Costco began selling the 24-karat gold bars in August or September 2023, Wells Fargo equity analyst Edward Kelly said Tuesday in a note to clients, which Business Insider viewed.
Richard Galanti, then Costco’s chief financial officer, said in September that the bars “usually disappeared within hours” and later said the company sold $100 million worth of gold bars in the quarter ended November 26.
The bars are selling for about 2% above the spot price – around $2,350 as of Tuesday morning – but are often out of stock.
The retailer also began selling packs of silver coins worth $625. Kelly said in the note that coin sales began in January.
Each coin weighs one troy ounce and is made of 99.99% pure silver. But some Costco members said in reviews that the tubes weren’t sealed when they arrived and that in some cases the pieces had spilled, leaving them scratched or otherwise damaged.
Gold bars are limited to five per Costco membership, while coins are limited to five cases. Price includes insured and signed air shipping via UPS.
“We view the addition of gold and silver as a smart move for Costco, as it only strengthens its value position,” Kelly said in his Tuesday note, referring to the low prices.
He said the number of Reddit posts about bullion, rapid sales and Costco’s strong online sales suggested there had been “a big increase in momentum since launch.”
CNBC first reported on the memo.
Kelly said Costco’s gold and silver sales appear to have “increased significantly” since Galanti’s previous disclosure. Kelly estimated that Costco sold between $100 million and $200 million worth of gold bars and silver coins each month, which he estimated would add nearly 1% to Costco’s total comparable sales and 3% to its general merchandise sales. Costco doesn’t publicly release its comparable sales, but said that in the quarter ended Feb. 18, they were up 6% year over year.
Kelly noted, however, that sales of gold bars and silver coins would likely bring “minimal profit” to Costco. In addition to the low prices, Costco offers its executive members 2% cash back, as well as an additional 2% cash back for those with a Costco Citi card.
“Price at this level and shipping costs suggest that this is a very low-profit business at best,” he wrote.
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