Should you "invest" in U.S. Military Weapons?

We’ve discussed this topic on this site before, but I continue to be asked if collectible U.S. military weapons are good investments. Having accumulated quite a few weapons of this type over the years, I’ve pondered the same thing. In my “day job” as a banker, I am well aware of the importance of maintaining a balanced investment portfolio.

Whether or not collecting U.S. military weapons is a sound investment strategy depends on several variables; one of most basic of which is how one defines an “investment.” In these days of a problematic national (and global) economy, a volatile stock market and almost zero returns on bank Certificates of Deposit and Savings account, we all are looking for relatively safe investments with reasonable rates of return. This still begs the question, do collectible U.S. military weapons, qualify as sound investments?

If an investment is defined as an asset that will experience future appreciation in value, the answer is a qualified “probably.” I’ve been collecting such weapons for several decades and, in general, prices have never experienced an across-the-board long-term retrenchment. Sure, there have been numerous “peaks and valleys” over the years but prices have generally shown an upward trend. Naturally, some types of weapons have gained in value more than others, most notably the Class III (full auto) stuff. Likewise, other guns such as 1911/M1911A1 .45 pistols, and high-quality examples of M1 Garands, M1 Carbines and M1903 rifles have steadily increased in value. Likewise, less common guns such as M1941 Johnson rifles and U.S. military trench shotguns continue an upward spiral in prices which still show no sign of abatement.

Since the best predictor of future behavior is past performance, then all things being equal, collectible U.S. military weapons should be desirable investments using the above-stated definition. However, this does not mean we should cashing out our 401Ks or divesting our stock holdings to buy weapons. Remember the key term “all things being equal.” There are a number of considerations to ponder and each individual’s financial situation is unique. Therefore, the byword is “caution” and the ancient adage “don’t put all your eggs in one basket” is still appropriate. That being said, let’s look at some of the variables and considerations.

While almost any U.S. military weapon is worth more today than it was ten or twenty years ago, the examples that have appreciated, and will continue to appreciate, in value are those in excellent or better condition. Marginal guns will never have the value or upward price appreciation as those in stellar original condition. As one old-time collector once told me, “junk will always be junk.” I have always advised that, apart from originality, the most important criteria in deciding what type of weapon to buy is condition. Yes, a gun in premium condition will almost always cost a lot more than one in lesser condition but it will unquestionably maintain its value much better. A collector should always strive to buy a gun in the best possible condition he can find (and can afford). Buying a gun at a “bargain” price may not always be the best course of action. In my opinion, it is better to have one weapon in truly exceptional condition than a dozen junkers.

Secondly, liquidity must be considered. While quality original U.S. military weapons will likely maintain their value and experience future price increases, they should not be considered as liquid assets. Most of you are familiar with the concept of liquidity which, simply put, is how easily an asset can be converted into cash. Yes, a mint-conditioned original M1941 Johnson rifle, for example, can bring $6,000 to $8,000 but a potential seller must find a buyer willing and able to write a check for such a non-essential purchase. If said seller is in no hurry, he can probably find such a buyer but it will likely take more than a couple of days. However, if the seller has time constraints due to pending medical expenses, or a soon-to-be-delinquent mortgage payment, he may not have the time to find the right buyer to maximize the selling price. This can often mean selling the gun for a fraction of its real value due to time constraints. In other words, don’t buy a weapon unless you are reasonably sure you can hold it for an indefinite period of time.

Another factor to consider is the future of firearm ownership in this country. Frankly, this isn’t something I lose a lot of sleep over, but should be a definite consideration. As long as the stuff we collect can be freely sold, those nearing retirement age, or who are faced with unforeseen financial considerations and need to dispose of their collections, should be okay in this regard. However, if there are more onerous government restrictions put on the ownership of guns, then all bets are off. By the way, this doesn’t necessarily have to be on the Federal level. Just ask those Californians who started collecting M1 carbines twenty-five years ago how state laws can put a crimp in one’s collecting aspirations.

In conclusion, I don’t think anyone should buy a U.S. military weapon solely as an investment. We should purchase the stuff because we enjoy collecting it. The fact that it will likely increase in value in the future is, as we say in Louisiana, “Lagniappe” (you can look it up if you don’t know what that is!) but should not be the prime motivation for parting with your hard-earned bucks.

 Any investment including IRAs, 401Ks, mutual funds, individual stocks, real estate, cash, commodities, etc., etc. have advantages and drawbacks. On the other hand, a M1 Garand is much more fun to have around than a R.E.I.T. or second-tranche Ginnie Mae MBS. Just remember to hedge your bets!

On a closing note, I had a friend who recently told me that if things really go down the drain in this country, I should be ready by stocking up on gold and canned food in order to survive. My response was that I have a lot of guns and ammunition, so if it really “hits the fan,” I can get all the gold or food I want!