Costco has seen a surge in sales after launching its offerings of 1-ounce bars of 24-karat gold last September, with gold bullion selling out quickly and leading the store to introduce silver coins to its lineup in January. Estimates from Wells Fargo show that the members-only retailer now sells between $100 million to $200 million worth of gold and silver each month. This success is attributed to Costco’s competitive pricing and high level of customer trust, as well as the current rise in the price of gold.
The popularity of Costco’s precious metals can be explained by online buzz, traditional interest in gold as a hedge against inflation and stock market volatility, as well as the recent rise in gold prices. Gold has seen significant growth over the past year, reaching price milestones such as $2,353.15 per ounce. Gold prices have risen 14.5% since January, outperforming major stock indices. Despite expectations of flat gold prices in the coming months, Costco’s offerings of gold bars and silver coins have continued to attract customers.
Costco sells two types of gold bars, including a 1-ounce PAMP Suisse Lady Fortuna Veriscan bar and a 1-ounce bar from South Africa’s Rand Refinery, as well as 1-ounce Maple Leaf silver coins. These products are priced around 2% above spot price, indicating that Costco is not generating significant profits from the sale of precious metals. However, the retailer’s focus on offering competitive prices and maintaining customer trust has contributed to the success of its gold and silver sales.
Edward Kelly, a Wells Fargo equity analyst, noted the role of Costco’s aggressive pricing and customer loyalty in driving sales, along with the online enthusiasm for the store’s offerings of gold and silver. Costco’s monthly eCommerce sales have shown strong momentum since the launch of the precious metals program, with quick sell-outs and increased Reddit posts about the products. The demand for gold and silver at Costco reflects a broader trend of interest in precious metals as a safe investment amid economic uncertainty.
As the price of gold continues to climb and interest in precious metals remains high, Costco’s sales of gold and silver are likely to remain strong. The retailer’s decision to offer competitive prices and maintain customer trust has paid off, with monthly sales of gold and silver reaching significant levels. This success demonstrates Costco’s ability to adapt to changing market conditions and capitalize on consumer demand for precious metals as a safe investment option.
