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

[jaydee770]

Wow! Just wow! Apologies if you were offended! I didn’t accuse you of saying anything. I meant no offense and was merely posing an honest question in reply.

I imagine ammo for unusual calibers, in shootable condition, may be a prized collectible in and of itself and command quite a price. More power to you if you can swing it!

[appalachian_dweller]

>> I just wish they would stop once they hit 10,000 rounds, or whatever gawd-awful amount of ammo they have stored up <<

10,000 rounds is only 100 rounds per day for 100 days, less than 6 months worth of ammo.

It really amazes me to see this type of comment on a supposedly conservative forum.

Just who are you to tell me how much ammo I need?

If I can afford to buy 100,000 rounds and choose to do so, it’s none of your damned business.

[jaydee770]

Don’t get your panties in a wad little girl - no one is saying you can’t buy a million rounds if you’d rather buy bullets than dental work. What I am now saying is that you are a hypocrite if you hoard ammo or buy 10k rounds at a time, then turn around and complain that ammo prices are high or that the shelves are empty. But what do you care what I say? You sound like you want to control opinions like a good little marxist. (See? I can make silly, baseless accusations that you aren’t conservative too!)

Spank you very much!

[appalachian_dweller]

Did you hear me complain about prices? Did I call you marxist?

You need to work on your comprehension skills. You can start with a good long read of the Constitution, but you should read slowly as it's a complicated document.

[jaydee770]

My comprehension is fine. You’re the one complaining about people freely expressing an opinion when you say, “It really amazes me to see this type of comment on a supposedly conservative forum”.

*Amazing*, you say? Really?

You find it amazing that folks who don’t hold an opinion that agrees with yours are commenting on FR? Would you have it mandated that everyone think the way *you* do, like a good little marxist? Perhaps you think FR needs “thought police” to make sure everyone agrees with you?

So we’re not “Conservative” enough for you? Fine. You are not required to read or reply to my comments. Like I said, “don’t get your panties in a wad little girl.” I don’t want to be responsible for you having an aneurism because you let mere forum comments, from someone you don’t even know, live inside your head rent-free and pester you so unmercifully.

You could also stand to sloooooooowly read the US Constitution (however slow it takes for an appalachian dweller to understand clear text) until you realize that the US Constitution has *no bearing* on my comments, either literally or figuratively, online or otherwise. Don’t get me wrong, I’m not accusing you of being a brainiac who excels at reading comprehension, but I’m not the govt and I never suggested the govt should do anything either. Please explain how the US Constitution applies to me expressing an opinion in a comment on FR? Take your time, cupcake. Ask for help if you need to.

And make no mistake, I can hold a civil conversation. But when jackass curmudgeons like you come out of the gate swinging, I make it a point to swing back. It never ceases to amuse me to see how easy flustered you can get when you find someone who swings back. And the more flustered you get, the more I’m going to let you know it. So, keep on digging that hole. Hey? Maybe next time, you’ll suggest I read the Magna Carta!

[appalachian_dweller]

The only thing you seem to excel at is name calling.

You expressed frustration at gun owners for stockpiling ammo. You blame us for the high prices and shortages.

If you had a couple of functioning brain cells, you would put the blame where the blame belongs - on the federal gov’t.

Every federal agency from the USDA to the NEA are establishing SWAT teams and buying huge amounts of weapons and ammo.

There is a lawless executive administration hell-bent on disarming us.

It's not your opinion that bothers me, it's your ignorance.

Now I must go back to wading up my purdee pink panties. It takes me lots of time as I'm just a little girl, or is it a curmudgeon? Or maybe I'm a cupcake, although I don't think cupcakes where panties.

I look forward your next entertaining reply with breathless anticipation.

[Hot Tabasco]

At the lowest, we might see .22 cartridges below $10 for 500.

A current logical alternative to the shortage of .22 cartridges is a high quality .22 pellet rifle where a tin of 500 will only cost you between $5 and $10 depending on your brand preference......

[jaydee770]

If you had two brain-cells to rub together, you would already be well aware that rimfire is produced on a separate, wholly incompatible manufacturing line from centerfire. Personally, I know of a manufacturing rep from one of the rimfire producers who said if he suggested they ramp up rimfire production in a company meeting, he would be fired on the spot. Mention that in your next conspiracy-club meeting when you get off the topic of UFO’s and chupacabra. See if anyone is smart enough for the light-bulb to fire up over their head.

So as someone who likes to hoard excessively above the average (note: to avoid inflicting further butt-hurt, I give you permission to do so, cupcake!), how does a govt procurement contract that specifies an order quantity “up to x quantity” over a multi-year contract and not “due at delivery upon acceptance” in any way significantly impacts rimfire production? And if the good common-sense most folks were born with leads you to deduce that it doesn’t, then you just might have a sane epiphany. Further, if everyone were like you and stockpiling orders of magnitude more than they shoot (what did you say you shoot? 10 pistol rounds 3 times a week?), you would still think it’s the govt that’s driving the shortage. It couldn’t *possibly* be because you drain the shelves as fast as they are stocked, could it? That’s your right to do so, but it’s also my right to point out just how big of a leech you are for doing it. Your ego precludes you realizing the obvious. You clearly don’t like me pointing it out, but you have no choice. When I yank your strings, you dance. So dance.

[appalachian_dweller]

And you continue to miss the point completely. Not suprising.

The shortages and high prices are caused by an out-of-control gov’t.

I’m weary of the word play and have better things to do.

Have a nice day.

[jaydee770]

The shortages and high prices are caused by an out-of-control gov’t

The reason for the shortages are *clearly* recognizable by anyone with two brain cells to rub together: 0bama says something negative about guns and the gullible rubes like yourself pi$$-backwards and start hoarding ammo. That's the reason. It is most certainly *not* due to a govt contract that isn't anywhere near to filling a multi-year ammo purchase.

Now, there's nothing legally wrong when you admit to hoarding 10,000 rounds (as a 6 month supply? really?) when you previously wrote that you shoot 10 rounds 3 times a week. Neither is there anything wrong when I *righteously* point out how much of a hypocritical jerk-wad you are for feebly attempting to shift the blame to a govt contract that isn't anywhere near to filling a multi-year ammo purchase. That's how it works in a free country: You are free to keep sucking the shelves dry as quick as they can stock them and then trying to blame the resulting shortage on the govt boogeyman -and- everyone else can freely and righteously label you a hypocritical jerk.

Now don't misunderstand, the govt is definitely, unarguably the cause of *many* of our countries woes, but the shortage in the commercial supply of ammo due to govt ammo purchases spread out over multiple years ain't one of them -- Show me a govt contract to buy .22lr and .22mag that *you* think is causing the rimfire shortage. You can't, because the govt ain't the cause, it's panic-buying hoarders. And if hoarders like you are the cause of the rimfire shortage, it doesn't take a genius to understand the commercial market ammo shortage as a whole: It's because of yahoo's like you who are *scared* of the govt who are panic buying. Period. No if's, and's or but's about it. Your ego just can't allow you to admit the obvious. I can keep explaining it *TO* you, but I can't understand it *FOR* you. Spank you very much!

[Octar]

o BS on your knowing four who own over a hundred guns each.

I know a lot more than that. Where are you sheltered?

[Nifster]

and will you also say what guns they are? I don’t believe any of these so called claims without further information.

[Nifster]

One of the reasons I don’t buy into this claim is on a cast basis alone.... let alone keeping each weapon in good alignment and firing readiness. You may know people with 6 figures worth of expendable dollars.....those that I know with that kind of dough own guns but not by the hundreds