Buying ammo as an investment

In December of 2011 I bought a box of Federal XM193 (900 rounds) 5.56 for $305.  Today that same box of ammunition from the same online retailer is selling for $370.  Doing the simple math that is an 18% increase in price in roughly 9 months.  I have a feeling that the price of ammunition is only going to increase and here are a few reasons why.

1- Demand.  Try searching for popular ammunition calibers online which can be purchased in bulk.  Most of the places that sell cases for halfway reasonable prices almost always seem to be sold out.   Once those retailers get new shipments in they are once again sold out within a matter of days.  Other retailers who do have them in stock are charging way too much for what they have on hand. As an example the exact same box PMC retails for $309 at AIM Surplus, and $459 at Florida Armory.  Of course AIM is sold out and Florida Armory has it in stock.

Gun ownership has become more popular than ever, driving up the demand and price of ammunition accordingly.  According to the ATF in 2008 there were 1,387,271 pistols and 1,746,139 rifles manufactured.  In 2011 that number had swollen to 2,487,786 pistols and 2,293,247 rifles!

2- Speculation about new gun and ammunition control laws.  This of course feeds demand and trust me it’s not all tin foil hats and water cooler gossip.  As recently as July of this year certain lawmakers introduced proposals which would ban online ammunition sales.

The bill would prohibit ammunition sales from anyone but licensed firearms dealers and require ammunition buyers to present photo IDs before each purchase, effectively ending the practice of online sales. The proposal would also require dealers to report bulk ammunition purchases of more than 1,000 rounds.

3- Presidential election.  We are two months away from the next election, in that time you will definitely see ammunition continue to rise in price.  If the sitting President stays in office there will no doubt be an additional sharp spike in prices!  This will be due to panic that new gun/ammunition control laws will be pushed through and approved by an administration which need not fear saving face for a re-election bid in 2016. Check out this chart I found on AR15.com which clearly shows the spike in 5.56 prices leading up to the last election.

 4- Everything is going up in price, or alternatively the dollar is simply getting weaker.  A full cart of groceries used to cost you around $175 a few years ago and now it’s $225.  The price to fill up your minivan at the pump has gone up considerably with no hope of ever coming back down into the low $2/gallon range.  Why should ammunition be immune to price increases?

So the point is this, as preppers we should always be looking for ways to diversify our preps and maximize our investments.  Ammunition is a tangible asset versus digits on a computer screen which tell you that you have $X sitting in an account a few hundred miles away.  Those boxes of 5.56 ball could be collecting dust on your basement shelf and steadily gaining value versus the 0.25% APY your “savings” account is paying out.

Of course do your own research and decide what is best for you and as always check with local laws and ordinances should you decide to buy ammunition with the intention of reselling it at a later date for a profit.  I say check with local laws because the ATF Website is pretty clear:

Q: Is a license required to engage in the business of selling small arms ammunition?

No. A license is not required for a dealer in ammunition only, but a manufacturer or an importer of ammunition must be licensed.

[18 U.S.C. 922 (a)(1)(B)]

I think buying up a few thousand rounds (or more depending on your resources) of your favorite caliber to save for uncertain times is a great idea.  The ammunition will never be worth zero and in almost every circumstance you should be able to sell it for at least what you paid for it.  Worst case scenario is you decide to keep the stuff and shoot it all, and that’s never a bad day.