Some of Many Things to Consider

If you are considering including guns in an investment portfolio, and I use the term very loosely, there are several things to consider.

  1. Guns are highly regulated, and every state has their own rules about buying, selling, carrying, using, safety, and registering. These are in addition to the Federal regulations. You need to be very familiar with what is permissible in your state as well as relevant Federal laws.

  2. Guns can be lost, stolen, damaged by traumatic events, or subjected to undue humidity and temperature, and therefore become devalued or worthless in a short time. They usually need to be protected from those sorts of risks. This means considering additional insurance, either adding extra coverage through your homeowner's policy, or getting a separate supplemental collectors insurance policy. It also may include getting good storage capacity that is fireproof and heavy. That is, a safe or a vault.

    Gun ownership requires a high level of personal responsibility for their safety, storage, and use. There may be both civil and criminal consequences in the event of an unfortunate discharge even if by accident.

  3. The regulatory environment is subject to change. Implementation or even threats of regulation - or diminution of such threats can either increase or decrease the value of firearms in a very short time.

  4. Selling firearms at a profit is taxable at ordinary income rates. There is no capital gains tax rate available for guns. Selling guns at a loss is something to discuss with your tax preparer. Hopefully that would never happen, right?

  5. You need to know what you are doing. There are scammers, liars, and cheats everywhere, even in the gun owner community. (Sadly) And in that regard...

  6. It may help to specialize. I believe that it is better to start by learning as much as you can about a few items than know a little about many items. Find someone to be a mentor. Read the books. Look at pictures. Get auction catalogs and review the post-auction hammer prices for the kind of guns you might be interested in. Hold lots of guns in your hand so that you get to know a good one from a bad one. Go to the shows - especially the big shows. Remember, some bring their items to sell at shows because of a known flaw; i.e. the quality items they want to keep stay home. Remember this.

  7. Almost never buy a gun that requires an explanation. Quality almost always wins out over quantity. And perfection is rare indeed for an older collectible. Get something others will covet, and buy it at a very reasonable price if you can.

  8. If you like older guns, get a C&R license. (Click here for the license application form.) They are only $30 for 3 years and it takes only a few minutes to fill out the paperwork. Adding to your collection is so much easier without having to go through an FFL if your State allows you to receive guns directly, and the paperwork is much less stringent than that of an FFL holder. When you decide you don't want the license any longer, you don't have to submit an inventory to BATF. If you plan on churning your collection, then you should seriously consider getting a FFL instead of a C&R license.

  9. Remember cash is king. Always have some loose change so you don't have to miss a good buying opportunity.

  10. There are millions of very nice collectible guns out there. Don't be afraid, necessarily, to sell when you think the price has reached its peak. And don't hesitate to buy when you believe the prices are low, poised for appreciation. Relatively few people can afford to acquire a meaningful collection without occasionally selling something from their collection.