Costco has found a lucrative venture in selling gold. According to analysts at Wells Fargo, monthly sales are estimated to reach between $100 million and $200 million.
Gold Rush at Costco
CNBC reported that the big-box retailer introduced gold sales last year, and this venture has rapidly gained momentum and turned into a cash cow.
Edward Kelly, an equity analyst at Wells Fargo, told CNBC that the success of Costco's gold sales is attributed to aggressive pricing and the high level of customer trust associated with the brand.
According to Kelly, the increasing frequency of Reddit posts and quick online sell-outs of gold products indicate a significant uptick in momentum since the launch. The introduction of 1-ounce bars made of nearly pure 24-karat gold has been particularly successful for Costco.
While the exact price is not disclosed to nonmembers, the product is estimated to sell for approximately 2% above the spot price of gold, which was around $2,357 an ounce as of Tuesday. That would place the gold price at Costco just above $2,400 per ounce.
Gold Sales in a Surge
Gold sales have been performing well this year, with spot prices increasing by more than 13% in 2024. This upward trend is driven by mounting concerns over inflation and the deteriorating US fiscal situation.
According to CNBC, the US deficit is expected to balloon to about $2 trillion this year, adding to a total debt load that surpassed $34.6 trillion.
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