As we explore the recent spike in gold prices, a notable trend has emerged: a buying frenzy for gold bars at Costco. Reports suggest that by early October, approximately 77% of Costco locations across the U.S. had completely sold out of their gold inventory. With gold prices reaching record highs, many shoppers are turning to Costco not only for member pricing but also for attractive cashback offers, making it an appealing option for those looking to protect their finances against inflation.
A Bloomberg report indicates that spot gold prices have surged nearly 30% this year compared to last, consistently breaking records. This remarkable increase positions gold as one of the top-performing commodities, outshining both U.S. stocks and bonds. The allure of gold as a safe-haven asset amidst geopolitical and economic uncertainty is fueling this trend, alongside its established role in wealth preservation. Last month, gold prices surpassed the $2,600 per ounce mark, largely driven by the Federal Reserve’s interest rate cuts, which typically benefit non-yielding assets like gold.
Currently, Costco’s website lists a one-ounce gold bar for $2,689.99 before tax, although inventory has been flying off the shelves. The retailer’s prices are significantly lower than those found at traditional precious metal dealers, enhanced by member rewards, making Costco a popular destination for gold purchases. According to Bloomberg, based on inquiries made at 101 Costco stores across 46 states, approximately 77% of gold bar inventory was sold out in the first week of October.
Interestingly, there’s evidence that cash-strapped Americans are taking advantage of rising gold prices. Many shoppers are buying gold from Costco while simultaneously selling their old jewelry at pawn shops and jewelers, demonstrating a thriving resale market. Costco began offering gold bars in June 2022; these Swiss-made 24-carat bars, which look similar to chocolate bars, are packaged in cardboard and plastic. During a quarterly earnings conference call last year, Costco executives confirmed the popularity of their gold products, reporting sales surpassing $100 million in just one fiscal quarter, equating to roughly 51,740 ounces of gold sold at that average market price.
In an email, Gary Millerchip, Costco’s CFO, highlighted that gold and silver sales remain a “significant component” of their e-commerce growth. Meanwhile, Stefan Gleason, CEO of a leading precious metals retailer in the U.S., noted that Costco’s offerings have made gold ownership more accessible than ever. Outside of jewelry, it is estimated that fewer than 2% of Americans own gold or silver. If that figure were to rise to 5% or even 10%, it could create a substantial shift in the market.
Frequent Costco shopper Miss Li shared her experiences in trying to purchase gold bars. She expressed that the level of interest in gold within the Chinese community is considerably higher than in other demographics, especially given the encouragement from mainland China to invest in gold. In her local Costco, locating gold bars has become increasingly difficult, leading her to seek alternatives at more mainstream retailers. However, with prices soaring—now at least $800 more than her last inquiry—her hopes of purchasing gold bars seem less likely than ever.
