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Costco is seeing a gold rush. What’s behind the demand for its 1-ounce gold bars?

Oct 5, 2023, 9:37 AM

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Costco is now selling silver coins. (Photo: Toby Scott, Getty Images)

(Photo: Toby Scott, Getty Images)

Looking for something to add to your Costco cart along with the 30 rolls of toilet paper? How about a bar of gold?

While not a typical outlet for the sale of precious metals, the members-only warehouse chain has seen its 1-ounce gold bars sell out faster than discounted 170-ounce jugs of laundry detergent.

In a company earnings call last week, CFO Richard Galanti said the gold bars, sold exclusively online, are “typically gone within a few hours” of appearing on Costco’s website — adding that there’s a two-bar limit per member. As of Wednesday, they remained sold out.

Unlike some other discount finds at the retail giant, gold bars come with hefty price tag. No prices were listed Wednesday because of the bars’ unavailability, but multiple media outlets reported last week that the 1-ounce gold pieces — offered in two designs — were selling for just below $2,000 each.

That’s slightly higher than the current market price of gold, which stood at about $1,835 per ounce Wednesday afternoon.

Costco did not specify how many gold bars have been sold recently, or how often it restocks them. The chain based in Issaquah, Washington, did not immediately respond to The Associated Press’ request for comment Wednesday.

Chances are, interest around Costco’s gold bars isn’t going away anytime soon. Although one or two ounces of gold won’t have a huge impact on diversifying one’s investment portfolio, experts note that there’s been increasing investor demand for precious metals in recent years, and that’s likely to continue.

Still, it’s important to pause and evaluate investment prospects. Here’s what some experts say.

What’s behind the demand for gold?

Interest in buying gold often stems from feelings of uncertainty, experts say.

Jonathan Rose, CEO of precious metal broker Genesis Gold Group, says that recent bank failuresinflation and individuals’ concerns about the U.S. dollar, for example, can cause some to start looking for alternative places to park their money.

“If someone’s going out to buy gold, that means they think that there’s some type of instability at the structural level of the market and/or the government itself,” added David Wagner III, head of markets and equities at Aptus Capital Advisors.

Is gold worth the investment?

Rose and others say gold can diversify and balance your investment portfolio, as well as mitigate potential risks down the road.

“People are looking for a safe haven … to protect their wealth. And gold kind of ticks all those boxes,” Rose said. He added that people may see value in having something tangible — and put precious metals “in a safety deposit box or into a retirement plan, even like an IRA or 401k … to safeguard what they have whilst they see what’s happening in the market.”

But not everyone agrees. Wagner says gold is “one of the worst things that you can ever own.” Among the downsides, he argues, is that gold isn’t the inflationary hedge many say it is, with inflation at times outpacing gold in recent decades, and that “there are more efficient ways to protect against the loss of capital,” such as through derivative-based investments.

The Commodity Futures Trade Commission has also warned people to be wary of investing in gold. Precious metals can be highly volatile, the commission said, and prices rise as demand goes up — meaning “when economic anxiety or instability is high, the people who typically profit from precious metals are the sellers.”

If you do choose to invest in gold, the commission and others add, it’s important to educate yourself on safe trading practices and be cautious of potential scams and counterfeits on the market.

Gold for December delivery fell $6.70 to $1,834.80 an ounce by market close Wednesday. For other precious metals, silver for December delivery fell 23 cents to $21.15 an ounce and December copper fell 3 cents to $3.59 a pound.

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Costco is seeing a gold rush. What’s behind the demand for its 1-ounce gold bars?