On Thursday, I saw that Palmetto State Armory was selling Winchester .223 soft point ammunition for $34.99 per box of 20. That’s $1.75 cents per round, which in my opinion is a ridiculously high price. Of course, for all we know, in a year we might think that was a great price.
Do I blame PSA for making a few bucks on ammo? Nope. They are charging what they think the market will bear and it appears to be the only .223 or 5.56 ammo they have in stock. I do blame the poor schmucks who didn’t buy ammo when it was $6.99 for 20 rounds or $299 for a case of 1,000.
In the world of prepping, timing is everything.
You can buy 36-roll packs of toilet paper for under $20 when they are plentiful, of you could be that poor guy or gal visiting four stores desperate to buy some when it is all sold out due to panic buying.
You could be sitting pretty with a stash of long term storage food you bought when the world was in between crises, or you could waiting for your order to ship, which they originally said would take six weeks but have pushed back twice. They’ve got your money, but you’re afraid if you cancel your order, you will lose your place in line and never get any food.
You could be the guy who bought gold when in August 2019 when it was $1,400 an ounce, or you could have bought it a year later in August of 2020 when it was $2,060 per ounce. (As I write this, spot gold is about $1,875 per ounce.)
Timing is Everything
How do you make money in the stock market? You buy low and sell high. The trick is knowing when the market is near the bottom and when the market is near the top, because timing can be the difference between making a fortune and losing one.
In prepping, you want to do the same thing by buying when prices are low and supplies are ample. Then you can feel pretty darn good when the rest of the world is panic buying. You might even be in a position to help a friend or family member out.
Supply and Demand Cycles
Much of the world around us is cyclical. Spotting the cycles and taking advantage of them can be the difference between being a winner or a loser.
There is a surplus of oil and gasoline due to lower consumption caused by COVID-19, so prices are at record low, but no one realistically expects that to last. Ammunition is ridiculously expensive because so many people are buying it out of fear and that creates a drought.
Thanks to the free market, the law of supply and demand usually finds a happy balance. When there is a shortage and prices rise, manufacturers add shifts or expand their plants and make more. This increases the supply and once supply and demand become more in line with each other, the sales price declines.
In oil, this can happen quickly. A country like Saudi Arabia can reduce their production by 2 million barrels per day in relatively short time. If production is down, they can bring it back on line relatively quickly.
But that’s harder to do with ammunition and many other manufactured items because of the supply chain involved. To increase the rate of ammunition they produce, the manufacturer has to obtain more bullets, brass, primers and powder. If they want to add a shift, they have to hire people and train them. If they are already running 24-hours-per-day, they have to buy new equipment and build a new manufacturing line or possibly a new plant. That is neither cheap nor easy and cannot be done quickly.
Why The Food Supply Chain Moves Slowly
There are also long supply chains for things like pork meaning you can’t suddenly increase pork supplies. Pigs have to be born and raised before they can be slaughtered and turned into bacon and pork chops. Not only does the farmer have to raise more sows to breeding age before he can have more piglets, he has to have the space to raise them and make sure he can obtain sufficient feed.
It takes about four months from insemination to birth, and the sows cannot be bread until they are six months old. If a farmer decides to increase the number of pigs he wants to bring to market, it will take 20 months before the first one arrives:
- Four months to give birth to the new mothers-to-be
- Six months for them to mature and get pregnant
- Four months for the piglets to be born
- Six months for the new pigs to grow big enough to slaughter
That also means the farmer doesn’t earn his first dollar for 20 months. They have to take the risk and invest the money in new sows, new barns, more feed and additional employees before they come close to seeing a return.
For vegetables and other annual crops, it can take a full year from conception to harvest. For fruits raised on trees, increasing production is a five to ten year process. To grow apples, oranges, almonds, pecans, and other fruit and nuts that grow on trees, farmers have to source the trees, plant them, and wait for them to mature enough to bear fruit. During that time, they have to care for the trees, fertilize, irrigate, manage pests, and prune them. All without any return on their investment foe years.
Know When to Buy
Some years ago, almond milk started growing in popularity, so almond farmers in California planted more almond trees. As they start to produce, almond prices are going lower. The combination of a good harvest combined with fewer exports due to COVID-19 means the price of almonds is at a low point. Now would be a good time to buy almonds.
The Sandy Hook school shooting in 2012 and the threat of subsequent gun control sent prices of guns and ammo soaring. Eventually, prices returned to “normal.” When Donald Trump was elected, the threat of gun control decreased and suddenly the gun market was flooded because so many new manufacturers jumped on board during the periods of high demand. Guns that sold for $800 dropped to $450. Manufacturers offered rebates. That was the perfect time to stock up on guns and ammo.
If you absolutely need to prep in the next two weeks before what you expect will be the COVID-19 lockdown, you aren’t going to be able to save any money, but if you look at prepping as a long, ongoing process, you can position yourself to take advantage of the up and down cycles in the market.
For example, grocery stores run sales on canned yams and frozen turkeys around Thanksgiving. That’s the time to buy canned yams and turkey. They might also try to clear these off the shelf the week after Thanksgiving, so buy some now and some in early December. Just like you can get a bargain on Christmas ornaments and wrapping paper the week after Christmas, you can save money by carefully planning when you make your purchases. So what if you have to keep stuff around for months or years – we’re preppers, that’s what we do.
Take the Long View and be Contrarian
Right now, no one is worried about nuclear war. That makes this the ideal time to buy potassium iodate tablets and a radiation detector. If there’s a sudden attack or a melt down, the market will go crazy and prices will soar. You’ll be sitting pretty.
No one is planting their garden right now either, but if you visit a garden center, you might find tomato cages and other supplies left over from the last season on sale. You might also find more seed availability and supplies now than you would in February when everyone is buying seeds and peat pots to start their vegetables.
Monitor the market, identify the cycles, and then buy when prices are low. You’ll save money, and you will be better prepared for what dollars you did spend.
If you enjoyed this article, you might like How to Prep for a Recession and How to Prosper in a Barter Economy.