Costco is selling up to $200 million in gold bars a month – here’s what it means

Multinational wholesale retailer Costco is famous for selling electronics, computers, furniture, appliances, jewelry and more since 1983… And, more recently, it branched into selling physical gold last year.

At Costco warehouses and online, shoppers can now buy gold bullion in 1 oz-sized Swiss PAMP bars of fine 24-karat gold “minted bar with a proof-like finish”.

The shiny new offering has proven to be popular – but just how much was revealed by Wells Fargo analyst Edward Kelly in a note to clients yesterday.

Gold bars a significant proportion of all Costco sales

According to Kelly, Costco is now selling between $100 million and $200 million worth of gold bars every single month.

This works out to approximately equivalent to 3% of Costco’s profits for an entire quarter, considering Costco’s most recent financial results stating that the company made $57.33 billion in net sales for the quarter ended February 18th.  

In fact, according to MishTalk, the gold bars are so popular that they are often unavailable as they typically sell out “within hours”.

How much is Costco selling gold bars for?

The amount you can buy a Costco gold bar for varies depending on the spot gold price. You also need to be Costco member signed in to see the price online.

However, general consensus is that the price of one gold bar usually equates to roughly 2% to 2.5% more than the current gold spot price.  

For example, if spot gold were trading at $2,000 per ounce, the price at Costco would likely be between $2,004 and $2,005 per coin.

What does it mean in terms of the economy?

The popularity of gold, particularly physical gold, indicates certain things about an economy.

Generally, more people will be interested in buying gold amidst concerns of rising inflation, as well as uncertainty for the markets.

Times marked by geopolitical volatility – for example, the ongoing wars in the Middle East and between Russia and Ukraine – tend to see higher gold prices.

In particular, an uptick in normal members of the public buying increased amounts of physical gold bullion is traditionally associated with greater uncertainty in the markets. That’s because gold bullion has a reputation for being reassuringly tangible, when much else seems in doubt.

This is interesting, given that the US economy is believed to generally be giving out positive signals this year so far, such as encouraging employment numbers and inflation decreasing (albeit slower and milder than expected).