Are firearms in an entirely different economy of their own?

[jakemccoy]

In no other industry have I seen prices rise like they have in the firearms industry. For example, two years ago, I bought 2,000 rounds of Wolf .308 Win for less than $500 from Cabela's. Today, those same 2,000 rounds cost $1,000. I can't justify buying cheap Wolf ammo at the current pricing. In other examples, similar price increases have happened with the Saiga 308 rifle and with many other guns. The price increases seem to be happening way faster than the pace of inflation.

Correction... OK, so we all saw prices rise during the real estate bubble and during the tech bubble. The reasons for those price increases were artificial. During the real estate bubble, many buyers were given credit they didn't deserve, and so the prices were able to rise unnaturally. During the tech bubble, stock values for tech companies rose artificially because successes like Yahoo caused a feeding frenzy by venture capitalists, etc.

What are the reasons for the rising prices in the firearms industry, especially when the overall economy is down? It's hard to believe the traditional reasons (e.g., supply, demand, cost of natural resources, etc.) are behind all the price increases. Is there a credible conspiracy theory (LOL)?

 

[LemmyCaution]

I'd look at oil in 2008 as an example of what's happening with firearms. Speculators held oil off the market to artificially shorten supply, knowing that SUV market saturation was at its peak, while rumors of peak oil were at their strongest. Gas prices spiked. Then second wave speculators came late to the party, pushing prices higher. Then the first group of speculators hedged against the inevitable collapse, dumped their hoarded reserves on the market and short sold their oil bets. The price of gas dropped more than 50% seemingly overnight.

Let's look for the parallels in firearms:

Cerberus Capital owns how many firearms manufacturers, thus controlling supply? Demand for firearms has spiked on rumors of a new AWB? Everyone else has seen the trend and are rushing late to the party?

I'd look for a whole lot of ammunition and firearms getting dumped on the market soon.

I know this is all just capitalism, but the 'efficiency of the market' trope is wearing a little thin and exposing it for the short con it is.

 

[Sam1911]

I'd look for a whole lot of ammunition and firearms getting dumped on the market soon.

Ammunition hasn't quite done this yet, and may not, really. But the guns are already there. Around Christmas there were deals to get an AR-15 lower for $50 -- in stock ready to ship. Saigas are back down under $400. WASRs are availalbe. The gun shops are stocked up again on AR-15s and AK variants, at quite reasonable prices. That bubble has burst.

-Sam

 

[wishin]

I contend it's simply supply and demand.

 

[JohnBT]

" an entirely different economy "

Sure, we're bidding against the government and there are a couple of wars going on. And the government has unlimited funds.

 

[heron]

Sure, we're bidding against the government and there are a couple of wars going on. And the government has unlimited funds.

I don't think that's much of an influence, beyond the most basic raw materials such as brass and powder. The gov't has their own source for ammunition (Lake City, plus others, I think), and they buy weapons that civilians aren't generally allowed to have (without unusual fuss and expense). Besides, those wars (and others) were going on long before the big price increases we've seen the last few years. I think the civilian market is largely separate.

 

[huntsman]

The price increases seem to be happening way faster than the pace of inflation.

Funny how guns and ammo seemed to have doubled in cost but other stuff hasn't

I not sure why, maybe just demand alone is enough, but I also think speculation is still driving the markets.

 

[JTH]

What's better, have a good stockpile of ammo or an arsenal of weapons? Prices have dropped on the in demand AKs, ARs. The glut of SKSs, has pretty much dried up, so no more NIB and the going price is $250-$350 dependant an variant. Bottom line, in demand weapons and ammo, make a great bartering currency. I believe AKs, ARs have come down more than ammo but we have to realize, there is a war in the middle east that utilizes the 7.62x39mm, .223 and .308 calibers rnds. This has added to the price of ammo in the U.S.

I have a question though, how has the prices of American made hunting rifles and pistols compare, in cost of increasing or decreasing? American made weapons are just expensive but many will agrue you pay for what you get. Bottom line for American rifles/pistols, do you want your weapons to be pretty or functional in worse case scenarios? Many look at AKs, SKSs and ARs as SHTF fan weapons, you know in most cases you can always depend on the AKs and SKS's. I know ARs early problems have been fixed but you can buy 2 AKs for every 1 AR.

 

[Pweller]

I've just found that, with any bubble, prices go up on emotion and come down on logic.

Real estate went up, not only from too easy credit, but there was a general 'feeling' that prices were going to go up forever so you'd better buy now. Same thing with the stock market - it's gonna go up forever, and then when it started going down everyone sold because it's going to go down forever! Of course, eventually logic and better judgement steps in and 'corrects' the markets. Guns are already being corrected, and I'm sure ammo will follow along soon enough.

 

[jakemccoy]

Intelligent opinions here, I really like this forum!!!

 

[NWCP]

It was all a matter of supply and demand. The Big O and his cronies took office and there was a resulting flood of panic buying. Both firearms and ammunition went up accordingly. Things are calming down a bit as gun owners and prospective gun owners realize he won't be making any rash moves against gun ownership in the immediate future. The supply is catching up with the market and prices are relaxing. I owned all that I felt was essential to me and my families safety before these knuckleheads took over so I didn't get caught up in the moment. Now that the gun market is calming down I might add another rifle to my collection this year. It won't be a military pattern, but will more than likely be a 26-06 bolt that I've been pondering for a few years now. Ammo prices are stabilizing, but I doubt we'll see the low costs of the past. The demand for Brass and lead will continue to fluctuate with the war effort and sporting needs. Ammo has come down quite a bit though. While there might have been an attempt by some companies to hoard ammo and keep the prices artificially high I don't think that was a big part of the total market price increase. I'd like to have a bit more 7.62x51, .223, 9mm and .45ACP on hand so price decreases in the ammo department are always welcomed.

 

[Zoogster]

There is several reasons.

One of the more important recent reasons was emotion, but based on logic.
Obama during his entire career has voted for every single measure of gun control before becoming president. This is fact backed by a proven documented voting record of someone who has been in politics for years.
From voting for every handgun ban or restriction, to every "Assault Weapon" type of legislation. In his entire career before becoming president he did not vote against a single anti-gun law, and even sat on the Board of Directors for the Joyce Foundation one of the biggest funding sources of anti-gun efforts in the country.
His Attorney General is also a noted anti-gun politician, who in fact called for an AWB early in 2009 before being told to shut up by wiser (but no less dangerous) career politicians that knew it was not the time.

So since nothing has happened yet, everyone has the luxury of saying everyone was merely panicking. We have seen over a year go by, and the panic subside. But it was in fact an entirely logical panic.


During that panic those places which restocked supplies at the new inflated prices now have merchandise worth as much or less than what they paid for it. Leaving minimal profits. So many are unwilling to part with their inventory for pre-Obama prices and take a loss. I think some are waiting for prices to catch up to what they are willing to sell them for.



Another major factor is we have actually succeeded in recent years in greatly increasing the number of gun owners and various permit holders.
That means more people are buying guns and especially ammo.
But the manufacturers are not making that many more guns or ammo. So the market is larger but the inventory the same.
This will be seen greatest in ammo prices, because while people who already owned firearms who purchase a new firearm may still only allot so much of their budget to ammo completely new firearm owners will be taking ammo from the market they never did before.

Additionally surplus sources that lasted generations have mostly dried up, and laws prevent a lot of future cheap surplus sources from going directly to civilians. This has greatly cut the supply of one of the most affordable sources on the market. A supply that also competed with and lowered the price of other ammunition. Previously before such laws there was always surplus ammunition after major conflicts around the world.

 

[xHypex]

Additionally surplus sources that lasted generations have mostly dried up, and laws prevent a lot of future cheap surplus sources from going directly to civilians. This has greatly cut the supply of one of the most affordable sources on the market. A supply that also competed with and lowered the price of other ammunition. Previously before such laws there was always surplus ammunition after major conflicts around the world.

I've seen this mentioned before and I may have even seen a source cited at some point, but does anyone have more information on the elimination of future surplus via regulation? Obviously select fire weapons will never be available for civilian sales, but is there anything that prevents US military surplus M9s, surplus ammunition, other military's weapons (i.e. German HK P8s), etc. from becoming available?

I know we'll never see the likes of surplus Garands, M1 Carbines, 1911s, etc., but even many of the CMP rifles are rifles that were loan returns from other nations (Greece, Germany). I'm guessing that policy favors providing weapons to other nations first, but will anything ever filter back to the US market? The past few years have provided fresh stockpiles of surplus pistols from Europe, so I've always wondered what else might be in the pipeline.
-hype

 

[Hatterasguy]

2008 and 09 will be remembered as banner years for the fireamrs industry.

Right now the bubble just burst, but its full affects won't be felt for a few months.

http://www.gunbroker.com/Auction/ViewItem.aspx?Item=156639664
Your a sucker if your paying .50 cents a round for 5.56 Wolf.

I fully expect to be paying .25 cents a round or less for quality American made 5.56 by this summer. Everyone stockpilled so much, combined with the slow economy finaly catching up, and the ammunition companies flooding the market...its the perfect storm.

 

[MinnMooney]

Quote:
Sure, we're bidding against the government and there are a couple of wars going on. And the government has unlimited funds.

I don't think that's much of an influence, beyond the most basic raw materials such as brass and powder. The gov't has their own source for ammunition (Lake City, plus others, I think), and they buy weapons that civilians aren't generally allowed to have

Sorry, heron, but there are just way too many articles and experts who know that all of the ammo manufacturers and many gun makers are "to their manufacturing limits" just supplying the gov't.

The war(s) ARE the influence.

 

[Extremely Pro Gun]

What about 380???????

 

[MinnMooney]

Look at the "Cash for Clunkers" program

Obama had a brain-storm of an idea to give people $4500 to crush decent cars/trucks if they'd trade them in on new vehicles.

Just a week or two before this boon-doogle started, I priced (& just about purchased) a Chevy 1/2 t Silverado with several goodies for $28,500 & change. List : $37,875

High inventory/Low demand = lower prices.

Three weeks into (& just about at the end of) the "cash for clunkers" money give-away, I went back to actually buy the truck. "Sorry", said the salesman, "our inventory is much lower than what it was so we aren't discounting vehicles as much. That truck you like.............. maybe I could let it go for $34,500."

That was a $6,000 increase in about three weeks!!! Supply & demand.

Low inventory/High demand = higher prices.


Same with the gun market. Obama created that scenerio, also. His reputation as a gun-grabbing liberal led to panic buying of guns, ammo, reloading supplies.

Low inventory/Super high demand = much higher prices and shortages.

 

[MinnMooney]

from Extremely Pro Gun (post 16) :

What about 380???????

Come on Xtreme, the shortage of .380 ACP is the same scenerio - Low inventory/Very high demand = shortages and high prices.

Look at all of the new .380 ACP's (Ruger, Kahr, etc.) that have hit the market in these past two years. They're selling like hot cakes and the ammo suppliers (who are already stretched to their limits) either can't or don't want to switch the machines to make .380 ACP ammo. Not exactly rocket science.

 

[daskro]

As others have mentioned there is still big demand from military for ammo. Big commercial manufacturers such as ATK are using most of their capacity for the war effort and there is little incentive to invest into new equipment beyond what the military is paying for when in 5 years time the ammunition demand will bottom out.

Also raw material prices for ammunition have risen similarly to oil over the last 3 years.

 

[huntsman]

During that panic those places which restocked supplies at the new inflated prices now have merchandise worth as much or less than what they paid for it. Leaving minimal profits. So many are unwilling to part with their inventory for pre-Obama prices and take a loss. I think some are waiting for prices to catch up to what they are willing to sell them for.

+1 That’s what the local gunshop said when I was complaining about his .380 being $25.00 he claims he paid $20.00 and I got it for $23.00

 

[22-rimfire]

I feel sure the gunshops would prefer that ammunition be a lot less expensive and available so that they have a bit more flexibility in pricing things at their shops. If prices are low, people tend to buy more. I might buy one box of 38spl now when in the past I would have bought at least two. This also equates to how much I shoot the stuff up as well.

The civilian firearms market is pretty much a worldwide industry like many. Prices have been going up due to demand and manufacturing costs. Many people are complaining about how, say Ruger, has cheapened their 10-22 with more plastic components. The firearms companies are in it for the profit and I believe they try to maintain as low a price as is possible on a product to increase sales. But they also have to contend with their costs and if the US moves into a high inflationary period as is predicted, you will see firearms prices going up significantly like they did back in the late 1970's and 1980's.

 

[leadcounsel]

Mainly supply and demand

To some extent I agree, but to some extent I disagree.

Yes, ammo has doubled in a few years. I attribute this increase to speculation, price of metals, and shipping (related to oil), and wars consuming ammo.

Yes, guns nearly doubled in 2009, but have since returned to pre-election mania. I've picked up some great deals, even with pre-election prices.

Look at gold and silver. Trippled in a decade.

Look at oil. It's been all over the map in the last 10+ years. Heck, in the last 2 years I've bought gas as low as $1.50 a gallon and I've seen it as high as $5 a gallon!

Property/housing has been a wild ride too.

And then there's the stock market. In a decade the DOW has been as high as 14000 ish and as low as 7,000 ish, and up and down everywhere between. Now that is a wild ride!

Much of it is speculation that drives prices to unsustainable levels, causing a 'correction' in prices. And when prices are too low, demand outpaces supply causing another 'correction.' It's the free market at work.

I would venture it's 90% supply and demand, 10% artificial (government) factors.