Gouging, Pt. 3: No, it’s Not the Hoarders

Lately, on the ammunition front, it seems that there’s a new scapegoat on the message forums: Ammo Hoarders.  These folks are apparently some kind of distributed Bond villain; they’re insidious and diabolical, buying all of the ammo that comes out just so that they can not shoot it and so that you can’t have it.

It’s supply and demand – but supply was never very large

The supply of ammunition out there isn’t like McDonalds food – unless they begin to convey super-powers, cheeseburgers will not suddenly see a 5x-20x spike in demand after an unpredictable incident such as a school shooting.  And even if there were such a spike, McDonalds could probably handle it readily because they’re flipping huge.  Ammunition manufacturers, on the other hand, aren’t really as big as they would seem – a lot of their capacity is pre-purchased by the government, and contractually can’t be used to produce civilian ammunition when they have outstanding government procurement orders.  So, the available capacity for ammunition production is only the headspace between government orders and maximum capacity.

That having been said, under normal circumstances, the rate of ammunition capacity suffices.  Components are produced at one place, then assembled into completed rounds (either by the manufacturer, or by an 06 FFL purchasing the components).  There are several links in the supply chain which must change in response to demand spikes, such as the one caused by the laws proposed in the wake of the Newtown shootings.  But because it’s a long-ish chain, fraught with costly investment in new facilities and machines, it’s a chain which only really grows in response to a radical demand spike such as this one.

I mentioned that the current supply chain is adequate for most normal circumstances.  Well, as you may have noticed, these are not normal circumstances.  Most gun owners are casual owners, who own a gun or two for protection and don’t actually bother to keep spare ammunition on hand.  They’ll have a couple of loaded magazines for their home defense guns, and whenever they go shooting they’ll stop at the store to buy ammo.  A lot of these guys are the ones complaining about “hoarders” right now.  The thing is, hoarders are over-reported.  Ask yourself this: These guys probably outnumber normal shooters by 50:1 or so.  What happens when half of them, at the same time, suddenly decide that it’s a good idea to keep a couple hundred rounds ‘just in case’?  Well, the stores get stripped bare, which then makes everyone go, “OH CRAP, there’s no ammo!  I need to buy more so that I’ll have some!”  There’s no stopping this particular snowball once it’s started; you simply have to let it play out.  Eventually, all the Joe Sixpacks will have a few hundred rounds of ammo lying around, and they’ll go back to being content.

Defining an Ammunition Hoarder

Through the course of this post, I intend to slap some sense into the people castigating “ammo hoarders”.  But first, let’s draw some definitions.  The proper definition of the verb ‘hoard’ is:

to accumulate for preservation, future use, etc., in a hidden or carefully guarded place: to hoard food during a shortage.

Technically speaking, you could argue that any ammunition purchase is a hoard, unless you’re buying it at the shooting range and burning it that day.  But that’s not much of a real definition.  We need to draw a line somewhere though, right?  Well, just like defining obscenity, “I’ll know it when I see it” just isn’t good enough.  We should also carve an exception case:

Preparedness isn’t hoarding: If you take your Second Amendment responsibilities carefully, then a thousand rounds apiece of your primary rifle and pistol caliber, shouldn’t be considered excessive by any gun guy’s definition.  A lot of us would say 10,000 isn’t excessive, if you have the space to store it.  And still others would… ok, well, somewhere in there we cross the blurry line and become a hoarder probably.

Ok, then let’s define an ammo hoarder as the guy who buys and stores way more ammunition than he will ever use.  He buys it and stores it, and pretty much never sells it – if he does, it’s years or decades later.  So, does this sound reasonable?  This is what “hoarder” is defined as, for purposes of this post.

Now, here’s one little catch: A flipper isn’t a hoarder.  No, a flipper (which I described in the last Gouging post) is a different beast who cares only about making money, and he’s not storing it.  I’m firmly against flippers, and I think most people are confusing flippers with hoarders.  The hoarder is probably not going to Wal-Mart to buy ammo, then reselling it on Calguns for a profit.  His goal is to have ammo.  And eventually he has enough, because his wife will set a limit on how many bedrooms he can convert to ammo storage.  Wait, no, uh, that never happens, all wives are fine with this.  By the way dear, if you’re reading this… about that spare bedroom…

Seriously though, if you’re complaining about hoarders right now, consider that…

Real Hoarders Aren’t Buying Right Now

I’ve known real ammo hoarders, and the guy who angers you buying the last five boxes of 45ACP at Wal-Mart isn’t one of them.  A real hoarder is always looking to add more to his stash, but unless he’s brand-new, he wouldn’t pay current market prices for it.  Real hoarders right now are waiting out the storm, and they’ll snatch ammunition by the caseload once the market corrects itself.

Secondly, a new ammo hoarder is on the same playing field that you are.  The difference between you and him is that he fantasizes about having 10,000 rounds of ammunition, or possibly more, sitting there just in the event of social collapse or a nasty new law, or what have you.  He’s not going to settle for fighting you over 50rd and 100rd boxes; ammo stores much better in case lots than it does in individual boxes.  And in the end, this doesn’t matter.

Because we don’t have too much demand – we have too little supply

Seriously, there are folks proposing that everyone should stop buying ammo until the prices go down.  Even if everyone were to agree to this (and you shouldn’t want them to), it’s the wrong thing for the industry, for preparedness, and (in the long run) for ammo prices.  New manufacturers enter the field because there’s money to be made in it, and right now there’s so much demand that it’s producing new manufacturers under every rock.  Companies which produce primers are probably upgrading their production capacity, with the costs subsidized by current primer prices.  In the long run, for our ammunition supply once the panic dies down, this is awesome.  When we have more available production capacity, prices will probably be lower once the demand spike dies off, and the next panic won’t hit as hard either.

Another benefit is that this shortage is pushing more people to start reloading, which is even better for both the Second Amendment and for prices in general.  And even if you aren’t a reloader, this is good for you because even fewer people will be competing with you for your overpriced factory ammo!

Where things are going with this

The classic laws of supply and demand mean that the more demand there is, the higher prices go.  The higher prices go, the more new companies will choose to enter the marketplace and compete, and the more the existing companies can afford upgrade their production capacity.  When the price of ammunition goes through the roof, it pulls up production capacity, and once the demand spike is gone, the supply remains elevated and the prices dip down below where they used to be (for a while; they tend to level back out in the long run).

Anyway, the price correction after this craze will be the right time to buy, because prices will be at lows which you haven’t seen for a while.  And when that does happen, you should buy thousands of rounds!  But wait, that would make you a hoarder, wouldn’t it?  Well, actually yes – and that’s just fine.

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