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.
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.
