Girls Gun Wild: Firearms Sales Are Surging–And So Are The Stocks $RGR $SWHC

  • Posted by
  • on April 2nd, 2012
502 Bad Gateway

502 Bad Gateway


Betty Draper: Locked and Loaded



Everything’s coming up AMMO!  Guns and ammo that is! And by looking at the recent performance of  gun and ammo stocks like $RGR and $SWHC, this is a trend that is on an upswing:

Sturm Ruger’s( $RGR) announcement that they are suspending new orders draws into a deeper “guns before butter” discussion for Joe SixPack consumer…
1. The biggest increase in demand for 2011-12 is for handguns
2. Background checks were up 14% for 2011
3. Volume from gun shows increased dramatically as a result of many new powerful firearms introuduced in 2011
4. Total unit production for 2011 was up 23%, yet demand has increased in 2012 to the point to suspend new orders…
5. Total background checks by the FBI for gun sales was over 15MM in 2011, almost doubling the previous record of 8.5 million in 2003
6. Smith and Wesson $SWHC  Model 635 Airweight, a .38 caliber revolver and Ruger $RGR LC9 9mm pistol are two of the more popular handguns in 2011 and they are both classic home defense firearms.

 This rise in gun sales is definitely evidence of  fear out there on behalf of the American consumer; and much of that relates to violence/theft increasing as a result of the poor economy… to riff on some economic theory (Geek alert!) One could assert that Americans are exhibiting a protectionist, “Guns PROTECTING Butter” type of mentality here.  There’s so much uncertainty out there: Massive unemployment, $4.00 gas, student loan debt, personal disposable income is waning. Seems like the cost of EVERYTHING from milk to eggs to beef and butter–it’s all MASSIVELY increased. We all feel it. Not a stretch in my opinion, to want to circle the wagons and protect what you have.  The devil you know  . . .

Let me lay a little Econ on you:

In macroeconomics, the guns versus butter model is an example of a simple production possibility frontier. It demonstrates the relationship between a nation’s investment in defense and civilian goods. In this example, a nation has to choose between two options when spending its finite resources. It can buy either guns (invest in defense/military) or butter (invest in production of goods), or a combination of both. This can be seen as an analogy for choices between defense and civilian spending in more complex economies.
The “guns or butter” model is generally used as a simplification of national spending as a part of GDP. The nation will have to decide which balance of guns versus butter best fulfill its needs, with its choice being partly influenced by the military spending and military stance of potential opponents. Researchers in political economy have viewed the trade-off between military and consumer spendingas a useful predictor of election success.[1]
This model does not typically correlate well with free market economies.[2


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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