Why I treat gold and ammunition as my favorite hedges in an over leveraged world.
We’re living in a time where the national debt is going full-auto, inflation quietly eats your paycheck, and AI is eyeing your job. I don’t know exactly what’s coming next, but I’m confident it won’t be “smooth and predictable” if history is our guide. So in this post, I break down why I keep an eye on the price of gold, treat ammunition as an unofficial asset class, and think risk management is no longer optional for businesses OR individuals. It’s part rant, part macro overview, and part playbook for how I’m positioning myself (and AmmoSquared) for whatever insanity shows up next.
We’re living in uncertain times – don’t get me wrong, all times are uncertain… but these days it feels that with extreme political division, a trade war with China, a parabolic national debt, and technology advances in AI, the world is teetering on the brink of something big.
Of course I could be completely wrong, but let me spend a few minutes describing my viewpoint and tell you about what I’m doing about it.
As you probably already know, I’m a macroeconomic nerd and self described “gold bug”. You can go back and read some of my past blog posts:
Gold, Silver… and Ammo
In God We Trust – For Everything Else There’s Ammo
Tangible Things, Part 1
What has me worried is the fact that there is no fiscal responsibility in government any more. Honestly it feels like everyone in Washington DC is on a permanent cocaine bender and has just given up on paying back the national debt. “Who cares?! It’s not REAL money!” SNOOORRT! “Let’s just keep the party going!”
That just can’t end well.
As of this writing, America is in $38 trillion dollars worth of debt. You can find various debt trackers online (all are depressing). Consider this: the most recent $1T of debt we added took us just 70 days, the $1T before that that it took 9 months. If you go back to our founding, our first trillion took 205 years from 1776 to 1981. In other words, Uncle Sam just mag-dumped the last trillion in only two months. To make a firearms anology: our national debt rate of fire is going from a muzzle loading musket, past belt fed, all the way into CIWS territory.
[Side note: how much is $38T? It is a hard number to comprehend. But we all know ammo, so let’s pretend we’re going to buy 9mm with that $38 trillion dollars…. How much ammo would it buy? At today’s prices that would buy about 146 trillion rounds of 9mm Practice. If you assume 50k rounds per pallet, that would be enough pallets lined up to wrap around the earth 80 TIMES! That is a lot of ammo!]
When a quarter isn’t a quarter.
There are signs that cracks are forming and it doesn’t take a junior economist to see it. For one thing just ask yourself if you feel better off than you were 5 years ago, oh wait that was November 2020… so let’s go 6 years ago. If you are like 99% of people the answer is “no”.
We’ve had inflation that’s been quietly eating away the value of our money. This has been accelerating over the past few years. Of course, you wouldn’t know it by looking at official government statistics, but you know this from your everyday purchases. Money just isn’t going as far as it once was. Cars, houses, food, you name it. A shiny new quarter in 2019 is only worth 19 cents today. How long until it is only worth ten cents? five cents? They just stopped producing pennies, will nickels be the new penny?
That is just six years, look at it on a longer scale.. It is eye opening.
Try this: Most of us remember our first (or second) car and what it cost. I do. My first “real car” (one that I got a loan on) was a black 1991 Jeep Cherokee that cost me $10,000 in 1996. When I tried to figure out what the equivalent would be for my daughter who is looking at buying a used car, I put it in the official inflation calculator and it would be nearly $21k in today’s money! You can do that too, use numbers that mean something like your first car or the year you were born.
That is using the official CPI tool published by the Bureau of Labor Statistics, and we all know we can trust the government to be 100% honest and transparent, right? Unfortunately Shadow Stats doesn’t have a tool to calculate inflation from one date to another, otherwise I would have used that. When it comes to CPI our government has a vested interest in keeping the official number as low as possible (anyone on a social security check?).
So when I hear people talk about no inflation or inflation being low, I know they are uninformed or just plain lying.
Let gold be your weathervane.
Gold is a tangible asset that has been used as currency for millenia. Regardless of your views on fiat currency (dollars) or digital currencies like bitcoin, there is no argument that gold and silver are the “OG” currency. There may be some new kids on the block revving their modded civics (is that still a thing?) but nothing is as cool as old school like a ‘69 Ford Mustang – just ask John Wick.
In case you haven’t been paying attention, gold is at an all time high even after adjusting for inflation. That is one of the signals that is hard to ignore. Another piece of the puzzle is that central banks around the world have been buying up gold like it is going out of style. Also, according to this piece, central banks now own more physical gold than US Treasuries. That’s important and means something for us holding dollars.
Why does that matter? It means the fiat paper standard, US Treasuries, are losing their luster. Foreign governments are prioritizing security, durability, and sovereignty over yield and the supposed safety. You know the “backed by the full faith and credit of the US government” available in US backed securities. (makes me wonder if a 10 Billion Dollar Zimbabwe note says something similar…)
Okay enough of my macro-geekery. Looking big picture is great, but let’s bring it down a notch and put it in practice. What can you do to help protect yourself from uncertainty?
2026 Focus
As a company, we’ve decided our focus in 2026 will be process improvement along with risk identification and mitigation. I’m practicing what I preach. In our case, we’ve grown so quickly over the past couple of years that we’re taking a breath and examining the areas we’ve neglected. I’ve been telling my team that it is like we’re, “Bringing the ship into harbor to patch the holes, so we can send it back out in the ocean again, ready for anything.”
There is a case for doing this in everyone’s lives on a personal level as well.
In other words, identify the risks in your life and make a plan of action to address or mitigate those risks. Today, while the waters are relatively calm. Don’t wait for the next global crisis, a lost job, or stock market crash.
I’m not a bitcoin guy, but Bitcoin has recently seen a large pullback. Will it last? Who knows. But people that are overleveraged could be in trouble. It reminds me of the housing bubble collapse, people that were overleveraged ended up in trouble. It was great until it wasn’t.
There is a great quote from Hemingway that applies here. From The Sun Also Rises:
“How did you go bankrupt?” “Two ways,” Mike said. “Gradually, then suddenly.”
History never repeats itself exactly but we can learn that unpredictable things happen. By their very nature they are unpredictable – which means we can’t predict them. But we can plan for bad things to happen and position ourselves to minimize the negative impact.
The current AI boom is a good example. It is both scary and bringing us innovation like we never would have guessed. I know a lot of folks that are worried about losing their jobs to AI. In my company we’ve started using it tentatively because if we don’t use the tools, we’ll fall behind. That is my view.
I think of today’s AI boom as similar to the late ‘90’s when Al Gore invented the internet and sold it door-to-door with AOL. Back then, if a company said, “Naw bro, I’m good” when Mr. Gore knocked on their door, AOL disc in hand, and asked if they wanted to use the internet, they would be out of business today (most likely).
It is the same with AI. It is here whether we like it or not. It is our job to leverage it and stay ahead of others that are going to use it – like an AI arms race. (That is until we need to let customers stock up on black tip armor piercing rounds…)
So I believe right now every person and every business needs to engage in risk management and mitigation appropriate to their situation. We all know there is going to be bad things that happen someday. We need to prepare and be flexible enough to ride out the crazy stuff that drops out of the sky that nobody predicted.
Gold and Ammo Intersection
“All that is gold does not glitter…”
That is the first line in a poem by JRR Tolkien in the Lord of the Rings. In the story, he is referencing something (“someone” really… Strider/Aaragon) that is valuable but does not look valuable at first glance. I like to think of ammunition in that area. Brass certainly glitters though (unless you run it through a suppressed firearm, then it can be downright DIRTY!) and can serve the dual purpose of personal protection and can be a form of financial security as well. To the average person it doesn’t seem much more useful than something that goes bang and sends a projectile down range. That limited perspective is deceiving.
If there is one thing I know for certain it is that the price of ammunition is never going to zero. Like any physical good, there is value in the components and raw material that make up a round of ammunition. There is also utility in it as a round of ammunition. I can’t say that about dollars or bitcoin.
The utility of ammunition goes up in uncertain times. That is another fact.
Guns and ammunition are America’s security blanket. That is why when there is uncertainty in the world, gun sales go up. Right now things are relatively calm. We could be looking at a recession or inflation but the future is murky. There could be a robot uprising in 5 years, we don’t know. Today we’re not seeing a panic buy situation like we’ve seen off and on over the past few decades. That’s a good thing.
I know one thing for certain too, the price of ammunition isn’t going down in the long run. Not when we’re running nearly $40T in debt and gold is spiking. Or said another way, it costs more dollars to buy an ounce of gold. I would be willing to bet that it will cost more dollars to buy a round of ammunition in 10 years too, heck even five or two years. That is why I like to think of physical assets like gold and ammunition as a hedge against uncertanty and inflation. Gold for inflation, ammo for both uncertainty and inflation.
It isn’t an official asset class, but maybe it should be? I believe people should consider having a portfolio of ammunition like they have a portfolio of stocks, bonds, or crypto.
Here is my portfolio:
You can see I have a pretty diversified portfolio or 4,347.2 rounds spread across 14 caliber variations, currently valued at $2322.14. I have a mix of pistol (9mm, 45ACP, 10mm), rifle (5.56, 7.62 Nato, 7.62×39, 300BLK) and shotgun (12ga Buckshot). I contribute about $50 per paycheck to my account and avoid taking ammo out unless I really need it.
There is real peace of mind in that portfolio. Sure it isn’t as much as I have in my 401k or the equity in my home, but it is a diversified asset that provides me with piece of mind that I’ll have ammo there when I need it. I can mix things up and change them at will. I can get a shipment at any time or even cash out if I need the money. Ammo in my AmmoSquared account is infinitely flexible – that is why I love it. I just love watching my balance grow over time.
After all, isn’t that what security and preparations are all about?
Peace of mind.
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