Costco has transformed the shopping experience into a global phenomenon, allowing consumers access to wholesale discounts and affordable food items, such as their famed $1.50 hot dog. This experience is not limited to the U.S.; customers in countries like Taiwan, Japan, and Australia also enjoy these benefits.
The retailer has taken innovative steps by manufacturing various products under its Kirkland Signature brand and expanding its offerings to include gold bars, introduced two years ago. Following a peak in gold prices in October 2024, the demand for these bars has significantly surged among Costco members.
Since launching its gold sales, Costco has reportedly generated impressive sales figures, sometimes reaching six figures each month. Its first-quarter report for 2025 even highlighted gold as one of its top-selling categories. However, potential investors may wonder if purchasing gold from Costco is the most effective way to invest in the precious metal.
In the summer of 2023, Costco began selling one-ounce gold bars, and the initiative proved so successful that, by 2024, the retailer expanded its inventory to include silver coins and platinum bars; nevertheless, gold bars have proven to be the most popular item. Analysts at Wells Fargo anticipate that Costco’s gold sales could account for between $100 million and $200 million monthly, but the retailer’s low profit margin on these sales, combined with cashback offers for credit card users, means that gold sales are not significantly boosting the company’s overall profit.
Owning gold can be appealing at this time, especially after the price reached a record high of $2,781 per ounce in October. This price increase can be attributed to the Federal Reserve’s interest rate decisions, which historically affect gold prices, as well as increasing inflation, which is currently diminishing consumers’ purchasing power and pushing them toward safe-haven assets like gold.
For consumers, purchasing gold from Costco is convenient, but it comes with its own set of advantages and disadvantages. While the ability to buy gold in-store is appealing, potential buyers should note the additional costs associated with purchases. Costco adds a 2% mark-up over the current market price of gold, which is consistent with industry norms. Although some members can potentially offset this cost with cashback offers—2% for regular members and an extra 2% for Executive members—there is a limitation on the quantity one can purchase at a time, capped at five bars per transaction.
Buying gold from Costco also presents challenges associated with the safekeeping of physical metal. Once purchased, buyers assume responsibility for its security, a situation akin to stashing cash without protection. While buyers can opt to insure and store their gold in a vault, this will involve additional expenses. In contrast, investments in gold ETFs provide a convenient alternative as they are more liquid, readily tradable on exchanges, and offer added security through insured storage. Some ETFs even provide dividends, contributing to passive income while also benefiting from gold price movements.
In summary, purchasing gold from Costco has its merits and may be as beneficial as buying from traditional dealers, especially if buyers are cautious of scams and want to earn cashback. However, there are alternative investment routes in gold that provide enhanced safety, greater liquidity, and less hassle compared to managing physical gold bars personally.
photo credit: money.com
