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Ammunition as an inflation hedge

Gold is the undisputed “go to” hedge when inflation rears its ugly head. Gold and silver are both widely recognized as a store of value during inflationary times. During the last major inflationary period, the 1970’s to early 80’s, the price of gold increased from $38 an ounce at the beginning of 1971 to over $470 an ounce at the end of 1982. Or said another way, it took 12 times as many dollars to buy an ounce of gold in 1982 then it did in 1971.

While that was the case during that particular time period, historically gold has not been able to keep up with the stock market or real estate in long term appreciation. After the inflationary period of the 70’s, it took gold another 23 years, until 2005, before it could beat its 1982 high, all while the stock market and real estate market were booming.

Everything is cyclical however, and we’re once again watching our portfolios decline and inflation come up as the topic of conversation. Is it gold’s time to shine again?

Maybe, or maybe not. History repeats itself but not always in exactly the same way. The 1970’s saw gold rise primarily because Nixon ended dollar convertibility into gold. That isn’t the case today, so it might make sense to look at tangible assets similar to, but not exactly the same as gold...

Is ammunition a good hedge against inflation?

If you have owned guns and been around ammunition for any length of time, you know how the price has continuously gone up over the years. Twenty years ago, you could buy a round of .22LR for a penny, today it is ten times that much.

Ammunition and gold share many common traits: they are both valuable and tangible. In other words, real things you can hold in your hand. Their values will never drop to zero. While ammunition isn’t a commodity like gold, it can be grouped into similar units. For example, a round of 9mm FMJ typically used for practice can be lumped together with other 9mm FMJ rounds and most shooters couldn’t tell them apart except for the headstamp.

One of the major benefits of ammunition is that it can be stockpiled, and it doesn’t go bad as long as it is stored properly. Ammunition stored in a temperature-controlled environment can last for decades. Today people commonly shoot military surplus ammunition produced in the 1940’s, or 80 years ago!

Ammunition can also be used as a medium of exchange if necessary. Individuals could conceivably trade ammunition for other needed items such as water or gasoline if ATMs were offline and cash wasn’t an option. Popular calibers such as 9mm, 223 Remington, 308 Winchester, 12 gauge and 22 long rifle are common in the US and it’s a safe bet that most gun owners have a gun chambered in at least one of these five calibers. During times of civil unrest or a breakdown of law and order, the usefulness of ammunition goes up by an order of magnitude, and so does its value.

This isn’t out of the realm of possibility either, just recently, Americans saw a spike in ammo prices in 2020 due to widespread instability. During that time, there was a huge spike in demand for guns and ammunition. Ammunition prices surged and availability decreased drastically. Anyone hoping to buy ammo in the local sporting goods store saw barren shelves. Its value tripled or quadrupled in just a few short months.

In less dramatic times, ammunition’s value can increase quickly with changing political winds. If there is any talk of banning certain types of ammunition or putting a tax on ammunition, its value can increase suddenly as we’ve also seen in the past.

Ammunition is unlike other products in our society and lends itself well to stockpiling for and unpredictable future. So how exactly do you do that?

The simple answer is to buy it and sock it away!

A more complete answer is that you’ll want to make sure your ammo is protected from theft and the elements. Ideally, keep ammunition in a climate-controlled environment. At the very least don’t expose it to fluctuating temperatures, and especially not moisture.

Once you have your storage situation optimized, you’ll need to work it into your household budget on a regular basis – like paying a bill.

These days, thanks to inflation, real wages are smaller, and everyone is feeling the cost of living taking a larger bite out of their paycheck. That said, if you look at ammunition acquisition as a priority due to the benefits already discussed you’ll need to make a plan.

Buy ammunition regularly so you can dollar cost average your purchases. This means spending the same amount each month and buying more rounds when the price is lower and less rounds when prices are higher. Over time, you’ll have the best cost basis for your ammunition stockpile.

While it is certainly possible to consistently buy ammo from your local sporting goods store or online, there are also companies that can simplify and automate that process for you. They generally make it easy to set up a recurring purchase plan, pick out what you want, and have it all stored for you in a climate-controlled environment until you want it shipped to your door.

Other benefits of using an ammunition bank account type of service include the ability to automatically purchase ammunition on your schedule, so you can set it up to match your paycheck. Also, as your ammo account balance grows, you can make changes online with the click of a button to return some or buy more. You can usually even exchange one caliber for another - all without moving an actual case of ammunition yourself.

While everyone should keep some ammunition at home for range work, self-defense and hunting, if you are thinking of it as a store of value and hedge, you shouldn’t keep all of your eggs in one basket, or all of your ammo in your home. Doing so risks total loss from flood, fire or theft, not to mention the expense and effort of transporting large amounts of ammunition if you move.

So to sum up, ammunition can be a hedge against inflation in the same way that any other physical asset is: during an inflationary period it will take more dollars to buy the same amount in the future. Ammunition has the advantage that it doesn’t spoil or go bad if properly stored, unlike eggs for example. Nor is it bulky like cases of toilet paper.

Owning ammunition is primarily a hedge against future ammo price spikes, shortages, and outright bans. It is also useful in its own right and doesn’t just sit there like a lump of gold. You can shoot ammunition for fun, defense, or hunting. During a situation where there is a breakdown of law-and-order, ammunition becomes infinitely more valuable than gold so make sure you are socking some away in your ammo bank account today.

Ready to get started? Open an account and always have ammo there when you need it.