Amongst Costco (COST)’s offerings of appliances, groceries and its famed $1.50 hotdog, members of the warehouse club in recent months have also been able to purchase one-ounce gold bars. The unexpected offering was introduced by Costco last year to great success, with gold flying off the shelves so quickly that customers created Reddit threads dedicated to tracking their restocks. Riding off its success with gold, Costco added silver coins to its precious metals offerings and is now bringing platinum into the mix by selling one-ounce bars of the metal for $1,089.99 a pop.
The Swiss-made bars are only available to Costco members, whose annual fees range from $65 to $130. Made of 999.5 pure platinum, the bars are non-refundable and limited to one transaction per membership at a maximum of five units per order. They are only available online and can’t be delivered to customers in Louisiana, Nevada or Puerto Rico.
Costco’s gold rush
Economic anxieties helped propel demand for gold, which is typically seen as a safe hedge against inflation—and Costco’s reputation as a trusted retailer helped boost its sales. Costco began selling gold last fall and quickly found a thriving market, with Richard Galanti, Costco’s-then chief financial officer, describing the bars in a September 2023 earnings call as “typically gone within a few hours.”
In December of that year, Galanti told analysts that Costco had already sold $100 million worth of gold bars during the September-November quarter. The bars are typically priced at more than $2,000 each, while Costco’s packs of 25 silver coins—introduced earlier this year—can be acquired for more than $600.
Sales continued to pick up steam into 2024. In April, Wells Fargo analysts estimated Costco was making $100 million to $200 million off its sales of gold bars and silver coins. Much of this success in precious metals can be attributed to the “high levels of customer trust” of Costco, said the research note. In part due to positive connotations surrounding its culture and growth, the wholesaler placed second on the 2023 Axios Harris Poll 100 reputation rankings, which surveys Americans on which companies they trust the most.
In addition to public perceptions of Costco as a trustworthy retailer, the global environment has played a large role in the company’s burgeoning precious metal sales. Sales of precious metals, like other commodities, typically rise in the case of economic and geopolitical instability. The value of gold has increased by around 30 percent in the past year. A Goldman Sachs report found that gold sales have been up since Russia’s 2022 invasion of Ukraine. And demand for the metal has only continued to rise following last month’s interest rate cut by the Federal Reserve, as precious metals typically thrive in a lower-rate economy.
Costco, too, has continued to reap the rewards of gold’s skyrocketing value. During the March-May quarter, Costco’s 20.7 percent increase in e-commerce sales was led in part by its gold and silver bullions, said Gary Millerchip, Costco’s current chief financial officer, during an earnings call. Last month, Millerchip told analysts that its gold bars were up “double digits” between June and August.
It’s yet to be seen whether Costco will be able to pull off the same feat with its new platinum bars. Typically considered less stable than gold, the value of platinum has fallen by around 7 percent since May, although it’s up nearly 15 percent year-over-year.
