, Suomi's, and so on). So I've been buying them while supplies are available, hedging on the fact that when supplies are NO LONGER available (which may be 1 month, 1 year, or 10 years for all I know), the prices will start to climb as supply is gone.

Semi-auto MG53's and PK's are a prime example. Those were out for a little while, the company which was assembling them ran out of kits, and supply is gone. I'm looking for them, can't FIND them. At this point, and at all points in the future, it is highly likely that those rifles will FOREVER be in a "seller's market".

(Same holds true for original H&K gear; G3's, and so on. They COULD Have followed the FNH model and built a factory here to continue operations, but opted NOT to, resulting in a cut of the SUPPLY of those firearms. Since then, prices have gone way up.)

The advantage is, unlike my stocks and bonds, I can run ammo through these if I feel the whim. ;-)

The downside is finding buyers if & when I sell.

The BIGGER downside is if there are ever any laws passed with limits imposed on the # I can sell without an FFL, or something preventing me from selling them AT ALL (a more stringent AWB.) In that case, they become family heirlooms, and I know I have enough guns to arm the next 4 or 5 generations of my descendants. (If it gets to that point, I'm sure there will be a use for them other than for collectible value, but that's another topic altogether).

Now, I might be WAY wrong and lose money by a depreciated value. But if I am, I'll have a bunch o' guns, so that's not all bad anyway. It's certainly a more pleasant outcome than if I lose money on the stock market, because once THAT is lost, it's gone for good, vanishes, without anything to show for it. With guns, I still have the PHYSICAL item, and I can use it. ;-)

(I am also trying to justify having such a large collection to my wife. We have the money to spend, but she groans every time I buy a new gun. I tell her "at least it's more useful than a coin collection" - which was my grandfather's pursuit and passion...)