Costco Gold Rush : A New Wave of Bullion Buyers
Despite Coin Dealer Sales Slump
Gold Rush at Costco: A New Wave of Bullion Buyers
(GoldFixNews)
Costco has managed to create a unique intersection between convenience shopping and gold investment. Despite gold hitting record highs this year, demand for bullion at the warehouse retailer remains strong. Shoppers flock to Costco for competitive pricing on gold bars and coins, making the precious metal more accessible to the average consumer. This surge in interest is driven by the growing appeal of gold as a safe haven and inflation hedge, as well as Costco’s ability to offer prices that undercut traditional dealers.
Sourav Sethia, a 33-year-old analytics engineer from New Jersey, shared his experience: “It’s a great experience overall. I get calls from Costco whenever gold bars arrive as I am a previous buyer. So whenever I see the price has pulled back, I rush to Costco to buy one.” His visits reflect a broader trend of consumers turning to Costco for their gold purchases, even as the metal’s price continues to climb.
Growing Demand Amid Record Highs
Gold has surged nearly 30% this year, outpacing US equities and bonds. Yet Costco, which started offering 24-karat bullion in 2023, is having a hard time keeping its shelves stocked with gold. A Bloomberg survey found that 77% of surveyed Costco stores had sold out of gold bars in early October. The retailer’s popularity stems from its ability to offer gold at prices lower than many precious metal dealers, while also providing rewards to loyal customers.
As Nicky Shiels of MKS PAMP SA pointed out, Costco is the “one bright spot” in the retail gold-buying market. “There’s a whole new cohort of retail buyers,” she said. “We do think that’s positive in the medium to long term, given the fact that Costco has managed to bring in new buyers into the precious space.”
Costco’s Strategy
Costco’s strategy of selling gold isn’t just about the metal itself—it’s about making gold more accessible to its higher-income customer base. Buyers are lured by the ease of purchasing from a trusted retailer and the extra perks Costco offers. Johnny Lee, a 40-year-old content creator from Los Angeles, bought gold bars from Costco twice: once for gifts and a second time “just for the excitement of it.” He believes many shoppers are drawn in by the novelty of buying gold at a big-box store. “I feel like people buying gold bars at Costco is kind of a symbol of how little folks know about buying gold in general,” Lee said.
Costco has noted the popularity of its bullion offerings. In a September 2023 earnings call, the company disclosed it sold over $100 million in gold bars during its fiscal first quarter. According to Chief Financial Officer Gary Millerchip, gold and silver sales remain “a meaningful part” of Costco’s e-commerce growth. “We are glad to be able to offer gold and silver items for our members,” Millerchip said.
Benefits of Buying from Costco
Costco offers tangible benefits to buyers, including 2% cash rewards for purchases made with its Citi credit card and an additional 2% for executive members. With gold selling at a 1.6% premium over spot prices, Costco provides a competitive edge compared to traditional dealers. “It seemed like a too-good-to-be-true deal,” said Josh Young, a Houston money manager who bought gold from Costco. He considers the purchase a hedge against geopolitical and financial risks, including “significant hyperinflation.”
Social Media and the Gold Buzz
Costco’s gold offerings have sparked a buzz online, with Reddit users and YouTubers sharing tips and stories about their purchases. California’s Angel Groff captured her own Costco gold-buying experience for her 40,000 TikTok followers. “I bought it impulsively,” Groff said, noting that her gold bars have since appreciated by $700 each.
Even though Costco’s foray into the precious metals market may not move prices, it signals a shift in how and where consumers are purchasing gold. Stefan Gleason, CEO of Money Metals Exchange, believes that making gold more accessible through big-box retailers like Costco could lead to a significant increase in ownership. “Even an increase to 5% to 10% ownership would be dramatic—and would likely disrupt the market,” he said.
Though the volumes of gold sold at Costco won’t impact global prices, it’s clear that the retailer has tapped into a growing consumer interest. As Matt Schwab from Quantix Commodities noted, “Costco gold buying can provide a form of constant support, akin to central bank buying.”
In short, Costco is bringing gold to the masses, offering convenience, competitive pricing, and rewards, all while attracting a new wave of retail buyers.
Quotes sourced from Bloomberg’s Costco’s Gold Bars Fly Off Shelves as Bullion Prices Smash Records
Confirmed with my LCS in Naperville Illinois, they do get people selling their Costco gold as a means to a quick buck.
When your cab driver is boasting the virtues of buying gold at Costco it’s probably time to sell 🥴