Guns Are Hard Assets

If I had sold the stock in my kids’ college funds in January 2020 and used the money to buy more 9mm handguns and ammo, my wife would have probably thrown me out! When inventory disappeared and prices shot up, however, I would have looked like a genius. Such a speculative investment is not an option for me, but that doesn’t mean hard assets, to include firearms, are not part of my financial plan.

When former Guns & Ammo publisher Mike Schoby would hear someone say, “I can’t afford that gun,” his usual response was, “You can’t afford not to buy it!” Not being flippant, his point is that cash in the bank is worth a bit less every day due to inflation. Meanwhile, firearm prices continue to rise. This is particularly true among rare, historically significant and vintage collectibles. Precious metals such as gold and silver are certainly hard assets, but commodities fluctuate daily. With guns, it’s usually not a matter of whether prices will rise, but by how much and when.

As a matter of supply and demand, rare firearms are often safe investments. As an example, according to the ATF, there are 175,977 transferrable machine guns available in the marketplace. That number is fixed, but demand for them is always on the rise. In the late 1990s, an HK MP5 in 9mm could be had for around $5,000. Today, that same gun is worth more than $40,000. Plenty of stocks have gone up 800 percent during the same timeframe, but none of them are as fun to shoot.

Kevin Hogan, president of Rock Island Auction (RIA, rockislandauction.com), has watched the collectible firearm market closely. “I compare what we do to any of the major auction houses that specialize in alternative hard assets,” referring to art, collectible cars and fine watches. Teddy Roosevelt’s silver-plated and engraved SAA recently sold for $1.4 million at RIA. “That was a rare and nice gun, but without his provenance, it is probably worth around $50,000.”

Most of us will never play in the million-dollar gun market, but we don’t have to. RIA recently did a detailed analysis of U.S.G.I. 1911 prices, tracking guns of similar condition passing through their auction from 2015 to 2020. The sample specifically excluded highly collectible guns such as Singer Model 1911 and transitional Colts. During that period, RIA saw an increase in value of 32.67 percent. Even when overall gun sales by volume slipped from 2016 to 2020, the values of vintage M1911s actually went up.

Chasing the next big thing in collecting is a lost cause. Safer bets are unaltered guns with strong provenance, limited production numbers and original boxes. Any firearm used in war will appreciate in value, as will clean pieces from iconic American brands such as Colt, S&W and Winchester. Collect what you enjoy but avoid anything too eclectic if resale is important. Generally, I don’t like commemorative guns as investments.

“If you want to get into guns purely as an investment, go do something else,” Hogan reminded me. “You have to like it and you have to want it. If you do get that pride of ownership, though, it can be very lucrative.”

I’ve never lost money on a firearm, and some have appreciated dramatically. I maintain a diverse portfolio of assets, but guns will always be a part of it. As nice as it is to log into my stock account and watch the numbers grow, it doesn’t compare to the feeling of reaching into my safe and picking up a collectible firearm.