As gold prices reach new heights, Costco is experiencing an unprecedented demand for its gold bars, with reports indicating that 77% of their stores were out of stock by early October. Shoppers are flocking to Costco, drawn not just by competitive membership pricing but also attractive cashback offers, as many see gold as a way to hedge against inflation.
A recent Bloomberg report highlights that spot gold prices have surged nearly 30% this year compared to last, smashing previous records and outperforming various commodities, U.S. stocks, and bonds. This surge is largely attributed to gold’s reputation as a safe-haven asset amid geopolitical and economic uncertainties, as well as its role in wealth preservation. Following recent interest rate cuts by the Federal Reserve, gold prices recently surpassed $2,600 an ounce. In environments with low interest rates, gold, which does not yield a return, generally sees price increases.
Currently, Costco lists the pre-tax price of a 1-ounce gold bar at $2,689.99, but these are sold out. Their pricing is more competitive than that of traditional precious metal dealers, alongside membership rewards. According to Bloomberg’s analysis, approximately 77% of Costco locations across 46 states ran out of gold bars within just the first week of October.
There are indications that some financially strained Americans are looking to profit from rising gold prices. Many are purchasing gold at Costco and then selling it at pawn shops and jewelry stores, leading to an influx of sellers in the marketplace. Last June, Costco began offering Swiss-made 24-karat gold bars, which are packaged attractively in cardboard and plastic, resembling chocolate bars. During a September earnings call, company executives revealed that gold sales have skyrocketed, yielding over $100 million in revenue within a single fiscal quarter—approximately equivalent to 51,740 ounces of gold based on prevailing prices.
Gary Millerchip, CFO of Costco, noted in an email that gold and silver sales have become a “significant component” of their e-commerce growth. Meanwhile, Stefan Gleason, the CEO of a major precious metal retailer, emphasized that Costco’s offerings make gold ownership more accessible than ever. Currently, it is estimated that less than 2% of Americans own gold or silver outside of jewelry; even a slight increase to 5% or 10% in ownership could dramatically impact the market.
Li, a Chinese-American customer, expressed her disappointment after several unsuccessful attempts to purchase gold bars at her local Costco. She highlighted that enthusiasm for gold within the Chinese community is notably higher compared to other groups, fueled by daily discussions in mainland China advocating for gold purchases. In her attempts to find gold bars at her local store, she’s had to explore other mainstream retailers for a better chance. However, with prices consistently climbing over the last six months, the gold bar she once considered has now seen an increase of over $800.
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