Costco Sells as Much as $200 Million a Month in Gold Bars

Costco, the well-known big-box retailer, has struck gold — quite literally. Since introducing gold bars to its inventory last year, the shiny metal has become a significant revenue stream for the company, according to estimates by Wells Fargo analysts.

The numbers are staggering. Analysts now anticipate that Costco’s monthly gold sales could range anywhere between $100 million and $200 million, marking a substantial surge since Costco’s gold bar debut in late 2023.

What’s driving this unprecedented demand? It seems Costco’s competitive pricing and strong customer trust have played a pivotal role. The rapid sell-outs of gold bars online, coupled with the increasing frequency of Reddit posts, indicate a significant uptick in momentum since the product’s launch.

Costco’s 24-karat, 1-ounce gold bars are the hot commodity in question. Though the exact price isn’t disclosed to non-members, industry experts estimate a slight markup above the spot price, placing the cost at around $2,400 per bar.

The timing couldn’t be better for gold. With spot prices soaring over 13% in 2024 amid concerns about inflation and geopolitical instability, investors are turning to the precious metal as a safe haven asset.

However, while gold sales are boosting Costco’s top-line revenue, the bottom-line impact is less clear-cut. The store’s thin profit margins on gold bars, combined with cash-back offers for executive members and Citigroup credit card users, mean that profitability remains a challenge.

Nonetheless, gold bars continue to be an attractive investment option, especially in uncertain times. Central banks, particularly in Asia, have been increasing their gold reserves, signaling a broader trend toward hedging against geopolitical risks.

Costco’s venture into the gold market has proven to be a lucrative endeavor so far, albeit with its share of challenges. As the demand for gold remains robust amidst global uncertainties, it seems the golden era for Costco’s gold sales is far from over.