Millennials Rush to Buy $2,300 Gold Bars at Costco

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by Mish Shedlock, Mish Talk:

Costco periodically offers one ounce gold bars. They sell out immediately, scarfed up by millennials. Looking for other sources? I have one.

Gold Bars in the Shopping Cart

The Wall Street Journal comments on Gold Bars in the Costco Shopping Cart.

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Costco, which started offering gold bars last year online and in a few stores, has been selling out within hours. Consumers rated gold as a better investment than stocks and mutual funds in 2023 for the first time in a decade, according to a Gallup poll. The price has been hitting record highs.

Gold buyers, especially those on the younger side, say it is a hedge against catastrophe. Even people who aren’t building bunkers and predicting doomsday are increasingly preparing for worst-case scenarios. Natural disasters, wars in Ukraine and the Middle East and the Covid-19 pandemic are fresh in the minds of many. There is also fear of financial calamity.

Some millennial investors said they don’t trust the financial system, especially after a series of bank failures last year. Searching for a safe store of value some turned to gold—and Costco.

The warehouse retailer said it sold $100 million in gold bars in 2023. It later added silver coins to its inventory. Precious metal sales helped drive 18% year-over-year growth in e-commerce sales during its most recent quarter, which ended in February, Costco said.

Millennial gold bugs

Compared with older generations, millennials have a more optimistic outlook on the benefits of gold, as well as the ease of buying and selling it, according to research by financial-services company State Street. The average millennial allocates 17% of their investments to gold, including exchange-traded funds, while Gen X and baby boomers invest 10% of their portfolio in the metal.

The Journal commented on Costco gold sales in January. Here are a few snips.

Members of Facebook groups and Reddit message boards dedicated to Costco and gold post alerts when the gold bars are available. Those who miss out on the fast-moving items often grumble, while those who made purchases often report their success, sometimes including pictures and prices paid.

Because gold prices are volatile, listed prices will vary, and Costco’s price may be above or below the day’s spot gold price. On Dec. 14, for instance, a 1-ounce PAMP 2024 Azure Dragon minted gold bar was available on Costco’s site for $2,079.99, about 2.5% over spot gold prices that day. It was gone in less than two hours.

Costco shoppers also get free shipping and don’t pay credit-card-processing fees. Online gold dealers charge for secure shipping and pass on the credit-card-processing fees to customers, which may add at least 3% to the final cost. On a coin costing $2,079.99, that is an extra $62.40.

Five Reasons to Buy at Costco

  1. Costco is trusted
  2. Swiss PAMP bars are trusted by dealers and consumers alike
  3. Small markups, on occasion under spot
  4. Free shipping
  5. No credit card fees

Regarding points one and two:

Peter Thomas, chairman of the offshore development for Ausecure, a Chicago-based precious-metals wholesaler and retailer, thinks Costco’s decision to offer PAMP bars in particular is smart, given the high quality of the product. PAMP’s flagship Lady Fortuna bar has a proprietary QR code on the card that identifies the piece that is also embedded in the bar itself to prevent counterfeiting. The QR code includes when the bar was poured and other identifying information.

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