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Lead Costs have Dropped Considerably

Discussion in 'Shooting Related Threads' started by RodRitter, Oct 20, 2011.

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  1. RodRitter

    RodRitter Member

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    Lead is approaching .8 dollars a pound. Comodities in general are coming down. Are good times approaching?

    Rod
     
  2. perga1

    perga1 Active Member

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    $.7969 at the moment
     
  3. IndyShotgun

    IndyShotgun TS Member

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    What's really hilarious are those store owners who don't know Economics. If they bought a load of shot that they had to price at $40, but the market has dropped to $30, they'll keep selling that shot at $40, until they run out of it.
     
  4. trapshootin hippie

    trapshootin hippie Well-Known Member

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    Indy, what are they supposed to with it, give it to you and order cheaper shot?
     
  5. Sam Ogle

    Sam Ogle Member

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    I understand what you are saying, but Lead sellers aren't like Oil Companies that raise the price at the pump for any excuse, then slooowly reduce it when the price falls.
    They aren't fools, but the sellers bought the lead at a given price, and have to sell it. They cannot control a rapid price drop.
    If they can't do that, they will simply stop selling you lead.
    That won't be good.

    Sam Ogle, Lincoln, NE
     
  6. mallard2

    mallard2 Active Member

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    No, what dumber is the shooter who will pay $40 at one store instead of $30 down the street.

    That market controls price is part of retailing. They make out when they buy low and it goes up, and have to eat some costs when the reverse happens. It's called capitalism.
     
  7. IndyShotgun

    IndyShotgun TS Member

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    Then, they tell me that "the new shot I'm getting will be $30."

    I have to be nice to maintain relationships in this hobby, but I want to tell them: "This IS the new shot. This is also the old shot. Shot is shot."
     
  8. oleolliedawg

    oleolliedawg Banned User Banned TS Supporters

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    Indy knows even less about the shot market. If he did he'd realize shot doesn't drop $10/bag overnight. The few manufacturers usually have stocks of lead on hand that were purchased at market price. Until those higher priced inventories are depleted the price to dealers will also remain high. Indy must believe shot has a shelf life like the suppositories he seems to need plenty of!!
     
  9. mrskeet410

    mrskeet410 TS Member

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    I knew a gun shop owner that sold a lot of shot, cheap, at a small margin. Price of shot dropped and he had to sell below what he paid for it.

    Now he keeps a small stock of shot, priced high, with a big margin for him. He keeps it for those that need it. Easier on his cash flow, easier on his back, less financial risk.

    Those that want it at good price can drive several hours to a big shoot or a regional reloading supply dealer and load up. That doesn't bother him when his otherwise loyal customers do that.
     
  10. IndyShotgun

    IndyShotgun TS Member

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    "The few manufacturers usually have stocks of lead on hand that were purchased at market price. Until those higher priced inventories are depleted the price to dealers will also remain high."

    Ha! He said it!

    Here's a free Economics lesson: Every day is market price.

    Would they sell shot at $30 if they could get $90 for it? Do you expect them to sell at a lower margin because they purchased lead at a lower price?

    In the commodities business, sometimes you win, and sometimes you lose.

    Why do I even bother? You and a few others never have anything to add, and you have an incapacity to learn. By the way, bounce your unit-pricing theory off your buddy BigDon. He actually works with numbers, so I want to see just how easily he has to let you down in explaining finance to you.
     
  11. Jeff P

    Jeff P Well-Known Member

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    Well, having bought 5 tons this summer at $36...here's what was my thought process:

    I figure that all commodities are going up, over the longer term. You might get some breaks this year or next since the economy is soft. But over time (say, the 5 or 6 years it will take me to shoot 5 tons of shot), I think $36 looks pretty good - obviously, since I bought it I must have figured its a buy.

    If shot comes down to $30 or even a bit less (not unlikely), I'll look to add to my stockpile and shoot the cheaper stuff first. You could easy see $30 or even $25 in the next year or two, before it goes up again.

    Anyone that thinks they'll see $15 shot again is dreaming...
     
  12. daddiooo

    daddiooo TS Supporters TS Supporters

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    2 gun clubs here in Atlanta are selling shot @ $46.00 & $44.50. (LAWRENCE)
     
  13. IndyShotgun

    IndyShotgun TS Member

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    The little guy is always stuck paying retail. Bigger guys should avoid making big-block buys of lead, unless they hedge. Best is to keep low backstock and have constant replenishment, but, more likely, they should just use dollar-cost averaging.

    Either buy small enough that you never have much on hand, or buy continuously so that any bag of shot on the shelf is dollar-cost averaged against the other hundreds of bags you have.

    Jeff P, when you buy a bag of $40 shot and toss it on your stack, you now have a stack of shot priced at over $36. This idea of vs. accounting isn't really helpful for our purposes.

    You can think that way with goods separated based on quality, like STS vs. Eagle, but if you have a stack of Peruvian shot, it's all one averaged price.

    Any purchasing professionals out there?
     
  14. oleolliedawg

    oleolliedawg Banned User Banned TS Supporters

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    indy boy, no need to consult BIGDON for his obvious expertise as I sell shot and other components for a living. Since I've sold shot to the consumer for over 30 years and never lost a dime on a bag I might know a little about the game.

    Now run along delivering magazines and periodicals to your fellow inmates and don't forget your janitorial duties begin at 2PM. The warden is watching!!
     
  15. dverna

    dverna Active Member

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    Jeff,

    Use the older shot first as it can oxidize. It make no econominc difference if you shoot the cheaper new shot or the higher priced old shot. The money is spent. Look at as "cost averaging". If you buy a 100 shares of stock at $20/share and 100 shares at $18 you have 200 shares that cost you $19. If next week share price drops to $17, you have lost $2/share.

    Don Verna
     
  16. IndyShotgun

    IndyShotgun TS Member

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    "Since I've sold shot to the consumer for over 30 years and never lost a dime on a bag I might know a little about the game."

    No. There's no guarantee of that, at all.
     
  17. oleolliedawg

    oleolliedawg Banned User Banned TS Supporters

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    indy mustn't have learned #1 rule of the successful salesman-buy right!!
     
  18. Jeff P

    Jeff P Well-Known Member

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    I guess I didn't do a good job of explaining....or more likely, I know what I mean and just didn't type it right.

    Right now I have 400 bags at $36. As long as the price is above $36, and I don't see any price shocks coming, i have no reason to buy more.

    But if the price drops to $30, and I "only" have 200 bags left, it would make sense for me to buy, say, another 200 bags.

    Then I would have 400 bags at an average cost of $33. I'm shooting cheaper shot (as Don notes) regardless of WHICH bag I pull out of the pile. If the cost continues to drop, I can theoretically continue to buy shot and use shot until I have a pile of 400 bags that would consist of 399 bags of "cheap" shot and ONE bag of $36 shot.

    My bottom line is I have fixed costs, largely, for the next 160,000 trap shells I load - I also bought the wads and the primers and I have too much powder sitting around in a cool, dry room.

    That might be good....and that might be bad. Depends on what commodities do. But so far, no one has told me it was a bad decision...
     
  19. wolfram

    wolfram Well-Known Member

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    Then there is something known as the opportunity value of capital which goes something like this;

    Instead of tieing up several thousand dollars on an inventory of $25/bag shot a few years ago, a person could have bought gold at the then insane price of $650/Oz. If that gold were sold today the wise investory could pocket his original investment and use the profit to buy his shot already loaded in premium ammo.....Now how smart do you feel sitting on a couple of tons of shot?

    Or it could be a little closer to home - instead of buying a few tons of shot at what you think is a good price, put the money into a a few backup mortgage payments for use in the event you find yourself out of work for a spell..
     
  20. JerryP

    JerryP Active Member

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    Jeff, You haven't made a bad decision. And there is a lot of comfort in knowing you won't run out for a while. That is worth something. smile
     
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