What's happening is a dwindling fixed supply.
Many people buy machineguns and keep them for life. If the supply of M-16s for sale is at 100, and 50 people buy one, there are likely to be, at the most, 75 M-16s that can be bought for any price. The other 25 are staying off the market until the owner dies. The 25 that were bought may be for sale, but not below what the current owner paid for them. This allows the distributers to raise prices, secure in the knowledge that if you want an M-16, you'll pay what they want.
Coupled with the Shrike, the M-4 craze, and the fact that a $5-6,000 machine gun is cheap, the demand for M-16s went up, and the supply went down. Since machineguns are popular, dealers can count on the fact that as long as they stay competitive, they can charge whatever they want and someone will pay it. I wouldn't be surprised if they had some level of coordination, bringing up prices while staying competitive.