Costco mines gold by selling one-ounce bullion bars, and the retail giant is reportedly making as much as $200 million a month as the price of precious metals soars.
Wells Fargo said revenue “currently may be hovering between $100 million and $200 million a month.” CNBC — Rapidly accelerating as sales of 1-ounce gold bars were $100 million in the first quarter of the fiscal year ended 2023.
“Our research shows that given COST’s aggressive pricing and strong customer confidence,” Wells Fargo equity analyst Edward Kelly said in a note to clients on Tuesday, according to CNBC. “That suggests there is a lot of interest.”
Costco does not disclose the price of its near-pure 24-karat gold bars to non-members, but wholesalers are charging 2% more than the spot price, which was about $2,340 per ounce as of Wednesday morning. It is estimated that a fee is charged. That would bring the price at Costco to nearly $2,400.
Gold prices have soared 13% this year as investors seek safe haven from persistently high inflation, even as the US Federal Reserve raised interest rates to a 22-year high. Rose.
On Wednesday, the consumer price index for March rose to a better-than-expected 3.5%, well above the Federal Reserve’s 2% target, raising questions about whether the central bank will begin cutting interest rates as soon as June.
Costco’s gold bars are so popular that they sell out in seconds, and there are even Reddit threads dedicated to acquiring gold bars.
In a discussion called “r/gold” Reddit user announces when Costco’s gold bullion will be back in stock.
The company has increased the limit on the number of gold bars shoppers can purchase from two to five.
It seems that the pattern of new inventory coming in is not yet clear, Said Check our website Wednesdays and Fridays for new gold inventory.
The Washington-based chain says the gold bars, which come with a serial number and proof of authenticity, include two- to three-day shipping by insured UPS.
One Redditer advised Costco members to use their Costco Executive Member Card to receive 2% cash back on gold bar purchases, as they qualify for the offer.
Customers using Citigroup credit cards can earn an additional 2% cash back.
Wells Fargo’s Mr. Kelly wrote in a note Tuesday that factors such as gold pricing, cash-back sales and shipping costs suggest it is “at best a very low-margin business.”
Another Reddit user blamed the boom on Costco’s ability to invest in gold.
“It’s difficult for the average person to purchase reputable gold without paying a significant markup above its value or never having the gold in hand. It’s nearly impossible. Costco has solved that. .You have real gold of known purity in your hands and very little markup,” says a user. I have written.
Representatives for Costco did not immediately respond to The Post’s request for comment.
