Costco, the retail giant known for its wholesale offerings, has made significant strides into the precious metals market, with monthly sales of gold bars and silver coins reaching up to $200 million, according to an analysis by Wells Fargo. This substantial increase in sales underscores Costco’s growing presence in the lucrative world of precious metals trading.
The company’s venture into the gold and silver market began last year with the introduction of one-ounce, 24-karat gold bars to its inventory. Since then, demand has skyrocketed, prompting customers to flock to the warehouse’s online platform in search of these coveted commodities. Reports from online forums and Reddit threads indicate a surge in interest, with customers exchanging tips on how to secure their share of gold bars before they sell out.
Initially, Costco limited purchases to two gold bars per customer. However, as demand continued to surge, the company adapted its policies, now allowing customers to purchase up to five bars at once. This flexibility has further fueled sales growth, attracting both seasoned investors and newcomers alike.
While gold bars were temporarily sold out for members online, reports from The Wall Street Journal revealed that customers were willing to pay approximately $2,000 per bar in December to secure their investment. This willingness to invest in precious metals reflects a broader trend of uncertainty in traditional markets, with many turning to gold and silver as safe-haven assets.
In addition to gold bars, Costco has also expanded its offerings to include silver coins, boasting purity levels of 99.9%. This expansion into silver further diversifies the company’s product portfolio, catering to a broader range of investors seeking exposure to precious metals.
The surge in Costco’s gold and silver sales comes amid a remarkable bull run in the precious metals market. Gold prices have soared to unprecedented heights, registering all-time peaks for eight consecutive sessions. On Tuesday, gold reached a staggering $2,365.35 per ounce, marking a nearly 17% increase since mid-February. This remarkable price surge has undoubtedly contributed to the growing interest in gold and silver investments among consumers.
Despite the significant revenue generated by Costco’s precious metals sales, analysts caution that the profitability of this venture may be limited. Factors such as pricing and shipping costs could eat into profit margins, making it a “very low-profit business at best,” according to analysts at Wells Fargo.
Edward Kelly, managing director of equity research at Wells Fargo, acknowledges that while the monthly sales figures of $100 to $200 million may not have a significant impact on Costco’s overall revenue, they represent a notable addition to the company’s business portfolio. Costco’s ability to tap into new markets and adapt to changing consumer preferences underscores its resilience and agility as a retail powerhouse.
