Costco Gold Business Booming: Estimations Put Monthly Sales Close to $200 Million

Costco Might Be Selling $200 Million in Gold Every Month

Demand for gold is increasing for individual investors. According to Wells Fargo estimations, the gold business of Costco, a big box U.S.-based retailer, might be experiencing a boom due to market conditions and geopolitical processes. Edward Kelly, a Wells Fargo equity analyst, stated in a note that according to estimations, Cotsco could sell from $100 to $200 million worth of gold monthly.

Kelly’s estimations are linked to several factors. “The accelerating frequency of Reddit posts, quick on-line sell-outs of product, and COST’s robust monthly eComm sales suggests a sharp uptick in momentum since the launch,” he stressed.

This would be supported by the aggressive pricing that Costco offers its customers, and by the high level of trust in the company. Costco’s gold product is sold in one-ounce bars of 24-karat, limiting its purchases to five bars per customer. Previously, every customer could purchase up to two gold bars.

However, these volumes don’t guarantee a high level of profit. Kelly stated that due to the almost market sale prices and the discounts applied to certain customers with specific payment methods, Costco’s profit margins could be low.

He stressed:

Pricing at that level and shipping costs suggests it’s a very low profit business at best,

Nonetheless, Wells Fargo’s estimation represented a demand acceleration for Costco’s gold, which only generated over $100 million during the 2023 first fiscal quarter. Gold prices have been rising steadily recently, with its spot prices rising almost 8% during the last 30 days.

Not only individual investors are into gold: central banks have continued buying gold, adding 19 tonnes to their reserves during February.

What do you think about Costco and the demand for its gold products? Tell us in the comments section below.