"You've probably read about the fact that we're selling one-ounce gold bars. We sold over $100 million of gold during the quarter [that ended Sept. 30]," said CFO Richard Galanti during an earnings call on Thursday, Dec. 14. This is the first quarter of Costco's 2024 fiscal year.
Costco started selling the one-ounce gold bars of Swiss refiner PAMP Suisse and South African manufacturer Rand Refinery in September. The bars are made of 24-karat gold and currently sell on Costco's website for $2,069.99 per ounce.
The product is only available to Costco members with a limit of two bars per person. It is non-refundable and is shipped directly to customers via UPS. Product descriptions of the gold bars state that they are brand new and come registered with certificates of authenticity and proof of lab analysis.
According to Jonathan Rose, co-founder of the Beverly Hills-based gold dealer Genesis Gold Group, Costco started selling gold as a promotion targeted toward "a certain sector of Costco's shopping clientele."
Rose noted that the gold bars hit Costco's shelves and website after it started providing accelerated offerings of dried foods and other survivalist goods at a time when concerns about the future of the United States were at an all-time high. Gold meshes with this kind of product.
"They've done their market research. I think it's a very clever way to get their name in the news and have some great publicity," commented Rose in September. "There is definitely a crossover of people living off the land, being self-sufficient [and] believing in your own currency. That's the appeal [of] gold as a safe haven as people lose faith in the U.S. dollar."
The sale of over $100 million worth of gold bars likely contributed to the fact that Costco had a 6.1 percent increase in sales compared to its first fiscal quarter of 2023. During the earnings call, the company also announced that it was providing a special dividend to stockholders of $15 per share.
"Buying physical gold is an investment strategy that's thousands of years old, and Costco has made it easier than ever," noted Axios chief financial correspondent Felix Samson. "A single bar of gold is both expensive enough to be a store of real value and cheap enough that a large proportion of Costco's membership can afford it."
Costco to keep selling gold due to high demand
The price of gold is expected to keep increasing over the next few months as the latest projections from the Federal Reserve suggest that Chair Jerome Powell is going to finally cut interest rates after nearly two years of near-constant rate increases. (Related: How gold price could hit $15,000/oz in 3-5 years as it enters new bull market, according to Rickards.)
With the federal government insisting that the inflation crisis is over as inflation declines toward the Fed's goal of two percent year-over-year, the White House further claims that rate cuts can now be done due to reduced inflation projects and a supposedly stable job market.
FX Street Editor Sagar Dua notes that the broader appeal for the gold price is bullish following Powell's declaration regarding future rate cuts after keeping interest rates unchanged in the range of 5.25 to 5.5 percent consecutively for the third monetary policy.
Currently, gold prices are trading near a short-term high of around $2,040 per ounce after it recovered from a 50-day exponential moving average. The precious metal is expected to keep recovering, with its price rising to $2,050 in the short term. High projections for gold prices suggest it could cost as much as $2,100 to $2,150 per ounce.
This is a conservative estimate. JPMorgan Chase & Co. suggests that gold could experience a breakout rally in 2024, with a peak of $2,300 an ounce. Following this, gold could retreat to as low as $1,900 an ounce, which could represent an opportunity for investors to position themselves for a rally later next year.
Learn more about recent developments in the gold market at GoldReport.news.
Watch this Sept. 27 episode of "X22Report" as he reports on the first time that Costco started selling gold – and how people flocked to purchase the precious metal in droves.
This video is from the Sanivan channel on Brighteon.com.
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