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 June 1st Ammo Tax...... 
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 Post subject: June 1st Ammo Tax......
PostPosted: Sun May 10, 2009 9:37 pm 
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Anyone heard about this? I have a close friend who is in regular contact with employees at Federal (you know, the folks who make lots and lots of ammo right here in Minnesota) and he has told me repeatedly that they have warehouses full of ammunition that they are just stockpiling, waiting for some new tax to go into effect on June 1st or some such. I have tried telling him that there is no such animal, but he "knows what he knows" and all that.

Anyone here care to address this? This board seems to be chock full of folks who "have their ear to the ground" on issues like this. Does he know something I don't, or is he wearing a tin-foil hat?

This isnt a question of being the one who is right. He is genuinely concerned about this, and I want to know if there is any truth in this.


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PostPosted: Sun May 10, 2009 10:03 pm 
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There's been absolutely nothing passed on this on either a state or federal level that I've seen. In fact, the only mention I'm seeing is on the tinfoil hat forums.

Nothing like more rumors driving the ammo shortage. :roll:

-Mark


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PostPosted: Sun May 10, 2009 10:21 pm 
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Thats what I have been trying to tell him. But, some folks, just dont listen.


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PostPosted: Sun May 10, 2009 10:37 pm 
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Put it to him this way:

Why would the companies (Federal, etc) want to horde ammo for a new tax to come in (that they do NOT get a share of) but that makes consumption (purchase) of their product go down due to higher prices? (Well, the cost of ammo went up 5% from the new tax - I can't get X boxes of Y with my $100, I can now only get X-1 boxes)


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PostPosted: Sun May 10, 2009 10:46 pm 
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QuiChenKane wrote:
Thats what I have been trying to tell him. But, some folks, just dont listen.


Still, he isn't lying. I don't know him. But, well, he isn't. I've been curious as to the stockpiling too. It is warehouses and warehouses. El Dorado.

Come to find out, they anticipate even greater, more ridiculous price hikes, or rather opportunities for such, by mid to late summer. This is how De Beers sells diamonds.

So, nothing as sinister as an ammo tax, but still kind of grim. :(

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PostPosted: Sun May 10, 2009 11:48 pm 
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Sietch wrote:
Still, he isn't lying. I don't know him. But, well, he isn't. I've been curious as to the stockpiling too. It is warehouses and warehouses. El Dorado.

Come to find out, they anticipate even greater, more ridiculous price hikes, or rather opportunities for such, by mid to late summer.


Sorry, but this doesn't pass the smell test. Prices are determined by the market - so unless there's going to be either a) some dramatic increase in demand, or b) some dramatic decrease in supply, it makes -zero- sense to manufacture a product and store it in a warehouse.

Now, the US Govt could be buying a large quantity for "delivery in june", and that could require warehouses, but that's not the same thing at all.

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PostPosted: Mon May 11, 2009 2:44 am 
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chuckw wrote:
it makes -zero- sense to manufacture a product and store it in a warehouse.


I'll give you an example. Oil companies store away thousands and
thousands of barrels worth of oil that they could be selling, anticipating a rise in price; i.e. an opportunity/excuse to raise their selling price. This happens all the time. Opportunities: before a major hurricane has its way with the refineries in the gulf, or the onset of a foreseeable military conflict (Israel-Iran, India-Pakistan).

If you traded in commodities, you'd make your living buying thousands of barrels of crude that you have absolutely no practical use for, because you know that in two weeks a storm is going to annihilate the southeastern states, or the Strait of Hormuz is going to deteriorate amid some clash between nations.

They're not stockpiling because they control the price. The market is the market. They're stockpiling because they can see the future.

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PostPosted: Mon May 11, 2009 2:56 am 
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Also known as speculation, or 'naked greed'. Perhaps the present administration will feel the need to step in and nationalize the ammo industry........to protect us of course.


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PostPosted: Mon May 11, 2009 4:34 am 
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Unless there are very many competitors making and distributing ammo to dealers, prices will not be fully set by the market.

There are only a few large ammo manufacturers, and probably fewer ammo distributors and importers. Not every competitor even makes every caliber everyday, and these companies will ignore smaller customers when they have huge military orders.

Then too, the government will not bother about an ammo shortage, or price gouging, or market manipulation on ammo; it's not like a shortage of say, baby formula or flue vaccine.

(As we've seen, they don't even worry about a failure of competition in the oil market when there is not even an appearance of a shortage.)

Hopefully the profits the gun industry currently enjoys will result in reinvestment in. and rejuvenation of, the industry, instead of further consolidation.


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PostPosted: Mon May 11, 2009 7:12 am 
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Sietch wrote:
I'll give you an example. Oil companies store away thousands and thousands of barrels worth of oil that they could be selling, anticipating a rise in price; i.e. an opportunity/excuse to raise their selling price.


You're confusing excess manufacturing capacity with stockpiling. Or can you point gas stations that were "out of gas" in the way that gun shops have empty shelves?

It does make sense to produce at a lower cost (without paying overtime) and store for future sale when you have known seasonal variability. But everything I've heard is that ammo manufacture is running full out - and the market is consuming everything that they can produce.

We're also ignoring risk - what happens to them if they've got 6 months normal sales volume sitting in warehouses and demand falls dramatically? (What if the tax turns out to be real and is 500%?)

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PostPosted: Mon May 11, 2009 7:15 am 
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I hate when people get sucked into spreading rumors.
WORD.


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PostPosted: Mon May 11, 2009 7:32 am 
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Sietch wrote:
If you traded in commodities, you'd make your living buying thousands of barrels of crude that you have absolutely no practical use for, because you know that in two weeks a storm is going to annihilate the southeastern states, or the Strait of Hormuz is going to deteriorate amid some clash between nations.


That's not an accurate comparison - for retail sales, ammunition is a recreational product. If it gets too expensive, people will substitute products (movies, new playstation, martial arts - whatever). Worse, if it's unavailable for any extended period of time (the store shelves are empty for too long) then people will permanently alter their behavior, and the ammunition companies will be stuck with a permanent drop in demand.

Besides - the commodities brokers already have to be playing with lead, copper and brass futures.

Sietch wrote:
They're not stockpiling because they control the price. The market is the market. They're stockpiling because they can see the future.


You're not serious? What future? The only reason to stockpile is if they expect both demand and price to go up, and I have yet to hear a suggestion of why that might happen.

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PostPosted: Mon May 11, 2009 7:33 am 
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I just wonder if the OP can explain to me how the increased TAX puts any money in the pockets of the manufacturer.
It doesn't.
In any way, shape, or form.

There "may" be a reason for product sitting in a warehouse, but in anticipation of a (possible) tax that would decimate their market? Nope, not gonna buy it.


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PostPosted: Mon May 11, 2009 7:47 am 
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mnmike59 wrote:
I hate when people get sucked into spreading rumors.


I know - it seems so much easier for people to believe in ominous intent and conspiracies than in simple mis-information and mis-interpretation of the facts at hand.

Seriously, what facts do we have here? There's a visible shortage, and prices have been rising because of the shortage. Because of the rising prices, some consumers are stockpiling, expecting that they'll be saving money in the long run. I've heard from several reliable sources that the ammunition manufacturers are running full out, and the military is buying the bulk of their production.

And, we have an unsubstantiated rumor that some company is stockpiling their manufactured ammo instead of selling it to the market now.

The only way this makes sense is if we're going to be in a war with N. Korea or Iran by the end of the summer. And I really doubt that the ammo manufacturers are the only ones who would know that.

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PostPosted: Mon May 11, 2009 9:25 am 
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Okay, folks, calm the f*** down. I posted because I wanted to know 2 things.

1: If there was a chance he does know something that I dont.

2: If he is wrong about this, how do I convince him its B.S.

I am not "spreading a rumor".
I am not contending that a tax would put money in the manufacturers pocket.


Unbunch the panties, please. There is no need to get worked up over this. In fact, that is what the post was about in the first place. That is, not being worked up over stuff that doesnt deserve getting worked up over.

mrokern, Q_Continuum: Thanks, thats what I need to know.


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