You Can Buy Gold Bars at Costco — But Should You Invest?

Costco will always command loyalty from its huge customer base looking for bulk products and cheap private label brands. However, the next time you pop in for a 7-pound tub of Nutella and a $1.50 hot dog, you might be tempted by a different kind of impulse buy: precious metal. According to a Wells Fargo research note reported by The New York Times, Costco has been selling $100 million to $200 million of gold and silver per month, thanks to hot demand.

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“I’ve gotten a couple of calls that people have seen online that we’ve been selling 1-ounce gold bars, yes, but when we load them on the site, they’re typically gone within a few hours,” said Richard Galanti, Costco’s executive vice president and chief financial officer, in a September earnings call.

Should You Buy Gold at Costco?

According to The New York Times, 1-oz, 24-karat gold bars are available for purchase by Costco members only, for a price that varies according to market rates. The Wall Street Journal reported that one Costco member purchased a bar for $2069, which was a few dollars below gold’s spot price at the time. Costco also sells 99.9% pure silver coins, per the Times.

With inflation still well above the Federal Reserve’s target of 2%, and wars in Ukraine and the Middle East causing worry, many experts have predicted a big year for gold in 2024. With more people investing in gold as a hedge against economic and geopolitical turmoil, gold’s value is up nearly 16%, or $314, since November.  

“If you look at gold’s performance historically, it’s the kind of asset that should perform well through uncertainty, as it has done in five out of the last seven recessions,” said Joe Cavatoni, World Gold Council chief market strategist for North America, as reported by USA Today. “For people looking for a store of value and a portfolio diversifier, gold has a strong track record of delivering those qualities.”

The Wells Fargo note speculated that Costco isn’t making a ton of profit on gold, but that doesn’t mean that adding new business isn’t a shrewd play by Costco. In fact, Wells Fargo analysts called the introduction of gold and silver a “smart move” that “only reinforces its value position,” ABC News reported.

For customers, it’s about convenience more than price. There are thousands of gold sellers in the U.S., but they don’t also stock rotisserie chickens, Kirkland leggings and LED TVs. “They make it convenient,” Sadiq S. Adatia, chief investment officer for BMO Global Asset Management, told The New York Times. “People can physically go in and pick it up and that’s it, versus opening up an account and buying gold shares.”

Given its potential for volatility, experts warn against using gold as a short-term investment. Those looking to profit quickly by unloading their gold while the price is high will be disappointed by dealer offers for their bars “due both to the premium buyers pay and the fees needed to resell it,” noted The Wall Street Journal.

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This article originally appeared on You Can Buy Gold Bars at Costco — But Should You Invest?

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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