Want To Make A Million In The Gun Business? Start With Two Million.

If you decided to invest in the stock market on June 15, the Dow that day stood at 21,359. The day after Thanksgiving it closed at 23,557. In other words, just about any stock you would have bought in June was probably up at least 10% over the following five months. Unless you made the mistake of buying Smith & Wesson stock, which was selling for $24 on June 15 and closed on November 24 at $13 a share. You would have done a little better with Sturm, Ruger, which was at $68 a share in mid-June and ended last week at $50, a nosedive of ‘only’ 25 percent.
stock prices

Talk about a Black Friday! The old joke used to be that if you wanted to make a million in the gun business, start with two million. That old joke seems to be coming true in spades! But if that’s the case, and I thank our good buddy Shaun Dakin for pointing this out, how come the FBI-NICS background check system set a new, single-day record for the number of received calls? They claim they were ‘flooded’ with 203,086 calls on Friday, which broke the single-day record of calls – 185,713 – set on Black Friday in 2016.
Before all my friends in the gun violence prevention (GVP) community start lamenting that America is once again becoming awash with guns, let’s remember that on average, more than 40% of the calls received by NICS are for license verifications, private sales and other issues which have nothing to do with the over-the-counter movement of guns. And when the FBI publishes their total monthly stats for November, I’ll take the short odds that retail gun sales will continue to show the same 15% slide that has been going on all year.
Want to see a really great investment opportunity in guns? Add some corporate debt bonds issued by Remington Arms, which has dropped from $65 to $14 over the last six weeks. And it appears that this trend will not only continue but may get worse, with Remington broadly hinting that a default on their debt may not be far behind. And the reason why their bonds are turning into junk is the same reason that prices for Ruger and S&W stock continue to fall, namely, that nobody’s buying their guns.
Incidentally, Remington happens to be the ‘flagship’ company for an outfit known as the Freedom Group, which was the brainchild of an amateur gun nut named Steve Feinberg who cobbled Remington together with Bushmaster, DPMS, Marlin and a couple of smaller companies to create what was described as the leading “innovator, designer, manufacturer and marketer of guns and ammunition” anywhere, anytime, anyplace. I’m quoting from the press release for what was supposed to be a big $200 million IPO in 2010. Now they can’t pay off their $275 million debt. Oh well, oh well.
I don’t follow the ins and outs of the stock market but I do know something about the price of guns. Right now I can buy a Smith & Wesson Shield pistol from Bud’s Gun Shop for $299. I can buy the same gun from the Grab-A-Gun website for $279. I’ll have to pay my local dealer a few bucks to do the transfer, but a year ago that gun was selling for $379. I can pick up a Ruger AR-15 for under 600 bucks; that man-killer used to sell for $899 or more.
In my lifetime I remember when every, single American kitchen had a Mixmaster next to the stove. I also remember when I first put my hands on the keyboard of an electric typewriter made by IBM. If the stock prices of S&W and Ruger continue to slide, those company names will wind up like Studebaker, Philco and Trump Air. Remember something called a pay phone?

 

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The NRA Tilts Loony Right Or Nobody Will Buy Guns.

I received an email yesterday from someone who read my Huffington column on the NRA and white supremacists and he wanted to know why the NRA leadership continues to tilt further and further not just to the Right, but to the loony Right. And a quick glance at the latest FBI-NICS background checks might contain an answer that both he and the gun violence prevention (GVP) community should consider with interest and care.

wayne             While obviously background checks can’t give totals for all transfers of guns, what they can give is an indication of the trend of new guns coming into the market each year. And when all is said and done, this is really the most important number which needs to be followed because there is simply no getting away from the fact that the more guns out there, the more people get hurt with guns. And please, please don’t send me an email telling me that it’s bot the gun, it’s the person holding the gun, okay?

Back in March, some gun-sellers were reporting that sales were still strong, others said sales were off – it was a mixed bag and nobody was sure which way the gun market would eventually go. But that was March and this is now August, and if this month turns out to be as lousy as last month, the fall-off in demand for guns may turn out to be much worse than even the most pessimistic analysts have projected to date.

For July 2016, the FBI-NICS phone bank racked up 1,143,824 calls covering gun transfers, including 628,725 handgun transfers, which from the perspective of gun violence is the most important category of all. Last month, July 2017, the total gun transfer number was 845,007, with handguns comprising 480,124 of the total calls. That’s a month-to-month drop of 26%, with handguns sales dropping slightly less by 24%.

Historically, July and August are always the slowest months in the gun business because despite the necessity to always have that gun around to protect yourself from thugs, terrorists and God knows what else, guns just can’t compete with the beach. Which is why a same-month comparison from one year to the next is a potent indicator of the overall health and outlook of the industry as a whole.

Let’s take a somewhat longer view.  From January 1, 2016 through July 31, 2016 the FBI rang up 4,712,334 calls for background checks on handguns; for the same period in 2017 the total was 4,257,132, a decline of roughly 10%. As for long guns, the slippage was also 10%, from 2,913,489 to 2,607,137. In the last two months, the drop in handguns sales year-to-year was nearly 20%.

If the more recent trends continue, the bloom is not only off the rose, the whole rose bush might be starting to dry up and wither away. Which means that not only will revenues within the gun industry collapse, but revenues for gun organizations like the NRA will also begin to decline.

The little secret which the NRA doesn’t want you to know is that for all their recent forays into television and video, the truth is that most people come into contact with America’s ‘oldest civil rights organization’ only when they walk into a place that sells guns. Ask yourself this question: ever seen an advertisement or logo for the NRA in the local convenience store, Walmart or CVS?

The problem for the NRA is simply this: in order to augment or even maintain their financial base the only thing that really works is to keep people buying guns. They can peddle concealed-carry insurance or holsters that fit inside bras or t-shirts which proclaim your 2nd-Amendment ‘rights,’ but nobody’s going to buy any of that crap unless they already own a gun. And how do you get more people to buy guns when no matter what you say, a gun simply doesn’t represent a necessary part of everyday existence like your car keys or your droid?

What Can Happen If You Sell A Gun Legally And It Gets Into The ‘Wrong Hands.’

I have a friend named Dave LaGuercia who happens at the moment to be in a Boston hospital for a second round of surgery – let’s hope all goes well. I have known Dave since 2004 or 2005 when he opened a small gun shop in Connecticut just over the Massachusetts line. Dave had previously been in the car business as a broker, he had done quite well, but being a gun nut once he had some dough in his pocket he did what we all do, he bought some gun inventory and opened a shop.

mcx            One thing led to another and within three or four years Dave had moved to a much larger location and now had a gun shop that was maybe the second-largest store in the whole state. And since Connecticut is a fairly small state and Dave’s store was situated right off an exit of Interstate 91 (‘easy on – easy off’) he got customers from as far away as the Danbury area, one of whom was Nancy Lanza, who showed up some time in 2011 or 2012 with her young son, Adam, and purchased an AR-15.

Two days after the Sandy Hook massacre, as Dave was about to close for the night, a squad of helmeted ATF agents carrying rifles and wearing body armor drove up in two Humvees and charged into the shop. Oh yes, they were immediately followed into Dave’s store by some media folks who had been alerted by the ATF that something connected to the Sandy Hook mess was about to go down.

Let me interject one point here that needs to be understood. I heard about Sandy Hook while I was standing behind the counter of my gun shop; I closed the shop immediately and went home.  But later that night after the shooter was identified, I went back to the shop and pored through my records to find out whether or not I was the dealer who had sold the gun. Since it was a rifle, Nancy Lanza could have come into Massachusetts and bought the gun from me. I would have been required to ship the gun to a Connecticut dealer, so I was able to quickly check and I knew that the gun hadn’t come from me. I can guarantee you that every gun dealer in Connecticut and Massachusetts was looking through their books that same night in the hopes that the AR wasn’t sold by them.

The ATF spent the next several weeks examining every gun sale that Dave ever made. They also suspended his license which he never got back. Eventually they found a sale of a hunting rifle which was improperly made, but it was still a violation of 4473 law so they could now build a case. A year later, having absorbed the loss of his entire business, Dave took a misdemeanor plea for the sale of the hunting rifle and also agreed never to go back into the business of selling guns. All the result of a legal sale of an AR-15.

Back in 1995 my good friend in Fairfax, Wayne-o LaPierre, took a lot of flak for calling the ATF a bunch of ‘jack-booted thugs.’ Wayne-o has never been known to be as a master of the understatement, but when I think about how Dave LaGuercia was treated by the ATF, I have to say that Wayne-o was right. And by the way, every, single gun-shop owner throughout the Northeast knows what happened to Dave because every shop is visited on a regular basis by the sales reps for S&W, Ruger and Glock, so news gets around.

I’m not trying in any way to justify Sandy Hook or the lethal dangers of an AR-15. What I am saying is that there are reasons why people in the gun business don’t trust the government to regulate their industry in a proper and positive way. Something to think about the next time an advocate for gun violence prevention gets into a discussion with a gun nut about his guns.

A New Monthly Chart On NICS Background Checks.

I have decided to keep a running record of FBI-NICS checks to help keep our friends in Gun-nut Nation at least somewhat honest, although as John Feinblatt has just reminded us, keeping that bunch honest is about as easy as keeping me on a diet. But be that as it may, with certain caveats that I am going to quickly list, the monthly background check numbers published by the FBI are still an effective measurement of the health and welfare of the gun industry, which usually stands in direct opposition to the health and welfare of the general population.

The caveats about using the NICS numbers as an industry measurement are as follows:

  • Only a handful of states require that all gun transfers go through NICS, so a large number of guns move from one person to another without any paper trail being created at all.
  • On the other hand, what NICS does indicate is the number of new guns that are added to the civilian arsenal each month, and that’s the most important number of all.
  • Of course NICS doesn’t capture the new gun transfers in any universal sense, because many states opt out of the NICS system when a resident holding a concealed-carry license buys a gun.

nicsBut the bottom line is that what we do get from NICS is a very clear trend of the degree to which America is or isn’t arming up. And basically this is the trend which is most important for determining the extent to which America will continue to suffer from gun violence, because without guns, there is no gun violence – it’s as simple as that. And please, please don’t give me the bromide about all we have to do is keep the guns out of the ‘wrong hands.’ Enough already, okay?

The total NICS number for each month is comprised of 24 different categories, of which only 4 categories – handguns, long guns, other guns, multiple sales – represent contacts with the FBI call center to get authorization to sell or transfer a gun. The other categories represent either checking the validity of gun licenses, or redeeming previously-pawned guns, or transfers between individuals rather than between a dealer and a customer; in other words, background checks which don’t represent any new guns being added to the civilian arsenal at all.

I am going to start publishing a monthly NICS chart which will compare numbers over time and will cover the following categories: handguns, other guns and personal transfers of hand guns. Why only handguns and other guns? Because these are the guns we need to worry about since handguns are usually what are used in gun violence of all kinds, and other guns are assault-rifle receivers to which the owner then attaches a bolt and a barrel and he’s got a very lethal gun.

Here’s our very first chart:

Jun-17 Jun-16 2017 to date 2016 to date.
Handguns 569,149 582,821 3,777,008 4,083,589
Other Guns 29,730 49,220 195,537 218,023
Private transfers 1,884 1,198 11,845 8,231

 

These are some interesting numbers, and they fly in the face of comments from various Gun-nut noisemakers that there hasn’t been any ‘Trump slump’ on guns.  Well, I guess a drop of more than 306,000 new handguns hitting the market between January and June isn’t anything to worry about, and a 30% increase in background checks between private buyers and sellers clearly indicates that gun owners just won’t go along with private NICS checks. Incidentally, I’m not going to track long gun transfers, but you should know that long gun checks dropped from 2.5 million in 2016 to 2.3 million so far this year. As handguns go so does the whole gun market, oh well, oh well.

If I had to estimate, I would say that a drop in handgun and long gun sales of roughly 500,000 units means a loss of revenue for the gun industry of somewhere around $150 million bucks. I don’t think that really makes up for Wayne-o going to the White House for the Easter Egg roll.

Does FBI-NICS Tell Us How Many Guns Are Sold By Gun Dealers? I’m Not Sure.

What’s that about you learn something new every day? Well I just learned something from the NRA about the NICS-FBI background check system and if I didn’t know about this before today, I guarantee you that maybe nobody else in the GVP community knows it either.  And what I learned today is particularly important because I learned it just after reading the new Pew gun report which claims that both gun owners and non-gun owners support FBI-NICS background checks for ‘secondary,’ i.e., personal transfers of guns.

nics             It’s all well and good that 87% of non-gun owners and 77% of gun owners favor more comprehensive background checks. But if you live in one of 26 states on an official list published by the ATF and possess either a concealed-carry license or, in some cases, a gun license, you don’t have to undergo a FBI-NICS background check when you buy any gun at all. Think I’m making it up?  Click here.

I never knew this because my gun shop happens to be located in one of the 24 states which doesn’t exempt any over-the-counter purchase from going through NICS. And in fact my state not only requires dealers to get a NICS approval before the gun is transferred, but also requires the dealer to verify through a website link that the customer’s state-issued gun license is also valid at the time the transfer is made. Do many other states which exempt license-holders from NICS have a system which requires real-time verification of the state license when a gun is sold?  I doubt it.  That’s about the last expense that a legislature in Georgia or West Virginia is going to add to the state budget.

Right now there are somewhere between 12 and 14 million active concealed-carry permits in the United States. Florida leads the list with over a million but the Gunshine State does not exempt any gun purchase from NICS.  On the other hand, states like Kentucky and Louisiana do exempt CCW-holders from NICS, and together these two states alone have issued over 300,000 concealed-carry permits.  Kentucky’s an interesting state because they use the NICS system every month to check whether any resident who has a gun license shows up as a ‘bad boy’ in any state. Last month the NICS system ran almost 375,000 such checks for Kentucky, but state residents also purchased almost 8,700 handguns. And since CCW-holders are exempted from NICS checks in Kentucky, even if someone’s name showed up on the NICS state license check, how would a gun shop owner know that the guy standing in front of him couldn’t legally buy a gun? Last month more than 10,000 handguns were sold in Louisiana and there’s no indication that NICS checked the validity of the 136,000 active Louisiana CCW permits at all.

I just did a quick eyeball on the number of concealed-carry permits issued by states which exempt the holders of those permits from undergoing NICS background checks, and the total is somewhere between 5.6 and 5.7 million, give or take a few.  How many handguns were purchased last month in these same states with background checks? Somewhere around 185,000, give or take a few thousand here or there (sorry, but I’m not going to waste time adding up every single one.)

The folks who go to the trouble of getting a concealed-carry license in many cases also tend to be the folks who buy lots of guns. Kind of goes with the territory, if you know what I mean. Is there a chance that the numbers for NICS checks in these exempt states may undercount the actual number of guns sold in those states by as much as half? Yup, there is.

I’m not saying that CCW-license holders are a threat to safety, I’ll let the Violence Policy Center make that argument with their ‘concealed killers’ report. What I am saying is that there may be a lot more guns being added to the civilian arsenal each month, and the one thing we know for sure about gun violence is that more guns equals more gun violence, period, the end.

 

 

Think That Gun Owners Really Know Why They Buy Guns? Think Again.

About thirty years ago the gun industry discovered that people who owned guns for hunting and sport were literally dying out. At the same time, European gun makers like Glock and Sig were bringing their guns into the American market and their hi-capacity pistols quickly began displacing the traditional, six-shot revolvers made by Smith & Wesson and Colt.

sig320              The result of this product change was that handguns, which until the 1980s constituted a sizable but nevertheless minority of all guns manufactured and sold, pulled ahead of long guns – rifles and shotguns – to the point that currently pistols outstrip all other gun categories in terms of sales. The only thing that has kept rifle sales even close has been the continued demand for ‘black’ guns (assault-style rifles.)  In fact, were it not for the sale of assault-style rifles, long guns would probably not account for even one-third of all new guns added to the civilian arsenal each year.

The gun industry messaging promoting handguns and assault rifles embraces two points of view. First is the idea that guns can and should be used to protect society from crime. This is such a pervasive attitude in the gun world that the NRA has even copyrighted the phrase ‘the armed citizen©’ so I better make sure to include it whenever I write those words (I just did.) The second argument to promote handgun ownership is that a gun symbolizes the freedoms afforded Americans by the Constitution because the 2nd Amendment gives us the ‘right’ to own a gun.

One or both of these arguments or their variations are found in virtually every pro-gun statement no matter whose mouth utters the words. Both statements popped out of Trump’s mouth at every stop during the 2016 campaign. There’s only one little problem. Neither of these statements bears any relationship to reality at all.  As in none.  Get it?  None.

The idea that guns have a positive social utility because armed citizens protect us from crime has been floating around since God knows when, but the number of people who can honestly state that they used a gun to protect themselves or others from a criminal attack is pathetically small. The NRA invites its members to submit examples of how they or other armed citizens take the law into their own hands, and the website on which they post those stories has never carried more than 400 stories in any one year. Want to calculate the number of defensive gun uses as a percentage of concealed-carry licenses?  Try .00002%.  That’s it.

Talking about concealed-carry licenses, if John Lott and some of the other pro-gun blowhards really believe that the fact that 14 million concealed-carry licenses make America a safer place, why doesn’t he do a survey and ask how many people with CCW are actually walking around with a gun?  I’ll tell you why this esteemed researcher doesn’t do any research on this issue. Because he knows that most people who could carry a handgun don’t want to bother actually carrying the gun. This is because after the thrill wears off they realize that having a lethal device on your person is more trouble than it’s worth.

As for the issue of gun ownership making us ‘free,’ I won’t even comment on the stupidity of that one, despite the fact that there are even some liberal scholars who hold and promote that point of view. But this argument remains a potent source of pro-gun rhetorical energy because who would dare argue with motherhood, apple pie or the Bill of Rights?

Gun-control advocates should stop citing all these evidence-based studies which prove beyond any doubt that access to guns represents a risk because the other side isn’t interested in evidence at all. They’ll cling to their pro-gun notions for the simple reason that when it comes to forming or holding strong beliefs, emotions override facts every, single time. Don’t believe me? Ask that laid-off factory worker whether he still believes that Trump will bring back his job.

How’s The Gun Business Doing? Lousy.

Last week Gun-nut Nation once again celebrated the mistaken belief that gun sales have not slowed down under Trump. Here’s the headline from NRA-ILA: April Background Checks: Strong Numbers Continue. The story then goes on to say: “While some who write headlines for a living may want you to believe we’re in a “funk” in firearms sales since President Obama left the White House, that shortsighted view neglects to consider that April 2017 was the second busiest April ever for NICS and the 21st busiest month of all time. There were only about 100,000 fewer background checks last month than in April 2016.”

sales             So here’s the question: Does the NRA staff member who writes this nonsense ever bother to actually look at the data which he so wrongfully describes? Or does he assume that everyone who reads what he writes will take what he says on blind faith?  It must be the latter because the statement above gives an impression about the state of the gun industry under #45 which is simply not true.  And I don’t mean ‘not true’ in a vague sense as if I’m quibbling over the meaning of a word here or there; I mean ‘not true’ as totally and completely false.

Take the trouble to download the background check numbers (just scroll to the bottom of the linked page.)  You’ll discover that the only correct statement in the NRA-ILA story is the number of total checks conducted in April – 2,045,564 – which has little, if anything to do with gun sales at all.  Oops – turns out that even the number is wrong, because the actual bottom-line for the April report was 2,037,180, but I’m not going to quibble over 8,000 calls here or there.

On the other hand, to the extent that FBI-NICS background checks represent how many guns were added to the civilian arsenal, despite the fact that NICS doesn’t differentiate between new and used guns and most non-dealer transfers still aren’t covered by the NICS, the total number of guns whose ownership was first proceeded by a background check was 1,060,322.  That number represents half the background checks conducted by the FBI last month, the other half were license checks, pawn-shop redemptions and private transfers, a number that was averaging less than 2,000 monthly in 2016 and is now over 3,000 background checks every month.

Not only have more than half the total background checks conducted since January 1, 2017 been for something other than a gun purchased over the counter, but NRA brouhaha to the contrary, background checks for gun sales continue to slide down. Gun sales always slow a bit in April because the yard needs work and then sales drop off even more from May through August because guns can’t compete with the beach. But the March to April drop-off in 2016 was around 12%, this year sales from March to April slumped 22%.  For January-April, 2016, total NICS gun checks were 4,950,000 (I’m rounding off,) for the same period this year gun checks were 4,500,000, a drop of 10%, with handgun checks declining by 17%.

That’s the good news about gun sales. Now here’s the bad news. This market loss by the gun industry will no doubt result in a more aggressive campaign to make consumers believe they should all own guns. Which means more appeals to fear, more appeals to fake patriotism, more attempts to promote phony ideas about 2nd-Amendment ‘rights.’

If you think the attempt to remove silencers from Class 3 restrictions is something, you ain’t seen nothing yet. The NRA is running a message on how animal-rights ‘perverts’ have ‘declared war’ on anyone who wants to hunt. Wait until you see what they will pull out when it gets time to push the national concealed-carry bill.

But the scare tactics won’t work for the simple reason that most people still don’t believe they need to own a gun. Unless, of course, Trump blurts out something positive about controlling guns. Think that can’t happen? You don’t know Trump.