Fear and Greed Have Sales of Guns and Ammo Shooting Up

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Fear and Greed Have Sales of Guns and Ammo Shooting Up

APRIL 16, 2009

Fear and Greed Have Sales of Guns and Ammo Shooting Up
Buyers Foresee Anti-Weapon Legislation; Collectors Hope to Get Bang for Their Bucks
By ALEX ROTH and BETSY MCKAY
WSJ

FAYETTEVILLE, Ga. -- The way Jay Chambers sees it, the semiautomatic weapons in his firearm collection might be the most promising investment in his financial portfolio. Like many gun enthusiasts, Mr. Chambers, a manager for a door wholesaler here, believes President Barack Obama and the Democrats in Congress soon will reimpose a version of an expired federal ban on the sale of so-called assault weapons. If such a law passes, he figures his collection -- enough guns, ammo magazines and weapon parts to assemble about 30 AK-47s, AR-15s and other semiautomatic rifles -- could triple in value. Purchases of guns and ammunition are surging across the country. Nearly four million background checks -- a key measure of sales because they are required at the purchase of a gun from a federally licensed seller -- were performed in the first three months of 2009. That is a 27% increase over the same period a year earlier, according to the Federal Bureau of Investigation. No one knows exactly what is behind the gun-buying craze. Some buyers say they are stocking up for themselves in anticipation of new gun-control laws, while others say they're worried about deteriorating public safety as the economy worsens.

But it's also clear that part of the gun-buying rally is driven by people like Mr. Chambers who are buying weapons the way others invest in a hot stock. The buying is pumping up prices. Many popular models of guns are back-ordered for a year or more. Some manufacturers are operating plants 24 hours a day. According to the 2009 edition of the Blue Book of Gun Values, the average price of European-made AK-47s -- the famous Soviet-era military weapon now made in several countries -- doubled from $350 last September to more than $700 by the end of 2008.

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Many gun dealers are fanning the fear on the Internet and in other advertising that President Obama will try to restrict the Second Amendment right to bear arms -- despite signs that major changes in federal weapons regulations are unlikely. The White House says there are no imminent plans to reinstate the federal assault-weapons ban. "The president supports the Second Amendment and respects the tradition of gun ownership in this country," a White House spokesman said. Restoring the ban on assault weapons has limited support in Congress, even among Democrats. Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi have signaled reluctance in recent weeks to renewing the ban. During the federal ban between 1994 and 2004, the value of popular firearms such as the AR-15 semiautomatic rifle -- a civilian version of the M-16 used by the military -- soared. During that time, it was illegal to manufacture weapons in the banned categories, but weapons already in circulation could be resold. The law also prohibited stores from selling ammunition magazines able to hold more than 10 rounds.

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Of course, like all investments, guns do fluctuate in value. Weapons whose prices rose during the previous ban fell once it was lifted. "People I know in 2000 were buying Colts for $2,300 or $2,400," says Dennis Williams, the owner of Guns & Leather Inc. in Greenbrier, Tenn. "Now you can buy a new Colt for $1,400." That the bubble could burst doesn't appear to be fazing buyers. "Right now even used semiautomatic rifles are selling like crazy," says Lawrence Keane, senior vice president and general counsel of the National Shooting Sports Foundation, which represents manufacturers and retailers.

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Mr. Chambers, the door salesman, figures he has spent $40,000 to $50,000 collecting guns and ammunition over the years. He says his 401(k) has been decimated in recent months. Real-estate values in his neighborhood have plummeted. His former employer went out of business. Medical benefits at his new job cost "twice as much and aren't as good." He's worried about supporting his wife and two young children. Even without a new assault-weapons ban, he figures he could sell his entire collection at current market rates and live off the proceeds for a year. "They'll be worth what I paid for them at least," he said. "I look at it as a savings account."

http://online.wsj.com/article/SB123984046627223159.html (subscription)