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Ammunition Bubble timeline and prediction. (Specifically .22lr)

Discussion in 'General Gun Discussions' started by cpy911, Mar 21, 2013.

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  1. cpy911

    cpy911 New Member

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    Hi,
    I have been looking at this ammunition price bubble recently. I understand there might be some of you denying we are in one and that the shortage and high costs may continue, that is fine. I respect that. However, I am absolutely certain that we are in a bubble and I am going to predict the timeline for its completion.
    I am working off the following image:
    [​IMG]

    Right now, I believe we are in the greed phase, a subcategory of mania phase. People are buying a $20 brick of .22lr and selling for $70-$80 on Gunbroker.com or other classifieds. The buyers are accepting this reality of price, availability and paying it. That is fine, it is a free market. I am calling this greed phase, with no moral judgement implied. I believe it has taken us about three months to reach this point. Based on this build up, I predict about another 3-4 weeks until we hit the "New Paradigm" of just the fact that you can not get ammo cheap any more. So, I am calling the top in later weeks of April with .22lr going for about $100 a brick at the online classifieds.

    Once the top has been reached, we will follow the blow off phase all the way down to $20 brick everywhere including auctions and classifieds, which will take another three months. Once this happens, those flipping and hoarding will see the whole blow off and will ease up on demand. I predict July or August we will see .22lr ammo on the shelves at Wal-mart any day of the week at around $20 a brick.

    So, if you can be patient you will be able to get your ammunition at the original price.
    I believe we are in a bubble and we have seen many of these throughout history. Smart men have made a lot of money off people and sheared the sheep so to speak.

    I am not that smart, so I am sitting this one out.

    Cheers.
     
  2. 22-rimfire

    22-rimfire Senior Member

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    No idea, but I know you probably put some time into that graph. So it's fun.

    I have been sitting this one out since December. That is working on 4 months now. How can I? Easy, I have all I need for regular shooting for years to come unless I sell a bunch. I am short on good target ammo however. But I have more than a case of CCI SV to fill in the gaps. Not using up the better stuff as I would normally do. It is for "sunday go to meeting" purposes only because of the shortage.
     
  3. Gato Montés

    Gato Montés Member

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    All things must come to an end, ammo shortages included. Mid summer would be nice so I'm hoping that you're right. One thing I hadn't planned on was just how disheartening taking brick after brick of .22 from storage without adding any would be. Years of building a supply not to be touched less a situation like this leaves me with a funny feeling of dread every time I grab the next box.:(
     
  4. MIgunguy

    MIgunguy Member

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    nice graph, interesting way of thinking about the current situation... I hope you're right
     
  5. DeadFlies

    DeadFlies Member

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    Funny, I feel like a millionaire every time I blast through 50-100 rounds of ammo that can't be bought a reasonable prices right now. That's what it's for.

    You can't have your cake and eat it too, so I'm happiest with little bits of chocolate and frosting in my beard.
     
  6. Killian

    Killian Member

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    Six months minimum, maybe a year for .22LR to become available again. As time goes by and people begin to question if it will ever end, I think prices will go up. I base this on websites reported backorder status. When the prices hit a high enough level that no one will pay them, then they should drop back down. Probably to around $40-$50 for a brick. After all, you are getting 500 rounds in a brick. No one sells 9mm or .45 for $50 per 500. .22 has been cheap the last few years. How much would it take to get 500 9mm? Take $150 or more to get that. People have shown they are willing to pay very high prices. Ammo makers won't forget that. So I would suspect that after quite a while of ammo being unavailable and people paying these high prices, that the price will be higher than it is now once "things get back to normal".
     
  7. Rembrandt

    Rembrandt Senior Member

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    Your analysis is OK as far as it goes....but I submit the "unknown event" can and will make your predictions invalid.

    The "unknown event" could come in the form of another mass shooting, economic panic, or an asteroid. Twice in the last five years we've seen massive ammo shortages....not a matter of "IF" it will happen, but when. Since the Federal Reserve is printing 85 billion a month, the amount of devalued dollars to purchase the 500 round brick will certainly go up. The price of $100 per brick is firmly entrenched in everyone's mind, the next time this happens we'll see $100+ per brick as the norm.
     
  8. silicosys4

    silicosys4 Senior Member

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    I don't know why people think this way...
    I have bought several thousand rounds of .22lr the last three weeks as they appeared on lgs shelves. They were priced at $20/box of 500. These crazy prices are PURELY small distributors and middlemen "fleecing the sheep" (to borrow a phrase) while they have the chance.
    The shortages are manmade, and prices WILL come back down to close to if not pre panic prices.
     
  9. Jim Mac

    Jim Mac New Member

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    I give it a few months. Once supply catches up with demand the bottom will fall out. There is only so many people with deep enough pockets to buy .22 at 50-60 dollars a brick. The guys paying this kind of money is the guy that didnt stock up when it was cheap. I bought a couple thousand rounds at a yard sale last summer for 20 bucks. I sold 3 bricks just because I didnt need it all. Also sold a can or 54R because I wasnt sure if it was light ball or heavy ball and I could still buy it online delivered for cheaper than what people were paying for it locally, go figure that one out? jim
     
  10. Killian

    Killian Member

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    Without production figures on how much ammo is produced and imported into the United States, either per day, per month, or per year and a reliable estimate on how many people own .22 firearms and wanting ammo, it's tough to get a firm figure.

    Swore I wouldn't do this formula again, but here I go. These are all assumption figures. Actual figures may be more or less for both production and demand.

    Assuming 20 million rounds of .22LR is made every day in the US.
    You had these selling as bricks so I'll use 500 rounds per brick as a guide.
    20 million rounds divided by 500 round bricks equals 40,000 bricks per day.
    Divided into the population of the 50 states, you average 800 bricks per day per state.
    Assuming Walmart sells only 1 brick per customer (they usually sell 3, but I'll use 1), then 800 people per day in your state get a single brick of .22LR.
    I live in Mississippi. Population 2.5 million. 57% firearms ownership, one of the highest in the nation. 1.45 million gun owners (including kids, I know). Figure that 10% of these gun owners own a .22. The real figure is more like 90%. The .22 is probably the MOST popular caliber firearm to own. But I'll use 10% to illustrate this point. 145,000 people thus own a .22 in my state (More like 600,000 or 700,000 would be my actual guess).
    At 800 people per day being served with 1 brick of ammo, it will take 181.25 days to get 145,000 .22 owners in my state a single brick of ammo. Around 6 months.

    Most other states in the Union have a higher population than Mississippi's 2.5 million. But your state gets the same 800 bricks per day on average of that 20 million round production. I base the figure of 20 million rounds on a .22LR production video that CCI has on youtube, where they mention they can produce 4 million 22 rounds per day. I figure some other companies can do that, some probably not so much. Like I say, these production figures might be really really low. Or they might be high. I'd love it if someone could get an industry report on how much .22LR the US produced and imported in 2011. That would give us some actual numbers.

    But considering the fact I used 10% demand in my state, it still looks pretty bleak even if I bump up production from 20 million rounds per day to 100 Million rounds (touches pinky finger to side of mouth a la Dr. Evil) are being produced. Let me run my state again with an estimated 400,000 .22 owners in my state and 100 million rounds per day in the US being produced.

    If 100 million rounds are being produced, that's 4000 bricks per state per day.
    400,000 people in my state looking for .22 ammo would need 100 days for them to receive 1 brick of 500 rounds on average. So a little more than 3 months. But my state is a small population state. For some of you who have 3 and 4 million people looking for .22 ammo. Well...4 million people, at 4000 bricks per day, would take 1000 days (3 years-ish) for your state to receive enough ammo for 1 brick to each of those 4 million, on average.

    We really would need estimated demand and production figures for the whole US...but this ought to give you some idea of where we are.
     
  11. 22-rimfire

    22-rimfire Senior Member

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    It is going to take a while even if half the buyers said... the shortage is over, the other half would buy all the available 22LR ammo for at least a month or so.

    Part of the problem are bulk packs. Many used to think of a brick (10 50-ct boxes) as a fair amount of 22 ammunition. Now, that is ONE bulk pack. There is a psychology behind packaging 22LR ammo in bulk packs and that is sales and cheaper packaging at the factory.
     
  12. David E

    David E Senior Member

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    July or August? Of what year?
     
  13. Killian

    Killian Member

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    It's possible you have a schedule that allows you to be there when the shelves are being stocked. Someone 10 minutes or an hour after you may be trying every day and been unsuccessful. You just may be lucky. My conversations with people locally is that .22LR has not been coming in except in very very tiny quantities. Which are bought very quickly.

    The reason I think like I do is from crunching some numbers and looking at how many gun owners live in the US. If 40 million people each wanted 1 brick of .22 ammo, that's 20 Billion rounds...for each of them to get a single brick. If you start talking about people buying thousands of rounds each--which seems correct to me, I believe quite a number of people would buy $100--or 5 bricks at old Walmart prices--, right now if they could find it.

    There's a big demand right now, and I'm not certain our production is up to meeting it unless we count it in months and years. Days and weeks before this "gets back to normal" seems short sighted to me...based on these calculations
     
  14. wild cat mccane

    wild cat mccane Member

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    Totally agree.

    The NRA, hoarders, the ammo companies, and jerks really are the factors for this ammo shortage.
     
  15. Queen_of_Thunder

    Queen_of_Thunder member

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    Your premise is invalid. There is no correlation between the stock market and the price of ammo.

    Our prolem is that the mechanics of supply and demand have broken down as a result of outside interference. Those prices you see on gunbroker are real time examples of a product attempting to reach maket equilibrium. Under nomal conditions price increases would bring a market into equilibrium but that is not happening. The price of 22lr is a perfect example. The only way this market (ammo prices and availablity) can return to a state of equilibrium is for the outside disruptive force (politics) to go away.

    Now I know some of you are thinking that rising prices can fix this but you would be wrong. Why? Simple. The producer increases the price, the distributers add their markup and the LGS's ont be able to sell the product. This results in fewer distributors and LGS's which reduces competition and raises prices.

    Our options are few. Outside of the politics going away or everyone agrees not to purchase ammo for a time period we are stuck in this blackhole of ammo shortages.
     
  16. David E

    David E Senior Member

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    The very vocal anti-gun legislators, to include Obama and Biden, spouting off their goals and intent have nothing to do with any of this, right? :rolleyes:
     
  17. ID-shooting

    ID-shooting Member

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    There is no "ammo bubble." I have purchased plenty of 22lr, 223, 9mm, 45acp just this month alone at no higher price than 4 months ago. All there is are scalpers and suckers.
     
  18. David E

    David E Senior Member

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    A couple questions:

    1) what are you calling "plenty?"

    2) where are you finding this ammo?

    3) Has the ammo been in stock regularly? IE; do they have it this second?
     
  19. Ignition Override

    Ignition Override Senior Member

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    cpy911: What is the "bull trap" short decrease followed by a short climb?

    If prices do return to within 10-20% of normal by July-August, it will be too hot/humid to really enjoy shooting outside, but much better than seeing the flippers continue to help cause the shortage.

    When the prices start to drop, won't the large number of flippers and scalper begin to get anxious, and steadily mark prices lower on GB, Armslist etc?
    I've seen the same .223, 7.62x39 ammo for several days on Armslist in the Memphis/Nashville areas with the same fixed prices.
    But these are mostly local FTF markets if shipping prices are seen as a turn off.
     
    Last edited: Mar 21, 2013
  20. feedthehogs

    feedthehogs Senior Member

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    No such thing as greed, hoarders or scalpers in a free market.

    Only those late to the dance or can't afford a ticket use those words.
     
  21. cpy911

    cpy911 New Member

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    Bull Trap? My guess is that people think it is going back to the "New Paradigm" again, when it is actually a false rally in price. Again, I am not that smart. YMMV.
     
  22. cpy911

    cpy911 New Member

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    I am not trying to compare to the stock market, rather bubbles. We have had bubbles throughout history and we are having one now. Once people realize the bubble is deflating, watch the bottom fall out. The .22lr bricks will be back to $20 in no time. I still predict we have another month of greed phase to the "New Paradigm" until everyone realizes that .22lr ammo is just that, .22lr that you go plinking with your son on a Saturday afternoon for fun and economy. The people with fear, uncertainty and doubt are that ones who are driving the bubble where the flippers are very willing to help feed the FUD.

    I still stand by my time frame of July/August 2013, you will walk into Walmart and buy a $20 brick with no problems.
     
  23. 19-3Ben

    19-3Ben Senior Member

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    Edit- Deleted. Question asked and answered right before I posted. Mods if you want to delete, that's cool.
     
  24. wally

    wally Senior Member

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    Your graph seems to show return to the mean prices about 2X what they were at the start of the "stealth" phase, which would make about $35/500 the "new normal" :(

    Very few if any current "investments" will double in value in this time frame.
     
  25. cpy911

    cpy911 New Member

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    That graph assumes increase in mean over time. For the short time we have now, I think it will be negliable.

    Look at the buyers who did this....
    http://www.gunbroker.com/Auction/ViewItem.aspx?Item=333254590

    $125 for a brick, which is already passed my $70-$80 estimate, however the average has been $65-$75. I am still calling the top in 3-4 weeks, when the blow off phase starts.
     
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