Gun Boom Stock : One Lesson Gold Investors Must Learn From Gun Boom

Tue, Feb 5, 2013

1 Lesson Investors Should Learn From Gun Boom

Gold investors and those thinking about Investing In Gold can learn a lot from the current gun control debate and what’s happening at gun dealers across the country.

The race for gun control has begun in earnest in the past few weeks.

Consumers, fearing regulations which would prevent them from buying certain guns, aren’t waiting for the regulations to be set. They’re buyingGold Investors Must Learn  Lessons 2015 now. And they’re buying out most of the available inventory they can find.

Empty shelves at gun shops have been reported from Boise, Idaho to Houston, Texas and everywhere in between.

KHOU.com out of Houston reports, “Looking at the shelves at Class 3 Weapons for the past several years, there have always been as many as 40 rifles on the wall — all of them of the AR-15 variety. There haven’t been any since Monday at noon.”

At this point, if you’re looking for a pistol or rifle which is most at risk of being regulated,  you’re going to have to wait up to a couple of months. There’s just no supply available.

That’s what fears over potential supply disruptions of any consumer good can do to any market.

It happens fast too.

That’s why for those of us preparing for the worst when it comes to the long-term value of the dollar, the current surge in gun sales is indicative of what the Future Gold Market will look like.

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When the demand for gold reaches its top-of-the-bubble climax, there won’t be any gold available.

In fact, we’re already starting to see the early signs of what the precious metals boom will look like.

The U.S. Mint recently stated demand for U.S. Silver Eagles is so high that is has sold out and new buyers are going to have to wait:

The United States Mint has temporarily sold out of 2013 American Eagle Silver Bullion coins. As a result, sales are suspended until we can build up an inventory of these coins. Sales will resume on or about the week of January 28, 2013, via the allocation process.

This delay, although not unprecedented (we saw similar waiting periods enforced during the 2008 credit crisis), is a precursor of what the precious metals boom will eventually look like when it reaches its peak.

How do we know this?

Simply put, we’ve seen it and profited from it many times before.

Contrarian investment trends go through certain periods in their cycles.

We’ve often stated how investment bubbles are formed. They always start off as a simple, easy-to-understand story when the early money buys in. As gains are made and asset values rise in the sector, the original story spreads and gains more widespread traction.

As the investment values rise faster and higher, they attract even more attention. At this point greed sets in, everyone starts to believe the story that started the trend will go on forever, and the aggressive buying at this stage pushes the investment values to unsustainable heights.

Eventually reality outweighs greed and the story. The whole bubble bursts and the asset values crash and all of the latecomers who thought they were going to get rich to lose a fortune.

Gold and precious metals will be no different.

At some point in the future – likely when confidence in the U.S. dollar has declined so much that everyone is clamoring to buy gold and precious metals to protect themselves from further currency devaluation – coin dealers will look like gun dealers do right now.

That’s why now continues to be a good time to buy gold. The prices which you pay for gold are reasonable. It’s available everywhere. You can walk into your local coin dealer and buy plenty of gold. The gold investment market won’t always be like it is now.

Good investing,

 

Andrew Mickey
Executive Editor, Contrarian Insights

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