Are we experiencing a "Gun Bubble"?

[spclPatrolGroup]

Maybe collector quality firearms are going up in price, but every gun maker seems to be comming out with better and better quality for less $, like the savage axis or ruger american rifles. The mid to lower end of the spectrum is really seeing the bennifits as gun companies needs to become more competitive to the entry level shooter, and that is a good thing.

 

[oneounceload]

Firearms companies are raking in the profits. They couldn't be doing better

Based on what? Fuel prices are high, insurance costs have gone up due to OBcare, utility costs have risen.......I seriously doubt anyone is "raking" in the profits - it you believe that, I guess you also believe in "Big Oil raping us at the pump"

This is no bubble - it is what they cost based on raw materials, manufacturing costs and all of the ancillary related costs to get the product to market and gain marketshare. How many gun mags are there now? Buying a full color page ad in each one gets expensive, especially when most are owned by one publishing house; then there is on-line advertising.

Guns costs what they cost - if you think we are going to be buying guns at 1950's prices based on 21st century salaries, it isn't happening

 

[Auto426]

I wouldn't doubt that there is a bit of a bubble forming. Comrade Obama drove the market insane when he was elected for his first term, and with a possible re-election on the horizon and more talk about new guns laws people are starting to do the same thing they did last time he entered office.

I can't help but also think that he probably did more for our hobby than anyone else. His election drove people that had little or no interest in guns to go out and buy one because they thought he was going to make guns disappear. That probably created more than a handful of new shooters who share our same addiction, as they realized that guns are evil and can be quite fun. The economy is also partly to blame, as tough economic crimes usually increase crime which encourages more people to buy guns for protection.

However, when it comes to things like Pythons, 1st Gen SAA's, and registered full auto weapons, I don't think we will ever see prices come down. There's only a finite number of those guns out there, and it's all too easy for someone to blow one up or get it confiscated by law enforcement and take it out of circulation forever. I believe what we are seeing there is the effects of inflation and an larger shooting population than what we had in years past. Demand goes up, value of the dollar goes down, and suddenly the price for those rare collectibles seems to skyrocket.

 

[BikeNGun1974]

No, this is not a gun bubble.

A bunch of people buying something does not automatically make it a bubble. If that were the case, then there was a Cabbage Patch bubble, a Pet Rock bubble, and lots of other bubbles in history.

A bubble means that people are buying something (usually things of volatile value like stocks or property) expecting to make a future profit based on its currently climbing value. It is usually followed by some sort of burst where the commodity in question suddenly drops sharply in value. It also implies some form of investment value to the item.

Granted, most bubbles are driven by uncertainty, but no one (ok, very few people) is going to lose their life savings because they invested their money in a safe full of MP5's and M-14's, thinking they could sell them to retire, and their price suddenly dropped.

At best, it's a bunch of people buying because they are afraid that they won't be able to in the future. That's not a bubble. That's basic supply and demand in action.

 

[BlueTrain]

Okay, then, just how much did Smith & Wesson make last year? How about Colt? Rounded to the nearest thousand is good enough.

 

[carguychris]

A bubble means that people are buying something (usually things of volatile value like stocks or property) expecting to make a future profit based on its currently climbing value. It is usually followed by some sort of burst where the commodity in question suddenly drops sharply in value. It also implies some form of investment value to the item.

+1; the final defining feature of a classic bubble is that many, albeit not all, buyers are fully aware that the commodity may be radically overvalued and are betting that they are smart enough to cash out before the value corrects itself. IOW these buyers view the commodity strictly as a short-term investment and are well aware that it is a poor or even potentially disastrous long-term investment.

There are probably some minor bubbles in the collectible firearms market, as with any other varied collectible market, but I would characterize the overall upswing in the firearms market as a surge rather than a bubble.

 

[jimbob86]

Compared to the Dollar, Firearms are rock solid. They will always be worth something. No paper currency can compete.

 

[HiBC]

The monetary value does not matter much if I do not plan to sell.

In part,I think some of the PC stigma against gun owners has faded as reality has set in.

It was "OMG,you own a GUN????!I have to go now.Bye" Now it is more"You own guns?Cool,I missed out on that.I think about getting one sometimes..."

The concealed carry experiment has been a demonstrated success.We are not Old West Abilene,our streets are a little safer.

It could be some see our Constitution is in peril.

One election could stack the Supreme Court.Some do not honor the Constitution,preferring Power in the hands of a man

Some may look at the future,ask"What do I want to have in stock?"and accelerate the priority on items that may become unobtainable.

Better to pick apples while they are on the tree,rather than when the limbs are bare.

 

[kozak6]

I don't know if "bubble" is really the right word, as that implies an eventual massive and catastrophic collapse.

Spike or surge? Absolutely.

Without going off topic too much, I think it's mostly due to political fears.

 

[Skans]

Compared to the Dollar, Firearms are rock solid. They will always be worth something. No paper currency can compete.

If that were the case, then why would anyone sell guns for any amount of dollars? Since people trade guns for paper currency all the time, I don't see how firearms are any more rock solid than dollars.

Guns are nothing more than iron, plastic and a few more non-rare earth elements plus labor. Metals and Plastic are relatively pleantify commodities. Labor exchanges for cash. So, I really don't see any difference between guns, gold, copper, Yen, Dollar or Euro. Just continually fluctuationg variations in their relative exchange rates.

Some folks have recoginzed that there is a "surge". But, isn't this the same kind of thinking folks had when we were at the beginning or even in the middle of the housing bubble, stock bubble, Pokeymon, or even the old "pet rock" bubble? For whatever reason, everyone rushes to get "in". At some point these same people suddenly drop their interest and want "out".....or at a minimum just stuff their gun in the closet next to the pet rock when they simply don't want anymore.

 

[spanishjames]

I really don't see any difference between guns, gold, copper, Yen, Dollar or Euro.

The difference is that inflation eats away at the value of currency. If a man put a weeks pay under his mattress in 1980, say $250.00, today he'd still have the 250.00, but it isn't worth a weeks pay.

Would you rather have the cash you made 30 years ago?, or the gold, copper, or guns you could've bought with it? I'd take the metals any day.

As to whether we're in a bubble or not, who knows. What I do know is guns and ammo sales are through the roof. The people that may have to worry about that are those who are setting up gun-related businesses. Worse if they're borrowing money, thinking the good times will go on forever.

As for me, I'm no Rockerfeller, or Trump, but I have bought a few guns because I can, and I'd rather pay 2012 prices. I could always leave them to my children, and they wouldn't have to pay 2030 prices.

 

[jimbob86]

Since people trade guns for paper currency all the time, I don't see how firearms are any more rock solid than dollars.

You wouldn't if you do.

I don't, so I do.

I'll trade guns I don't want for something (other guns, perhaps) I need..... not for paper.

Dollars: At the rate they are printing them and giving them away/buying votes with them (same thing) ..... supply and demand sez they'll make good wallpaper in a decade, so if you want to hold onto them, get them in uncut sheets!

 

[Newton24b]

yes and no.

The prices are somewhat steady, some companies have come down slightly like with certain kimber models.

however the bubble is there because used guns are going for the cost of new guns. sure it depends on the market you live in, but i dont believe that anyone here would really come down and say that a g19, or a sig 229 that was bought 5 years ago, and is being offered to you in "as is" condition, with the original factory goody bag of cleaning rod, storage box, and magazines is going to be worth the MSRP in the current manufacturers catalog.

 

[BlueTrain]

I see there is a little confusion here about the money supply. Really, they don't just go and print money when they need it. Think about it. Does the company you work for give you a little envelope stuffed full of bank notes?

 

[Skans]

Would you rather have the cash you made 30 years ago?,

Would that be in Chinese Yuan or Swiss Franc. If so, the answer would be YES!

People make good livings trading guns for dollars all the time. These people would much rather have paper (or electronic) money over steel and polymer firearms. They're called gun manufacturers, distributors and gun stores.

 

[animal]

Those successful at trading guns for dollars are not expecting the dollar to remain a static store of value. They’re reinvesting or using the money gained from the sale, and dollar is just a medium of exchange. After the exchange, the money is used in ways that are dynamic with respect to the dollar. If the company were to throw dollars in a storage bin, it would be constantly losing value.

IMHO, there are 2 main types of inflation in gun prices. The first in an increase in the relative value of the gun caused by supply and demand. The second is an increase in the amount of dollars paid, caused by the deflation of value in the dollar. The second type of inflation has outpaced the first (excepting certain types of guns that are politically vulnerable, more comparable to the futures market, and the "bubble" aspect of gun prices)
Problem is, how to define "value" as a constant if we want it to reflect "what we get for the work we do" . A unit of value could be derived from average income to form a baseline, but why bother when there are commodities? The price of durable commodities remains roughly constant, compared to the percentage of average income it would take to buy them.

And the gubmint CAN print more dollars as "needed", which increases the supply and drops the value in them. It’s called increasing the debt limit.
The holders of the debt hold up the dollar’s perceived value … if they become overconfident in the dollar, and then lose confidence … it’s "dollar bubble" time.

 

[animal]

Some of us choose to work harder and more efficiently, cut luxuries, etc. … rather than to go further into debt. Some of us sell unnecessary property … The govt. could allow supply/demand to function in the market and increase their revenues a little, by selling surplus firearms/ammo again.

On theright track ? The debt limit is a line of credit, but politicians treat it like part of the govt.’s checking account. Leaving out a long line of details of how the money gets printed … how much is physically printed vs. funds made available … is a long tangled mess that leads to the same conclusion.

If you leave an open bag of food where the dog can get to it, you’re feeding the dog. How much you put in his bowl becomes irrelevant. What matters is his total consumption.

Back when an SKS was 75 bucks, a can of green beans was about 20 cents, and gas was a buck thirty a gallon. The prices have multiplied by about the same amount. Have these things tripled in value, or has the dollar gone down? Supply/ demand determines relative value, and that includes the money supply… not just items like guns.
Granted the three things mentioned are a tiny sample, a good sample would include as many items as possible.

 

[BlueTrain]

Well, maybe the government doesn't have any surplus guns. There's been a war on for the last ten years, you know.

 

[arcticap]

Just because there's record orders doesn't mean that that all of these guns have already been sold to consumers. The large distributors that placed the orders are betting that they will be sold sooner rather than later. No one really knows when they're going to all be sold or where.
Also remember that a spike in new gun sales of certain models that are popular now could mean that there will be a glut of them on the used gun shelves in the not so distant future which can depress their prices in the future used marketplace. Not all used guns go up in value or even hold their value. Some models do and other models don't. It's based on their desirability and competition with the other used models on the market and their used prices etc... Not all models are equal, even if they're made by Ruger or S&W.
There can be a downturn in a particular market just as fast as there can be an upturn. The manufacturers know that it's cyclical and that's why they tend to offer incentives, rebates, new models, sending factory representatives to certain gun shops with offers of special pricing, all to stimulate sales.
Since all politics is said to be local, when a local economy goes sour then so can the local demand for guns. I guess that for now, the national economy isn't as bad as some want others to think that it is. That can change as fast as the price of oil, real estate, stocks or the level of Federal defense spending which has been generating a huge number of jobs during a long time of war. How deep are the military cuts going to be? I think that's more relevant than how many dollars are being printed which is based on our level of taxation and our trade imbalance (oil consumption and Chinese goods, etc..).
Not very long ago some manufacturers were having such a hard time selling their hunting guns that they were forced to close up shop. Take a look at what happened to Thompson Center. They were bleeding millions in red ink and their losses were being totally subsidized by its parent S&W, until they were eventually shut down and moved to a new location.
So the hunting rifle market may not be doing as well as the self defense & home defense market.
And for some manufacturers there's probably too much competition and over production like for AR's and AR parts which can lead to gluts in the market.
I think that some parts of the gun market are soft.

 

[Tom Servo]

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