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Costco Rides Gold Rush Wave, Reaps Profits Amid Market Uncertainty



Clear Facts

  • Costco has been profiting from the increasing demand for gold fueled by rate cut uncertainty and other market forces.
  • According to an equity analyst at Wells Fargo, Edward Kelly, the sales of gold and silver at Costco have grown considerably since the CFO, Richard Galanti, announced that the company had managed to sell over $100 million worth of gold in the first quarter.
  • Precious metal buyer Blaine Silverman, who recently purchased a gold bar from Costco, buys precious metals to safeguard against inflation and the devaluation of the U.S. currency.

Costco has been reaping the benefits of a surge in demand for gold, spurred on by factors such as rate cut uncertainty and other market pressures. This increasingly popular trend has seen a significant number of buyers flocking to the wholesaler.

Blaine Silverman, a buyer of precious metals, recently discussed his experience with Costco’s gold.
“I’ve always been buying gold and silver. I’ve been buying it for probably 30 years now. And I saw a lot of reports that Costco was selling gold, and I haven’t seen anybody review it on YouTube,” he explained.

According to Wells Fargo equity analyst Edward Kelly, Costco’s sales of gold and silver “seem to have grown considerably” since the retailer’s CFO, Richard Galanti, announced in mid-December that the retailer had “sold over $100 million of gold during the [first] quarter.”
Silverman was one of the numerous customers who bought gold from Costco after the company launched the sales in the fall.

The success of sales was earlier hinted at by Galanti who had expressed surprise at how quickly the 1-ounce bars were selling out on Costco’s website. Additionally, Costco reported $100 million in gold sales following the launch.
“I featured in my video, and it seemed to be an okay process, but it did take a long time to actually find it in stock, because those things sell out right away,” Silverman revealed.

Alongside gold, Costco has also ventured into selling silver, with 1-ounce tubes of Canada Maple Leaf Silver Coins being available for sale online.
Wells Fargo’s Kelly estimated that the sales of these precious metals “may now be running at $100-200m per month, which would add almost 1% to total comps, slightly more to US comps, and about 3% to gen. merch. sales,”

In terms of his buying habits, Silverman disclosed, “I normally buy gold coins like this American gold buffalo. And I think the cheapest I’ve paid is about $1,100,”. He also added that he began buying gold more frequently from the mid-2000s, after initially being more interested in silver.

Silverman views his purchases of precious metals as a form of protection against inflation and the devaluation of U.S. currency.
“I consider this savings. So to me [gold] is money. And then this cabbage here, [a dollar bill], is just debt notes that I use to cash in on money,” Silverman concluded.

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