Costco (NASDAQ: COST) is striking gold with its latest venture into precious metals. According to a recent equity research note from Wells Fargo, the company is generating between $100 million to $200 million each month through the sale of gold bars, marking a significant expansion in its revenue streams.
Since last October, Costco has been offering 1-ounce bars of nearly pure 24-karat gold. Despite concerns about the profitability of this venture due to high pricing and shipping costs, analysts view it as a strategic move that reinforces Costco’s value proposition.
The retailer has strategically priced its gold bars slightly above spot prices, offering additional incentives to its members. Executive members receive a 2% cash back reward, while those using a Citi card enjoy an extra 2% cash back. This pricing strategy has proven successful, with gold sales totaling around $100 million between the product’s launch and the end of the last fiscal quarter.
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Building on this success, Costco has expanded its metal market offerings to include silver coins. Sold in tubes of 25, the 1-ounce Canada Maple Leaf Silver Coins were a hot commodity, quickly selling out online last month. Members are limited to purchasing five tubes of coins each.
In addition to gold bars and silver coins, Costco is now selling a 2024 1-ounce Canada Maple Leaf 24-karat gold coin.
Costco’s venture into the precious metals market aligns with a significant uptick in gold prices, which have risen more than 13.70% since the beginning of 2024. As of this afternoon morning, gold was trading at $2,337 per troy ounce.
Information for this story was found via USA Today and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
