Picked up a chest holster and placed the M1911 Engraved within it, the HUD whited out the gun as if I had dropped but I was able to pull the gun in and out fine but only using the corresponding number key.

Gun was not visible within the holster but seemed to magically appear when pressing the correct number key. Gun was fully usable when pulled out but was nowhere to be found in the inventory screen, the holster showed up empty.

Removing the HUD icon made the gun inaccessible, tried placing a few more handguns in the holster and everything worked as intended with them.