When will the hyper gun demand bubble burst?

[R.W.Dale]

That's not entirely true, you could get someone like John Tester or like him for the Dem nom.

And Santa could bring me an 03a3 Springfield for Christmas too

 

[gfanikf]

And Santa could bring me an 03a3 Springfield for Christmas too

He might, have you been naughty or something?

 

[JHenry]

It's most certainly due to a marketing strategy. Glock was (and possibly is) able to build quality handguns a lot cheaper than most anyone else even when folding in the amortized R&D/tooling expenses. When Glock came on the scene one of the things being chased by government were the el cheapo, die cast, ring-of-fire, junk guns. While Glock might have been able to price their guns much lower (as they do for law enforcement) and still maintain suitable margins they didn't want to be labeled as a junk gun manufacturer so they priced their guns near the market resulting in great margins. As the market headed north, they pretty much held their pricing static.

that may be true, but my line of thought is more along the lines of, We[Glock] have spent a ton of money developing this new pistol. If we sell it at a higher price upon introduction we will see a quicker return of investment(pretty much breaking even) and then we can gradually lower the price and sell more once our initial costs have been paid and whatever profit we make after subtracting our variabe costs is ours.

The prices for most goods don't typically drop in a sudden manner. They erode through competition -- which is also true for guns except that the gun market is not truly 100% an open market so it slows things down.

Markets become saturated for durable goods like guns. They aren't like most other durable goods like vehicles or tools. Most guns don't wear out. They are retained, sold or given away. In time the market will be saturated driving prices lower. In the mean time it will be fascinating to watch what the gunmakers do to keep prices as high as possible. Limit production. Take certain models out of production altogether for the foreseeable future, etc. etc.

Unless capacity further shrinks, the markets will become better satiated not only through sales but an eventual shift in consumer attitudes.

Well the advantage guns have over cars is that they are not nearly as expensive. People dont mind owning multiple guns where as a family of 4 will probably only need 3 maybe 4 tops at any one time. However it is not uncommon for the members of that same family to each own multiple guns.

Also alot of guns that are made do not last forever and eventually breakdown, once they do if they are no longer in production then finding parts to fix them becomes a hassle and eventually the number of usable guns in a particular model become increasingly thin. And imho by introducing new models, people will always buy the new, improved product and trade off their older makes to someone who will gladly buy it for the right price. For instance say you bought a Px4 when it first came out and loved it, so you suddenly find yourself without the need for your G17 so you sell that off.

Its all very subjective and noone can chime in more than a vague theory, but since it is an uncertain future noone is wrong

 

[DefiantDad]

Not true. The quantity purchased (and/or quantity produced) has to change. If people actually stopped buying in the hopes of driving prices down it would be effective only until they resumed buying.

The only way the bubble will burst is by satisfying the demand -- through the passage of time at current production rates or by raising production.

Actually, if it really *is* a bubble (and I don't necessarily see it as such) then it will pop when DEMAND is extinguished. If you keep supplying the bubble, it is just going to get larger, so I don't see increased production being the factor of the bubble popping.

Compare with the housing bubble. More demand, more production. More new building starts, more mortgage funding, etc. all feeding the hungry masses who want more and more homes since the prices are SURELY going to double.

I just don't see the firearms thing the same way. As mentioned, I would think the "bubble" will burst only when people feel SAFE and do not feel the NEED a firearm to protect themselves (or otherwise are OUTLAWED from owning such, OR are otherwise so poor as not to be able to afford them). However, even in the last two scenarios, where affordability/legality is the issue, there is still pent up demand so, hard to say, because what is the price of a BLACK MARKET firearm? Price is even higher, but of course total sales volume is lower.

Every day, my guess is that more and more people are growing more aware/concerned about the world/USA and thus walk into gun stores for the first time in their lives. And the people who already have firearms, are considering owning more of them and/or supplies.

It has to reverse itself before the bubble pops. That is to say, firearms owners have to SELL their firearms (for cash) and for them to do that, it means they think the firearms are next to useless and therefore prefer to have the cash.

 

[mljdeckard]

I don't know at all that it's hyper-enthusiasm. Why can't it just be legitimate growing enthusiasm? (And how is that a bad thing?)

The panic after the 2008 election was hyper-enthusiasm.

and oh yeah, the prices aren't going to drop.

 

[Kynoch]

that may be true, but my line of thought is more along the lines of, We[Glock] have spent a ton of money developing this new pistol. If we sell it at a higher price upon introduction we will see a quicker return of investment(pretty much breaking even) and then we can gradually lower the price and sell more once our initial costs have been paid and whatever profit we make after subtracting our variabe costs is ours.

Actually I don't think Glock's capital investment was Earth-shattering for the M17. Many of the costs were sunk costs because Glock was already in business building other products. It was nothing to sneeze at but it was trivial in comparison to the profit potential. Certainly trivial compared to all the tooling and the process required for a truly high volume consumer product like a drill motor or a circular saw. Glock has never really lowered (or raised) prices as you suggest.

Well the advantage guns have over cars is that they are not nearly as expensive. People dont mind owning multiple guns where as a family of 4 will probably only need 3 maybe 4 tops at any one time. However it is not uncommon for the members of that same family to each own multiple guns.

Guns also aren't consumed or worn out. Not only for one generation but for multiple generations. The fact that an M1911 or a Browning Hi-Power is still a very viable weapon is remarkable.

Also alot of guns that are made do not last forever and eventually breakdown, once they do if they are no longer in production then finding parts to fix them becomes a hassle and eventually the number of usable guns in a particular model become increasingly thin. And imho by introducing new models, people will always buy the new, improved product and trade off their older makes to someone who will gladly buy it for the right price. For instance say you bought a Px4 when it first came out and loved it, so you suddenly find yourself without the need for your G17 so you sell that off.

Most guns last generations.

Its all very subjective and noone can chime in more than a vague theory, but since it is an uncertain future noone is wrong

Actually that's not true. There is a lot of historical/business information out there about Glock. His company now has a history that can be analyzed to see what they did, when they did it.

 

[Fishslayer]

Prices won't drop.

I would kinda/sorta agree with this but from my observation & frequenting of gun shops the supply is much better than in '09-'10. Decent used handguns, especially older S&W revolvers, were scarce as hen's teeth. Took over a year to score a 4" .357. When I did see something interesting at a decent price if I went home to research it it would be gone the next day.

These days there doesn't seem to be as much a frenzy. I see plenty of interesting used guns in the cases and they seem to be staying there a bit longer.

I see sales on guns & ammo at the local big stores, which you didn't see in '09-'10. And they're guns & ammo we may actually want.

I haven't noticed any real ammo shortage at Wally World yet. That's always a barometer.

The Glock fanboiz still seem to think their beat to **** used G17s are worth $500 though...

 

[medalguy]

Supply and demand. If we start selling our guns, the supply will increase. I don't know about you, but I ain't selling.....

 

[Kynoch]

Actually, if it really *is* a bubble (and I don't necessarily see it as such) then it will pop when DEMAND is extinguished. If you keep supplying the bubble, it is just going to get larger, so I don't see increased production being the factor of the bubble popping.

Demand will never be "extinguished." It may be reduced but not extinguished.

Compare with the housing bubble. More demand, more production. More new building starts, more mortgage funding, etc. all feeding the hungry masses who want more and more homes since the prices are SURELY going to double.

I just don't see the firearms thing the same way. As mentioned, I would think the "bubble" will burst only when people feel SAFE and do not feel the NEED a firearm to protect themselves (or otherwise are OUTLAWED from owning such, OR are otherwise so poor as not to be able to afford them). However, even in the last two scenarios, where affordability/legality is the issue, there is still pent up demand so, hard to say, because what is the price of a BLACK MARKET firearm? Price is even higher, but of course total sales volume is lower.

Every day, my guess is that more and more people are growing more aware/concerned about the world/USA and thus walk into gun stores for the first time in their lives. And the people who already have firearms, are considering owning more of them and/or supplies.

It has to reverse itself before the bubble pops. That is to say, firearms owners have to SELL their firearms (for cash) and for them to do that, it means they think the firearms are next to useless and therefore prefer to have the cash.

The sad part is that like Western Europe, the USA's population really isn't growing that fast that MILLIONS of guns are being pumped out each year. Sooner or later the markets will satiate.

 

[Hangingrock]

Should November’s election replace Obama with Romney the Chicken Little’s of the world remove themselves from the market place and there would be a reprieve from the buying frenzy. At some point there is going to be market saturation and with this economy there is only so much of what is referred to as disposable income.

 

[Kynoch]

Should November’s election replace Obama with Romney the Chicken Little’s of the world remove themselves from the market place and there would be a reprieve from the buying frenzy. At some point there is going to be market saturation and with this economy there is only so much of what is referred to as disposable income.

That's a very salient point. Many have mentioned that with uncertain times people want guns. How about when they cannot afford a gun?

 

[Bartholomew Roberts]

When is the last time gun prices went down systematically? The closest thing I can think of is the small bubble in ARs circa 2008; but in general guns haven't gotten cheaper as long as I've been alive,

An Uzi Model A Carbine with all the accessories went for $425 locally in 1984. Today the same thing runs $1,600-$,2000. Even if you assume the lower price and take inflation into account, that is still doubling the original price.

 

[Kynoch]

When is the last time gun prices went down systematically? The closest thing I can think of is the small bubble in ARs circa 2008; but in general guns haven't gotten cheaper as long as I've been alive,

An Uzi Model A Carbine with all the accessories went for $425 locally in 1984. Today the same thing runs $1,600-$,2000. Even if you assume the lower price and take inflation into account, that is still doubling the original price.

Gun prices have never been on such a high cliff to fall from... The Uzi is hardly a representative sample of gun pricing.

 

[Ignition Override]

Radagast: Your wide variety of factors was interesting.
I've told my wife twice that my Russian 7.62x39 or Serbian .303 ammo will only go up in the long run, and more ammo now means money saved.

Have you guys seen "The gunstockmarket"?
It has actual sale prices of Garands, SKS, MNs, TT-33 and several others, if the info is accurate.

 

[larryh1108]

I believe we've seen an explosion of demand since '08 because of the obvious reasons but there seems to be a new generation of gun buyers like we haven't seen before. These internet video games have created a young generation that covets guns and they are finding out what we already know... you can't have just one. Women have taken to the gun world as well for whatever reasons and combined, you have 2 reasons why demand will remain high for years to come.

The panic buying comes and goes but when you have a generation that embraces the sport like this latest one has (males and females), you won't see the wild highs and lows that are the norm in periods of uncertainty and ambivalence. I see a long period of pro-gun activity due to the renewed interest in firearms as well as the recent SCOTUS rulings. This internet generation may have saved us from gradually losing our rights over the next 100 years.

 

[Bartholomew Roberts]

The Uzi is hardly a representative sample of gun pricing.

OK, give me a counterexample. Show me a gun that has had prices fall dramatically compared to what it sold new for (after adjusting for infaltion).

Gun prices have never been on such a high cliff to fall from...

Which is it? Are we in a bubble where gun prices inflated or are gun prices not that high?

 

[Trueno]

I don't know at all that it's hyper-enthusiasm. Why can't it just be legitimate growing enthusiasm? (And how is that a bad thing?)

The panic after the 2008 election was hyper-enthusiasm.

and oh yeah, the prices aren't going to drop.

I work all of the Houston-area gunshows, it's hyperenthusiasm mainly because of politics but also the latest crime trends. Yes, there is a "legitimate growing enthusiasm" by newbs buying their first gun, but most of them are doing so only because of the current state of politics.

Seriously, lots of these newbs wouldn't be at the gunshow or Gander Mtn in the first place if it weren't for the political scene. To hear it in their words, they are "buying guns before they get banned".


hope this tidbit helped,

t

 

[Trueno]

OK, give me a counterexample. Show me a gun that has had prices fall dramatically compared to what it sold new for (after adjusting for infaltion).

Which is it? Are we in a bubble where gun prices inflated or are gun prices not that high?

Not sure if this will qualify as an example, but LE6920's were fetching 1500-1800 early '09, they're back down to 1100-1200 now. What's sad is seeing those that bought high in late '08/early '09 still trying to this day to recoup their investments (it ain't happening!).

As far as inflated vs high, the current game between Springfield and Glock is entertaining. S&W might be stuck where they are on the social ladder but those XD's are eating into Glock's share like there ain't no tomorrow.

t

 

[bri]

I am 46 years old, and have never seen prices go down in my lifetime, only up.

This just means you weren't looking. Ask some guys and gals that purchased an AR in '08, you may learn something.

Guns are a commodity like gold to some degree.

I always cringe when I read statements like this and the infamous "Guns as an investment...".

Firearms are toys or tools, both of which are priced based on supply and demand.

 

[Trueno]

I always cringe when I read statements like this and the infamous "Guns as an investment...".

Firearms are toys or tools, both of which are priced based on supply and demand.

Granted, a 427 Cobra is a toy also...but would you deny it is an investment?

In late February of this year WASR's were priced at 462 for a fixed-stock version, would've been an excellent investment as they are now priced at 568 (and are selling). And don't even get me started on ammo...remember the $27 SA battlepacks in '07?

I always get a kick out've the folks that laugh at firearms as investments, I simply offer them a 5yr old price for theirs

t

 

[Kynoch]

I believe we've seen an explosion of demand since '08 because of the obvious reasons but there seems to be a new generation of gun buyers like we haven't seen before. These internet video games have created a young generation that covets guns and they are finding out what we already know... you can't have just one. Women have taken to the gun world as well for whatever reasons and combined, you have 2 reasons why demand will remain high for years to come.

The panic buying comes and goes but when you have a generation that embraces the sport like this latest one has (males and females), you won't see the wild highs and lows that are the norm in periods of uncertainty and ambivalence. I see a long period of pro-gun activity due to the renewed interest in firearms as well as the recent SCOTUS rulings. This internet generation may have saved us from gradually losing our rights over the next 100 years.

Now that really is some excellent input. Two giant markets that need to be filled...

I guess there is another issue that I haven't thought too much about. It doesn't take much of an increase in purchasing a gun from the huge general public to put a helluva strain on the world's gunmaking capabilities.

 

[Kynoch]

Not sure if this will qualify as an example, but LE6920's were fetching 1500-1800 early '09, they're back down to 1100-1200 now. What's sad is seeing those that bought high in late '08/early '09 still trying to this day to recoup their investments (it ain't happening!).

As far as inflated vs high, the current game between Springfield and Glock is entertaining. S&W might be stuck where they are on the social ladder but those XD's are eating into Glock's share like there ain't no tomorrow.

t

How do you know? Do you have SA's production numbers? The BATF numbers for their handguns is a great deal smaller than I would have ever imagined. Connoisseurs might be amused with the SAs compared to the Glocks but it's still Glock that is still selling the huge numbers -- and they are not the company I would want to get into a pricing war with...

What do you mean about S&W being on a "social ladder?"

 

[tarosean]

I wanna know where all this is happening? In my neck of the woods everytime I walk into a LGS, or Chain sporting goods store.. the gun counters are not particularly busy..

These internet video games have created a young generation that covets guns and they are finding out what we already know... you can't have just one.

Yeah but once they realize the guns they play with are either illegal (post May) or cost between 10-50k.. They vanish from the boards... ha ha

While I didnt have video games growing up, I had westerns, bond, and other TV/Movie icons to fuel my desire. So it may not be any different just a different media planting the seed.

 

[Trueno]

How do you know? Do you have SA's production numbers? The BATF numbers for their handguns is a great deal smaller than I would have ever imagined.

Selling 51 handguns in 8hrs might give me some insight to comment on, so I did. Anyways...can you enlighten the rest of the class as to these ATF numbers you are privy to?

Connoisseurs might be amused with the SAs compared to the Glocks but it's still Glock that is still selling the huge numbers -- and they are not the company I would want to get into a pricing war with...

What do you mean about S&W being on a "social ladder?"

Whoa, let's get something straight...I didn't say Glock isn't the biggest seller, I said Springfield has taken a big chunk of what used to be Glock's playground. Doesn't take a rocket scientist to figure what's gonna happen when you put a 9 or .40 XD on the table for $10 less than a Gen3 17 or 23

Maybe it's just a Texas thang, but around here S&W sells on price alone. But when folks decide to approach the $400+ zone, they immediately pass S&W by and go straight to the Springfields and Glocks.

By then, the marketing by Springfield can have an advantage. The case + compartmentalized foam and general presentation alone can sell a customer over the Glock and its mags laying loose in its box. See what I'm saying?

Now graduate to the XDs with all its goodies...and it's a whole new ballgame, consistent winner in the presentation department. Now you and I could probably care less about that, but we're talkin' about everyone else and their buying patterns/habits. Some here might be surprised at how a simple grip safety can sell a gun.

t

 

[bri]

Granted, a 427 Cobra is a toy also...but would you deny it is an investment?

So now we're comparing firearms to extremely rare, classic sports cars? Really? I don't think I need to point out the differences.

In late February of this year WASR's were priced at 462 for a fixed-stock version, would've been an excellent investment as they are now priced at 568 (and are selling). And don't even get me started on ammo...remember the $27 SA battlepacks in '07?

If these are such great investments, why aren't investors moving away from proven capital markets and shelling out for a pallet of Romanian rejects?

I always get a kick out've the folks that laugh at firearms as investments, I simply offer them a 5yr old price for theirs

If you're offering a 5 year old price on my AR... SOLD.