Costco Sells Gold Bars To Customers

It is true! Costco now sells one ounce Gold Bars to customers. Sales of these one ounce gold bars have been very successful for the company. Supermarket News quotes Wells Fargo
WFC
analysts that suggest sales “may be running at $100 million to $200 million a month”. Sales have accelerated since the warehouse club introduced the gold bars last Fall (2023).

The gold bars are available at Costco’s on-line site, and retail prices fluctuate with the price of gold. Customers are limited to buy two bars, Supermarket news correctly points out that Costco makes a small profit on the sale of these bars. “It is not all shiny news though. In terms of bottom-line profit, the big box retailer sees a low premium on the gold bars, and additionally it further offers 2% cash back for executive members and another 2% for those who use their Citigroup
C
credit card. The sales are adding about 3% to general merchandise sales, but are not contributing much to profit, one analyst said.” It ends with the comment that all that glitters is not gold.

There are other questions that come to mind.

1. Suppose you want to return the gold bars. Is Costco taking them back at the original selling price or at the current value of gold, which may have appreciated? I suspect it would be at the selling price within 30 days of the purchase. Whatever the policy, it may present customer service issues if gold prices fluctuate.

2. Is Costco willing to store gold bars for customers? I suspect it is not willing to do that since the gold bars are owned by customers, and it would potentially create a big liability.

3. Is Costco guaranteeing the legitimacy of the gold bars? Pictures available show the word “Suisse” (French for “Swiss”) or possibly a reference to Credit Suisse. It is one of the renowned Swiss Banks, assuring quality.

4. Is this a good deal? It depends on your own research. If you believe the value of gold will go up, it certainly would be a good deal. If, on the other hand, you see doomsday, gold may be less valuable in the future.

POSTSCRIPT: While I respect and admire Costco’s management team, which is creative and seeks new innovate ways to generate sales, I think that gold bars are a new way to create revenues from affluent customers. It shows that Costco’s management is always looking to increase revenues and grow. It is a team that is looking to improve its growth. If it can sell diamonds, and it does, you can sell anything valuable.