The Coming Crash in Ammunition Prices

Gun Watch ^ | 7 June, 2014 | Dean Weingarten

[marktwain]

The Obama caused bubble in ammunition prices seems ready to bust.   Over the last few years people have seen ammunition prices double or triple.  Handgun and rifle ammunition has been hard to find at times.   .22 long rifle ammunition tripled in price over the last 18 months.   People would line up to buy ammunition at prices two and three times the level that they were just two years ago.

All of that is about to change.   Ammunition supply looks as though it is ready to catch up with demand.   Centerfire pistol and rifle cartridges are available on most store shelves.   When I walked into a local Wal-Mart this morning, their were over 30 signs on the ammunition case indicating a rollback of prices by 10-15%.

In classic economic fashion, the bubble was fueled by actions of the Federal government.   Many federal agencies bought enormous quantities of ammunition.  While the quantities were only a small percentage of total production, the raw figures fueled conspiracy theories.  Obama administration actions fueled fear of coming shortages, gun bans, registration of ammunition sales, even potential low level warfare.  All of this led to the current bubble of ammunition sales.

In response, the economy reacted the way that free markets are supposed to work.   Ammunition suppliers started running their manufacturing plants day and night, adding additional shifts.   Importers scoured the world markets, trying to buy everything they could to satisfy the insatiable demand.   Foreign manufacturers bumped up their production to try to fill the desire for more and more ammunition.   Ammunition production was at the highest level ever for small arms, short of war.

But unlike during war, this ammunition was not being fired in combat.   Most of it was not being fired at all.   It was being stored against future need.  Very little was actually being used.

There are limits to this sort of demand.   I gave away a couple of thousand .22 rounds to make a point.  A person who only had 37 .22 shells out of a box of 50 is well justified in wanting a thousand or two, or a case of 5,000 "just because".    Once they have the 5,000, their desire for more becomes less.   Then demand drops, likely below pre-bubble levels for a while.

In the meantime, manufactures cannot stop production instantly.  They have orders in the pipeline.  They have supplies coming in that they have no storage space for.   They have employees that they have trained and who they do not want to lay off.   For all these reasons, demand drops suddenly, but supply cannot drop as quickly.   As supply took a while to spin up, it will take a while to spin down.

This means that retailers and wholesalers will be saddled with a glut of merchandise that they cannot sell at the current high prices.   They will have to put it on sale.   Lower prices bring about the expectation that prices will fall even further.   The prices crash.

That is when a prudent person buys what they want, at very good prices.   Demand will not stay at the artificially low prices of the crash.   The new crop of urban, hip, shooters will want to feed their equipment, and the new demand will be higher than it was before the bubble, but it will take a while to settle out.

Metal prices have already fallen from the highs of the bubble.  Copper and lead are far lower than they were.    You will know that the bubble is close to the bottom when you see .22 LR on sale for below 4 cents per round.  At the lowest, we might see .22 cartridges below $10 for 500.

©2014 by Dean Weingarten: Permission to share is granted when this notice is included.
Link to Gun Watch

[mad_as_he$$]

I don’t necessarily travel in “gun nut” circles but I know four guys that do not know each other(I am the common link) that have well over 100 guns each. And they do not consider them selves gun nuts. Only one could be considered a trader that buys and sells to trade up to the exotics he wants. Stop and think a family of four should have a minimum of 20 guns; shotgun, handgun, MSR, plinker and a deer rifle EACH.

[Nifster]

Since when should a family of four have 20 guns??? You live in a very very strange world

My dad was a collector. I grew up around guns. I love shooting and hunting.

May I pint out to you that I can only fir ONE at a time??? Maybe on a good day I could do a Rooster act but RIFLES are one at a time.

I am beginning to not believe anything you say. Your list is just nonsensical. So BS on your knowing four who own over a hundred guns each.

[Red in Blue PA]

Your scenario is precisely the one I envision. Anyone who truly believes ammo prices will “crash” is living in never never land.

[JRandomFreeper]

Thank you for that link. There is tons of information out there, but getting it in context, when interest is the greatest, is rare.

Once again, thank you.

/johnny

[Red in Blue PA]

Curious where you LIVE? My guess is CT, CA, MA, OR NY. Am I close?

[Red in Blue PA]

Curious where you LIVE? My guess is CT, CA, MA, OR NY. Am I close?

[mad_as_he$$]

Gun are tools. It takes different ones to do different jobs. If you want to go wing shooting it takes a shotgun. If you want to go plinking it takes a 22 or 17hmr.

I don’t care if you believe me or not. The numbers are on my side not yours

http://www.theblaze.com/stories/2013/03/19/how-many-people-own-guns-in-america-and-is-gun-ownership-actually-declining/

[Texas Fossil]

With .22 at 13 cents a round

Yep. With cast bullets, I can reload my old 30-30 for $.12-.15 per round. It is still a lot of fun to shoot.

[precisionshootist]

"I visited the local Cabelas on Fri(6/6)morning and NOT a single box of 22cal. in the store.It’s been like that for almost 2 years. ?????? When in America has it taken that long for supply to catch up with demand? There has to be other reasons at play!!!"

There are other reasons. Here's the big one.

The price of 5.56,9mm,45acp etc. has caused GUN manufacturers to produce a large array of new .22 versions of their larger caliber firearms. They did this to fill the demand for firearms that are affordable for training and recreational shooting. Now suddenly the number of shooters wanting .22 ammo to feed these new guns had risen dramatically. So the reality is .22 ammo is wiped out everywhere because of the price of larger caliber ammunition.

[jaydee770]

...There really are people out there that have that many...

It makes me wonder if those types of collectors are the rule or the exception? I can't imagine there are enough of those types of collectors to starve the country of ammo though...

[Ruy Dias de Bivar]

I’ve always said there is no such thing as too much ammo on hand. I still have CIL (Canadian Industries Limited) 30-30 ammo I bought back in 1970.

[Gaffer]

Gee. I NEVER said that! I commented on somebody mentioning a hundred thousand round stash of ammo. Each gun having 1000 round backup.

I know that I have a lot of guns and for many of the calibers I have, particularly the odd ones, I want at least 1000 rounds - otherwise it’s just a museum piece.

As an example, 7.65 Argentine, 7.62 Nagant, 30 carbine, 7.5X54 French, 8mm Mauser, etc.

The rest, .233 REM and 5.56 mm, 30’06, 7.62X39mm, 9X19mm, 45 Auto, 32 Auto, 38 spl and +P, 357 mag, 45 Colt, etc., many of those can be shared among more than one type of gun.

[dangerdoc]

bump

[TalBlack]

It can crash all it wants I still can’t even find a mention of Remington 35.

[vetvetdoug]

I got worried during the Clinton administration. What ammo shortage?

[Lurker]

“Are you aware that all ammo becomes less effective with age?”

I regularly fire ammunition that is well over 65 years old. Never had a single problem with it. If properly stored ammunition will be effective long after you and I are dead and gone.

L

[Lurker]

Fascinating. Thanks.

[Comment Not Approved]

Here in Montana, where over 90+% of homes have firearms, the average number of firearms they own is 27. That stat is over 4 years old so it may be higher now.

I know many people with at least that many. Firearms are part of our culture here. I’m in the process of building a new handgun range on what I like to call the back 20 acres ... dropped a tree on the previous one. I’m much better with my chainsaw now. Several of my neighbors also have built ranges since I built my first one.

We hear gunfire almost daily here. It is the sound of freedom!

[Ruy Dias de Bivar]

I remember when I could have bought quite a few antique Marlin rifles in .33 Winchester.

Anyone make .33 Win?

[voicereason]

One critical piece that seems to be ignored is simple economics. People need money to buy ammunition, or even reloading components. Contrary to the Mis-information being put out there, the economy has not improved.

Food prices have risen and are still on an upward swing. Healthcare costs have gone up. Fuel costs are still at levels higher than they were when Obama took office. Yet the income levels of families and individuals has declined.

Just at look at information from the retail sector. Store closings are being announced, earnings by the giants such as Wal-Mart have even declined.

It isn’t that people don’t want to buy more ammo, they simply can’t.