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Old June 23, 2013, 02:07 AM   #1
Machineguntony
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Machine guns as investments

I recently got back into the shooting sports.

Coincidentally, I am also looking at investments. I have money that I woul like to invest and I have cash that currently is earning half of 1%.

I decided to buy machine guns as investments because of several reasons:

1. The supply can only go down because of the 86 ban. So even if demand stays constant, the supply every year dwindles. This means higher values. This is only true of NFA machine guns.

2. Entry point to is relatively low for high end 'best of class' products. Compare a m16a2 or a tommy gun to a Picasso. An m16a2 complete and all original is $30,000, compared to millions for a Picasso.

3. The only risk of loss of principal is if the NFA is repealed or declared unconstitutional. I'm betting this will never happen.

4. It's fun and it makes you money. Anytime I buy a new sig or HK or a new rifle, it's purely a expenditure with no expectation of a financial return. With machine guns, you enjoy the investment and you also get to have lots of fun with it. Even with investments like classic cars, you can't drive them around all that much. I can not think of a single investment where you get to play with your investment (staring at a Picasso, while enjoyable, doesn't qualify as fun).

I'm currently awaiting transfer of about $85,000 worth of guns, and if the transfer is smooth, I'm going to buy some more, $100,000 at a time, until I've spent enough on machine guns. I am only going to buy original m16a (not AR conversions), mp5s, and tommy guns.

According to my projection, machine guns will return about 8-10% per year, at the very least.

Does anyone else invest in machine guns? Does anyone disagree with me and think that, outside of the NFA being repealed or declared unconstitutional, machine guns will go signifcantly go down in value?

My guess/hope is that in 20 years, my m16s will be worth about $100,000 each.

Last edited by Machineguntony; June 23, 2013 at 03:03 AM.
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Old June 23, 2013, 08:45 AM   #2
jackpine
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you forgot that there could also be a complete ban on NFA items and that would hold up under current law as NFA items are not counted as "in the common use" resulting in the loss of all your investments.

then again I can remember $500 stens and reisings
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Old June 23, 2013, 09:22 AM   #3
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Seems like it would be a very limited market for resale. Sort of like classic cars but worse.
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Old June 23, 2013, 12:29 PM   #4
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Also, when there is any financial trouble in the country as a whole the price on those "toys" drops as people unload them.

Just a few years ago I saw the price of TSMGs fall first followed by HK guns and the other high end transferables. The low end stuff continued to grow in price. Now as things have stabilized a bit the top end guns are climbing in price once more.
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Old June 23, 2013, 12:51 PM   #5
Garycw
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Machine guns as investments

Guns and ammo ALWAYS increase in value unless abused. Not sure about the high end machine gin market though. I would invest in all the $500-$1500 guns and all the popular calibers of ammo you can find. Should out perform the stock market. IMO
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Old June 23, 2013, 12:54 PM   #6
Machineguntony
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I agree that there will always be market pull backs. Fluctuations are a normal part of any investment, prices go up and down. But the real issue is will there be any event that will completely devalue machine guns. The only thing that would completely devalue an NFA machine gun is legalization/decriminalizing of machine guns because of repeal of the NFA, due to either congressional or court action.

While there are pullbacks, it seems that the overall trend for growth is up.

As for a limited market, that's actually not true. Demand is growing, and supply is shrinking.

I'm going to mark this thread. In five years, I am going to come back to this thread and say one of two things:

1. I told you guys to invest in machine guns! Remember when an m16a2 was only $30,000?

2. That was really stupid of me. What the hell was I thinking paying $30,000 for an m16? Wow that was dumb.
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Old June 23, 2013, 01:01 PM   #7
Machineguntony
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I think machine guns will totally outperform the stock market. But I think as far as investments go, 'best of class' investments perform the best, whether it be stocks, bonds, art, guns, classic cars, baseball cards (pfffft), memorabilia, or antiques.

In ten years, I fully expect my m16a2, with all original parts, not an AR conversion, to be worth $50-100,000.

But if NFA gets repealed, investment will be work zero because who would want a 40 year old m16 when they can get a brand new factory m16, freshly made.

Another possibility, I just thought of this, is if every state bans NFA items like NY or California. That'd be trouble.
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Old June 23, 2013, 09:15 PM   #8
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I am much afraid that some day a Bloomberg or Feinstein or Schumer will succeed in having all semi-autos seized and melted down, then decide to create some "awful tragedy" so machineguns can be banned, also. The fact that they are registered and controlled will make no difference; handguns were registered and controlled in the UK, but that didn't stop the anti's from taking "certain steps" to get them banned.

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Old June 23, 2013, 10:26 PM   #9
Machineguntony
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I agree that anything is possible. But with the DC v Heller case, it is extremely unlikely that our government will be seizing anything in the near future. But you're right. One day a very anti gun President may pack the Supreme Court with antigun Justices like Stevens, who issued the dissenting opinion in Heller.

I started this thread about machine guns as investments, and the Heller case creates more certainty that the NFA will not be repealed, thereby protecting machine guns as investments. During Heller oral arguments, attorney for Heller conceded that the second amendment does not guarantee ownership of machine guns, as such guns are 'dangerous and unusual'. The SC seems to concur in its no binding dicta, and now most lower courts of appeals abide by this dicta.

The biggest danger to machine guns as investment isn't seizure, I think the bigger danger is that the NFA will be repealed, thereby bringing the value of a Pre 86 machine gun to near zero. Slim chance of the NFA being repealed, but it's much more likely than all machine guns being seized.

Ive been talking to some friends, country boys who are big time gun rights guys. It's kind of a weird no-mans land having machine guns as an investment. Those of us who own (or in my case will own) lots of machine guns, as investments, we want the status quo. If the gun control crowd wins out, then we have our investments seized. If the pro gun lobby strikes down the NFA, we lose our investment because the market is flooded with new machine guns. Also, gun control people thnk we're crazy for owning machine guns, and gun rights people think we're an arrogant bunch who would seek to deprive people of their 2nd amendment rights due to our purely financially motivated support of the NFA.

I guess I understand why NFA guys keep to themselves. It's like a little brotherhood. No one likes us.
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Old June 24, 2013, 01:37 AM   #10
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Quote:
Machineguntony posted
The biggest danger to machine guns as investment isn't seizure, I think the bigger danger is that the NFA will be repealed, thereby bringing the value of a Pre 86 machine gun to near zero.
A repeal of the NFA would have very little effect on the value of your machine guns; even if you could buy a full-auto firearm as easily as any other, the high value of existing full-auto weapons is mostly due to the ban on post-1986 production by the Hughes Amendment of the Firearm Owners Protection Act.

If they repealed the Hughes Amendment, I think a lot full-auto collectors might mourn the vast decrease in value of their collection, but I'm sure most of them would also love all the new toys they could now buy and the lower prices at which they could buy them.

I'm a former Marine machine gunner. I would LOVE if I could afford an M240, and it would be even better if I could legally buy a new one.
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Old June 24, 2013, 01:48 AM   #11
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I think it's too late to buy machine guns as a true investment opportunity. If you'd bought in prior to the registration closing you'd be golden (literally).

Now, there are probably better ways to invest your money for long term growth. But there probably aren't too many ways that could be as much fun.
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Old June 24, 2013, 03:40 AM   #12
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I bought a couple NFA machine guns back in the late 1980's so those are definitely good investments. One was an M1919A4 which I built from parts.

I picked up the right side plate from the original manufacturer for $850 - I kick myself these days for not picking up a stack of them (they had a dozen or so in stock at the time).
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Old June 24, 2013, 08:33 AM   #13
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I own one machinegun, a Ruger AC556. I paid $2,400 for it sometime around 2002; well, you have to add $200 + another $180 or so for tax and transfer costs. In 10 years it has about tripled in value.

My gut tells me that machineguns are not "good" investments and I would be inclined to tell others to invest in something else. However, my little AC556 has proven to be a good investment, and a fun one as well.

I wouldn't worry about the laws too much when investing in machineguns. However, if you intend on shooting them, I would be worried about parts, barrel replacement and possible receiver cracking. Although, unlikely, these things can be very costly to repair or destroy your investment.

I would also have at least a 10 year horizon. Prices do slide backwards - I've seen this happen at least two, if not three times since I bought my AC556. Scarcity and higher cost of ammo will put downward pressure on prices. Also, you have to keep in mind that there are going to be less and less buyers as prices rise - not as many people looking to buy an AC556 at $8,000 as there were at $2,500; obviously there are still enough with plenty of money who want them at $8,000+ since they seem to be selling.

The biggest problem with buying machineguns as an investment is becoming too attached to the machinegun(s) you purchase and not wanting to sell them to get into other investments.

Last edited by Skans; June 24, 2013 at 08:45 AM.
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Old July 1, 2013, 08:05 PM   #14
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I wouldn't worry about the laws too much when investing in machineguns. However, if you intend on shooting them, I would be worried about parts, barrel replacement and possible receiver cracking. Although, unlikely, these things can be very costly to repair or destroy your investment.
I guess that would depend on the gun in question. Since the OPwas talking about an M16A2, and an original one, not a converted AR-15. Than the only part he needs to worry about is the lower. And those tend to last forever unless you completely abuse the hell out of them. Which i doubt he will with a $30,000 investment.

Everything else you can buy on Brownells and MidwayUSA and fix yourself.
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Old July 2, 2013, 09:34 AM   #15
Jim Watson
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I don't know about MG collectors, but other fields value condition and originality nearly as much as scarcity.

Have fun with your investment and the dollars may wear off with the finish.
Put in replacement parts and the investment value may diminish.

Sure, there will always be a scarcity value on full autos but between Excellent and Good, the choice will be for the Excellent.
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Old July 2, 2013, 11:10 PM   #16
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My guess/hope is that in 20 years, my m16s will be worth about $100,000 each.
You'll need to deduct the cost of 2 decades of safe storage to protect your investments from theft, weather, fire, etc. from your realized return.

I wouldn't be sticking an item (or items) I expect to be worth $30K-$100K in a standard gun safe. I've seen pictures of what guns look like after a fire when they come out of a typical gun safe with a typical fire rating and it's not what I'd want for my $30K-$100K investments.
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Old July 3, 2013, 08:20 AM   #17
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I've seen pictures of what guns look like after a fire when they come out of a typical gun safe with a typical fire rating and it's not what I'd want for my $30K-$100K investments.
Nothings really "safe" is it. I've seen pictures of what a 401k investment looked like after after a stock broker got done with it in 2007. It might just be smarter to take your chances with a $6,000 safe bolted to concrete hidden in your house protecting your investments over a stock broker.
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Old July 3, 2013, 01:14 PM   #18
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You'll need to deduct the cost of 2 decades of safe storage to protect your investments from theft, weather, fire, etc. from your realized return.
A deposit box at a bank is very affordable.
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Old July 3, 2013, 02:36 PM   #19
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You'll need to deduct the cost of 2 decades of safe storage to protect your investments from theft, weather, fire, etc. from your realized return.
You took the words out of my mouth. As an investment, we're looking at several concerns:
  • The very real possibility that they'll be banned, and you're out your principal
  • The possibility that restrictions are eased, which can hurt
  • Constant maintenance and storage provisions
  • Insurance
  • The administrative overhead and cost in transferring them
  • A fickle market for liquidation

The last two points bear mention. A slight change in state or federal law could leave you unable to sell them, and even if that doesn't happen, it's still a hassle.

On top of that, if you do want (or need) to liquidate them in the future, you're selling to a very fickle niche market. In my area, machine gun prices have been pretty flat the last decade or so. Expect to deal with endless haggling and buyers who don't know the laws correctly.

There's a huge amount of potential liability, and there must be other investments out there with a similar rate of return and less risk.
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Old July 3, 2013, 03:08 PM   #20
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There's a huge amount of potential liability, and there must be other investments out there with a similar rate of return and less risk.
Invest in Rhodium!
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Old July 3, 2013, 05:33 PM   #21
Machineguntony
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I like the idea of machine guns as investments for so many different reasons.

1. They are serious investments and they are fun! You can't take out a 401K and play with it. I have a friend who invests in high end artwork, and he thoroughly enjoys it. Further, he has never lost money on a piece of high end artwork.

2. Other than old collectibles, no other gun will give a possible return. Sure, an m16a2 may run $30,000+, but its actually cheaper than a Sig 226 at $900 or any other modern gun. Why? Because the 226 won't go up in value, and the moment you take it out of the dealer's store, it drops in value. NFA items have historically proven to only rise in value. This means that the $900 you spent on the 226 or USP or 1911 is gone, and only about half the value is left in the gun, whereas every single dollar, all $30,000 of it, is still impounded in the m16a2.

The main reason machine guns are a good investment is this...

3. The pool of available NFA transferrable machine guns will NEVER ever increase. It is estimated that only 100,000 - 250,000 exist, with many being turned into authorities on collection days or just being lost or destroyed. This means demand is always increasing while supply is always decreasing.

The value of a collectible is based on supply and demand, and the existence of a marketplace to create liquidity. I can not think of a single investment grade collectible that where supply is big enough to create market place liquidity, and where the supply always shrinks, while demand is always increasing.

Gold, they can always mine more of it.

Land, they can always develop more of it.

Stocks and bonds, they can always issue more of it.

NFA transferrable machine guns, there will never be more.

Artwork, antiques, and even collectible guns like Colt revolvers, are not all that liquid because to get fair value you have to auction them off.

Of course, there are risks, for example, theft, destruction, or legislative interference.

As far as legislative interference, I highly doubt that the NFA or the '86 act will ever be repealed. The courts have opined that machine guns are dangerous and unusual and not protected by the second amendment. So I sleep easy at night knowing that the only president that might move to repeal the NFA is President Rand Paul.
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Old July 3, 2013, 07:18 PM   #22
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Perhaps the NFA or 86 ban will never be repealed. But don't underestimate the states. Many of them are throwing around ideas of laws pretty much voiding any federal firearm laws (including the NFA and '86 FOPA) within their states. And imposing legal charges on any federal agent who would try to enforce them.
Sure these laws are technically invalid since the feds trump states, but in practicality. The feds may not be willing to make a fuss over it which creates a semi-legal market for machine guns in those states. If it happens in your state, then suddenly who would want to pay $100,000 for a "legal" M16 when they can make their own for under $1,000
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Old July 3, 2013, 09:48 PM   #23
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A deposit box at a bank is very affordable.
A deposit box big enough to hold a number of M16s will run into a good bit of money over 2 decades.
Quote:
As far as legislative interference, I highly doubt that the NFA or the '86 act will ever be repealed.
That's not the only type of legislative interference that could affect the value of your investment. They could freeze transfers or make it much more difficult or expensive to qualify to purchase machineguns which could effectively prevent you from selling your "investment".
Quote:
This means demand is always increasing...
Practical demand is a function not only of supply but also of price. If the prices rise high enough, the market will eventually slow down. It's one thing to pay as much for a machinegun as you paid for your car, it's another thing to pay as much as you paid for your house. At some point the game will get so rich that people can't afford to play. I'd hate to be saddled with a few hundred thousand dollars of "investments" that are worth so much that I can't sell them.
Quote:
...they are fun! You can't take out a 401K and play with it.
If you want fun, buy a machinegun and play with it. If you want an investment, look at something that's easier to store, less volatile and harder to break.
Quote:
I've seen pictures of what a 401k investment looked like after after a stock broker got done with it in 2007.
There are all kinds of ways to lose money in investments. Even if one could prove that investing via 401K is a bad idea, that wouldn't prove (or even imply) that buying machine guns is a good idea. They could both be bad ideas.
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Old July 3, 2013, 09:55 PM   #24
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So I sleep easy at night knowing that the only president that might move to repeal the NFA is President Rand Paul.
If that were to come to pass, would collectors mourn the loss in value or celebrate it as a victory for the 2A?
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Old July 3, 2013, 09:55 PM   #25
Machineguntony
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True true.

I can't argue those things.

But there is no risk free investment, other than a CD that pays half of 1%.

But I totally agree.
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