Friday, January 7, 2011

Firearms as a store of wealth...... Timely thoughts


Folks, as I post this... the US national debt has exceeded $14,000,000,000,000 and is racing upwards. Our debt has actually surpassed our gross domestic product, and there is no end in sight to congress's spending. I see no other conclusion than hard times ahead... possibly very hard times... and thought it might be timely to re-post what follows.....

Hard times and good times, people look for ways to save wealth. I'd like to say 'save money', but too often money (cash) is only an illusion of wealth. During times of inflation a savings account earning a few percent interest can result in a loss of capital. Saving 'money' can mean losing money.

But... you may say... how can earning interest on money in the bank mean we are actually losing money? It works like this.... We deposit money in the bank. In our case, dollars. On the day we deposit that money, we might be able to buy a gallo
n of milk for $3.00. We begin earning interest on that money on the day we deposit it, and lets be generous and say it's 5%. In a year, even with compound interest, we are only going to have about $3.15. If, in that same year, inflation has driven the price of milk to $3.50 a gallon, we have lost about 10% to the inflation factor, even while our 'money' earns interest in a savings account.

Money (or cash) is not wealth, it's just a representation of wealth, and sub
ject to manipulation and the effect of economic factors. The milk.... it's a gallon of milk. It's not a good long term repository of wealth, but at least you know where you stand with it. The same can't be said by so many folks who had their wealth 'invested' in 401k plans, and have seen their wealth diminish by 50% since the One took office.

It can be worse... inflation can turn rampant, and many a nation has been brought to its economic knees by triple digit inflation. In every case, heavy debts and overheated printing presses turned that countries cash to toilet paper, and sometimes did so overnight. Cash, especially the American dollar, has long been thought to be a nearly perfect play on security. After all, cash is cash! The problems begin when the government that backs that cash becomes unstable, or loses the trust of those they deal with and govern.

Some people store wealth in valuable metals, such as gold and silver. Since
history was first recorded, these have been regarded as stable investments and wise ways to sock away the egg money. While stocks and nations can and do fluctuate, gold retains value, as does silver. I suppose, if one had a large amount of wealth to tuck away, buying gold and silver might make sense.

The problem with precious metals is not buying them, nor in storing them... not really. It's in spending them. During good times, turning them to cash means dealing with a broker who takes a cut. Sometimes a ruinous cut. During bad times, when cash has lost much of it's value, finding people who will trade goods and services for precious metals can be tough. Not many people anymore know what an ounce of silver is worth, nor do they really care to trade their labor for a lump of metal. Likewise, buying a truckload of produce with an ounce of gold can b
e difficult.

There are, however, other forms of metal not so precious just now. Not silver, but aluminum. Not gold, but steel. Not platinum, but copper and brass. All these cheaper metals turn into their own kind of precious when worked into firearms and ammunition. In these value is stable in ways that gold lovers only wish their store house of wealth was.

As an example, allow me to present a decision I made today....

In this pay period I had a few hundred dollars not already aimed at bills. No deb
t pressing at the moment, I still understand the future must be looked after and spare money should not be simply blown away in a moments folly. I am not one for shopping sprees, buying crap useful for nothing but sucking up floor space and emptying checking accounts.

Ordinarily, that money would be click/dragged over to a savings account and tucked away as ones and zeros on the bank balance. Maybe at a measly few percent interest, but saved none the less. But... with quite literally trillions of new dollars being pumped into our flagging economy recently, inflation is beginning to rear its ugly head. Is a savings account based on 'dollars' the best way to store wealth just now?

I had an opportunity to buy a different kind of precious metal as an investment, and it made sense to do so. That same $200 which might have been dribbled into the savings account, instead bought me a Ruger p85 9mm with two magazines. Knowing they have recently sold for much more than that on, my investment earned a return the second I took possession. Not one or two percent, but nearly fifty percent.... immediately.

While the p85 is not a firearm I ever really desired owning, that doesn't effect it's value as a store place for wealth. Knowing it's not gold nor silver, it does have something better than both those metals... it's useful. I can use it, over and over again, and it's value won't go down while I do. Better than that, it's easily recognized wealth that's commonly desired, most especially when times go bad. The farmer that might not care to trade a side of beef for my ounce of gold, is far more likely to willingly make that swap with the Ruger as his price.

In good times.... even the best of times.... firearms retain value better than any bank account, and better than most other store places of wealth. As an investment, looking for return, firearms bought used at good prices almost invariably outperform the stock market, hands down.

Ammunition, bought inexpensively, can serve just the same. A case of Chinese 7.62x39 I once bought on sale was later traded (unopened) for a rifle worth five times what I paid for the ammunition. 8x57 Mauser I paid $2 a box for by the case lot, sold a year later for twice that.... and all parties were very happy with the deal.

As a way to squirrel away wealth.... firearms and ammunition are hard to beat. In good times or bad, quality used firearms bought at the right price will always be a solid store house of wealth, and a good investment. When I look at this Ruger, I don't see a new shooty toy, but instead I see $200 turning into $300 overnight, and next year maybe into $400, and the year after... maybe a side of beef.

Priorities my friends..... priorities.
  • Have a nest egg in case of job loss
  • Have on hand what you need to live, should it be hard to come by
  • Pay off debts
  • Protect what wealth you have, in the best ways possible


Me said...

Great minds think alike. That's one of the reasons that I have a whole safe filled with CMP Garands, carbines and Springfields, and why I have as many cases of ammunition as I could buy for them back when both guns and ammo were cheap from that source.

Conservative Scalawag said...

THis is a great post. Gold and silver will not play an important roll in a depression scenrio,at least in the beginning.

Where goods will. Food,tools,and anything well made will or can be used as barter. This would include ammo and guns. For people will need them for common defense,or even hunting to put food on the table.

Me said...

The only problem with using guns for barter is that you run the risk of arming someone who may decide to use those arms to come for whatever else you've got. Tread cautiously when bartering. I personally plan on bartering away only the guns I have that shoot obsolete or foreign military cartridges. I have some ammo for each of them, but not enough to tempt someone to try to lay siege to my lair with them. Also, if I'm able to determine that I took fire from someone using a 6.5 Carcano, 7.7 Jap, or an 8x56R, well then I'll have a pretty short list of suspects.

Crucis said...

In dire straits, ammunition, too, can be a source of "wealth." I've been buying ammo and components a bit here 'n a bit there. You just can't have enough.

Rev. Paul said...

I have few firearms, but plenty of ammo for each. What I DO have is a case of Aguila .45ACP ammo for barter. I don't find it particularly desirable, and will be able to let go of a 50-rd box at need.

GreyBeard said...

I'm not totally sure about this. I've tried to downsize my collection a couple of times, and have never gotten an offer near what the posted values are. I recently won a Remingtion 742 in .270 caliber in a reffle, and wound up selling it for $350 (new and in the box). I believe the in store selling price was about $550. I'd like to have a larger collection with good value, but experience just doesn't seem to prove it a good investment.

Barry said...

$xxx.xx into my savings account weekly makes for a nice nest egg, however, I quickly convert it to blued steel & walnut every month or two. Wife doesn't quite see it that way, but I have for years. Putting meat on the table is the #1 priority for any Father/Husband. Eat your ounce of gold or silver & tell me how it tastes. You're spot on again Art.

Montana said...

Lead, copper, and brass are the only precious metals I invest in. Steel, blued, stainless, or powder coated, make for good long term investments. Reloading gear is guaranteed to pay for itself, whether in increased practice, or bartered product when nobody can afford factory ammo any more.

Wilson said...

Sage advice indeed. I too believe that this country will be hitting hard economic times in the near future and tangible goods like guns and ammunition will be practical form of payment compared to even gold or silver. How many have a need for an ounce of gold compared to how many will need a home defense gun or more ammo for it?

James R. Rummel said...

Good post!

Old NFO said...

Excellent post and all good points...

CountryBoy said...

I agree with Graybeard. In most barter systems, the trading skills count for as much or more than the item (guns, ammo, whatever) being bartered or sold. Yes there are smart investments and dumb investments. There are also smart traders and dumb traders. To my thinking, the ability to "buy low and sell high" will always count for more than the intrinsic nature of the product, and this applies to guns and ammo as indicated by the comments of those who have done well in this area.