Costco Gold Bars Sales Reach $200 Million Per Month

Wells Fargo estimates Costco's gold bar sales at $100-200 million/month. Gold prices up 13% this year. Silver coins also available online.

An analyst note from Wells Fargo has estimated that sales of Costco's gold bars are currently bringing in between $100 million and $200 million per month. These one-ounce bars, made of 24-karat gold, have been available since last October and are selling for around $2,000 each.

Although the revenue generated from these sales is substantial, the note suggests that the profits are relatively low. However, the true value lies in how the price of the gold bars reinforces Costco's position as a retailer offering good value to its customers. The current spot price of an ounce of gold is $2,332 as of 11:15 a.m. Wednesday morning.

In a way, these gold bars are like a high-end version of Costco's famous rotisserie chickens, serving as a way to attract attention from customers. The timing of this product launch couldn't be better, as gold prices have been on the rise this year due to decreasing chances of an interest rate cut by the Federal Reserve. Gold prices have increased by 13% year to date, compared to an 8.6% increase in the S&P 500.

Costco's decision to introduce silver coins on their website in March was also a success. The coins, like the gold bars, are only available online and have contributed to a boost in e-commerce sales. Former CFO Richard Galanti mentioned in an earnings call in March that the increase in online sales last quarter was driven by the sales of gold and silver.

Initially priced at $625 for a pack of 25 one-ounce silver coins, the silver coins are currently sold out. However, customer reviews suggest that shoppers were more pleased with the gold bars compared to the silver coins. Some silver customers complained about the shipping of the coins, noting that the cases were unsealed, causing coins to fall out and get scratched. Costco's policy states that the coins cannot be returned or refunded, and customers are limited to five cases per membership with only one opportunity to purchase them.