In God We Trust - For Everything Else There’s Ammo

Do you feel a little bit poorer this week? It seems like most of the world does thanks to Monday's flash crash.

While the markets may have recovered a little bit, Monday was a record setting day in financial markets - and not in a good way. The Dow lost over 1,000 points on Monday and the NASDAQ fell 3.4%. The Japanese had it worse than any of us however, with a 12.4% tumble in their stock market. Something they haven’t seen since the Black Monday crash of 1987. 

How did Bitcoin do in all this chaos? Well, not great. It was at $70,000 on July 28th but has since dropped significantly: 11.23% on Sunday then just touched $50k on Monday before bouncing a bit. Something interesting to note is that with all of the institutions and ETF funds now actively trading Bitcoin, it has become correlated with equities. So it is no longer the true alternative to equities. (Whether it is a dollar alternative remains to be seen, but it needs to trim that volatility before it can even be considered in my mind!) 

How did gold and silver do this week? Well gold traders must have known something was up, because gold futures hit an all time high of just over $2500 an ounce on Friday. It has since dropped slightly. Silver is down but since it is more of an industrial metal that is to be expected in light of a slowing economy. 

Real estate? Well since that is so location specific I won’t go there but I know in my area (Boise, Idaho) prices are now soft after being red hot for so long. We still have a lot of people moving to Idaho so that is keeping things pretty stable, but long term who knows? It is really dependent on interest rates.

What else... hmmm. Oh yeah...

Ammunition as a Store of Value

Now let’s talk about the good stuff… Ammunition! 

Ammunition is interesting for so many reasons. I believe there are three main things to keep in mind about ammunition: 

1. It is VALUABLE - the price of ammunition will never go to zero because it always has value for sport, training, and self defense. In fact, with inflation and general uncertainty ammunition is becoming more valuable, not less.
2. It is USEFUL and therefore DESIRABLE - Guns and ammunition are America’s security blanket. When times get uncertain Americans buy more ammunition. Think back to the summer riots of the scam-demic 2020. Average people were fearful so they went out and bought guns and ammunition so they could feel safe - causing a run on ammo and shortage.
3. It is TANGIBLE - Ammunition lasts a LOOOONG time if stored properly. It isn’t going to go bad or rot away and you can count on it to be there when you need it. It is a hard asset.

For all of these reasons I consider ammunition as a “Store of Value”. It is especially apparent during flash crashes like we saw this week. I’m a big proponent of having real assets (not just “real estate”) and not tying up my wealth in financial instruments such as stocks, bonds or crypto that can theoretically drop to zero over a lunch break.

We all have different risk tolerances and levels of financial acumen. I personally believe we're in a giant financial bubble created through rampant government spending. The writing is on the wall and our time of a stable dollar is limited. Even Michael Burry from Big Short fame agrees with me:

Over the past few years, I've more strongly believed everyone should prioritize ammunition and other hard asset accumulation over traditional financial instruments. In 2022, I wrote a three part series about my predictions and philosophy around the need to prioritize hard assets. You can read part 1 here: “Tangible Things Series Part 1: Beginnings”. 

Ammunition... Portfolio?

So here is a question for my customers that have decent sized ammo stockpile or “ammo portfolio” if you will... 

“Did you see any change in the value of your ammunition holdings this week?” 

I can answer that because I have an ammunition portfolio too: No.

You know when we did see a change? The weekend of the Trump Assassination Attempt. Yes really.

Why? 

See point #2 above:  “Guns and ammunition are America’s security blanket”. We saw a slight bump in prices and fears about future availability. As would be expected we also had a bunch of shipments that week. Then things calmed down and are now back to “normal”. For us it was a preview into the potential chaos this election season.

Waves of Weirdness

As anyone that has internet access can tell you, things are starting to get a little “weird” out there. I’m not saying the past four years haven’t been, they sure have! Imagine you are on a lakeshore and a large boat goes by… you can see the waves increase in size, frequency and magnitude. That is how I feel about the world right now - we’re getting more waves of weirdness that are coming out of the blue. 

I was a guest on the Prepping 2.0 podcast last month and they asked me about the rumors of the powder shortage and whether people should be stocking up on ammo. I answered that I believe people should be stocking up regardless of a powder shortage rumor. We should always be stocking up on ammo because we just don’t know when the next shortage will hit. It is as simple as that.

When you think about it, if it isn’t the powder shortage, it will be the “China Invades Taiwan Shortage”, or the “COVID 2.0 shortage”, or the “2024 Election Year Riots Shortage”, or whatever big news event causes Americans to seek their safety blanket of guns and ammunition panic buying. You can almost guarantee there will be an ammo panic sometime in the next few years, if not this year.

My recommendation on that podcast and in general, is to prioritize ammunition stockpiling. Have a plan of regularly purchasing ammo so you have it when you need it. This way you won’t need to join in the panic crowd. Things get even better when you have an “ammo portfolio” and you are more prepared than the average gun owner to capitalize on the trade winds of chaos and uncertainty.