In light of the current economic fluctuations, Costco has broadened its product range, allowing customers to buy gold and platinum bars alongside groceries and household goods. If the newest sales estimates are any indication, it appears that the interest in these valuable metals could escalate in the near future. So, what’s driving consumers to acquire gold and platinum bullion right now? Should you also be considering a purchase?
Since Costco began offering gold bullion in June of the previous year, the warehouse giant experienced an immediate surge in its revenue. While the company does not provide specific sales numbers for its gold and platinum items, analysts from Wells Fargo estimated earlier this year that the retailer could be earning between $100 and $200 million monthly since launching the 24-karat gold bars on its website and in select stores nationwide.
Precious metals available at Costco
In March 2024, Costco expanded its selection of precious metals by introducing silver coins, following the heightened interest in valuable metals created by its gold bar release months earlier. Priced at around $675 for a 25-count tube of 1-ounce silver coins, these coins, produced by the Royal Canadian Mint and featuring an image of King Charles III, sold out rapidly. During an earnings call that month, former CFO Richard Galanti acknowledged the positive sales outcomes of Costco’s silver and gold offerings, stating, “E-commerce sales in Q2 ex-FX rose by 18.2%. E-commerce showed strong performance in various areas, primarily driven by gold sales and, more recently, silver.”
Just last week, Costco further enhanced its precious metal assortment by adding platinum bars. The 1-ounce platinum bars, imported from Switzerland, made their debut on the retailer’s website with a price of $1,089.99—lower than the $2,699.99 price tag for the 1-ounce gold bars, plus tax. Despite the higher cost, a Bloomberg survey revealed that gold bullion bars were sold out in approximately 77% of Costco locations, based on sales data gathered from 101 stores across 46 states in early October. Current sales estimates for platinum bars remain unavailable.
Reasons behind the rush to purchase bullion
Several factors are motivating individuals to stockpile precious metals these days, the most evident being the pursuit of a diversified investment portfolio. Given the unpredictable economic environment, diversification is crucial for building additional resilience when unforeseen events occur. Locking in comparatively stable investments is beneficial for investors when stocks, bonds, and other assets take an unexpected downturn.
Another aspect that enhances the appeal of gold, platinum, and other precious metals to investors is their physical nature. While a robust investment portfolio typically comprises primarily stocks and bonds, financial experts advise including tangible assets that can easily be acquired, traded, and re-acquired. Moreover, during periods of geopolitical unrest, gold and platinum bars can be conveniently stored at home or exchanged for goods when necessary.
In light of the current market volatility, actively seeking investments that retain their value or appreciate over time makes good sense for seasoned investors. Bullion serves as a hedge against inflation, providing a safeguard for wealth during challenging times. Gold recently reached a record valuation, while platinum prices saw a modest increase—both of which are compelling reasons for investors and collectors to consider what Costco has to offer.
Should you buy gold and platinum bars from Costco?
Given the excitement surrounding Costco’s precious metals inventory, it’s understandable if you’re tempted to jump on the bandwagon and acquire the retailer’s gold and platinum bars. However, there are some important details to consider about Costco’s marketing practices regarding its bullion products.
For example, Costco’s pricing structure differs from that of traditional precious metal dealers. Last week, gold was trading at $2,642.44 per ounce, while Costco is retailing its gold bullion for $2,699.99 pre-tax. Platinum’s market rate was about $1,000, but Costco listed it at a slight markup of $1,089.99.
It’s also crucial to understand that not everyone has access to purchase precious metals from Costco. The gold and platinum bars, along with silver coins, can only be acquired by customers who pay the retailer’s membership fees. Non-members cannot even see the prices of gold, platinum, and silver on Costco’s website, as access to pricing necessitates a membership. Additionally, each customer is limited in the number of metal units they can purchase: a maximum of five platinum or gold bars is allowed per individual, with a limit of one transaction per membership.
If you do opt to buy platinum or gold bars from Costco, you can enjoy additional benefits as a paying member. The retailer provides 2% cash back on purchases made with an associated Citi credit card. Executive members, who pay $130 for their annual membership, receive an extra 2% reward. A standard annual membership fee is $65.
