Costco sold $100 MILLION of gold bars in the most recent quarter – but were they WORTH the investment?

Costco has sold a whopping $100 million worth of gold in just three months, its finance chief has revealed.

The retailer caused a stir in September when it announced it was selling 1-ounce bars for $1,950, and demand was so high that they sold out in minutes.

Considering the total amount sold, this means that the members have looted more than 50,000 gold bars.

And the good news is that buyers should all be in the money now, as gold has risen in value by about 10 percent since then.

In fact, the retailer has had to increase the price at which it currently sells them in light of the rising value of gold.

The 1-ounce gold bars were listed on Costco's website Friday for $2,070 — slightly higher than the current spot price of $2,045, according to APMEX. That's because the retailer must make a small profit, plus the costs of producing and shipping the bars.

Costco sold more than $100 million worth of gold in just three months, its chief financial officer told investors this week. Pictured is a Costco in Sheridan, Colorado

So those who bought the bars in September for $1,950 will have made a profit and paid significantly less than the current spot price.

“You've probably read that we're selling 1-ounce gold bars,” CFO Richard Galanti said during an earnings call Thursday. “We sold over $100 million worth of gold this quarter.”

Because each member is only allowed to purchase two bars, at least 25,000 members have made the investment – but was it a good one?

The spot price is the estimated amount a bullion dealer would pay for gold. Between the end of September and Friday, the spot price of gold rose more than 9 percent – ​​more than Costco raised its price.

Everett Millman, precious metals specialist at coin dealer Gainesville Coinstold DailyMail.com in September that it is normal to pay more than the spot price for such items.

“The price you're going to pay for a piece of precious metal is always going to be the spot price plus a small premium,” Millman said. 'That premium applies to the costs of making the bar, but also to the dealer's profit margin.'

In this case, Costco is the dealer, which he said was unusual.

“It's not often you hear of gold bars being sold in a place that doesn't specialize in it,” Millman said, noting that those selling gold are normally traders and so will buy it back.

But Costco's website indicates that the gold bars are non-refundable.

Costco CFO Richard Galanti told analysts Thursday that the company sold more than $100 worth of gold in the first quarter of fiscal 2024.

“Generally speaking, (the seller) would go to a precious metals dealer. They almost always operate in a two-way market. They will always buy back the products they sell, but they will always pay a small percentage that is less than what they sold it for,” he said.

“It was usually between 1 and 2 percent, that was always the standard, but since about 2020 or 2021 when the price for the metal started to rise, that profit margin has increased to closer to 5 percent,” he added .

Millman suggested that Costco's ability to present attractive products to consumers – coupled with ongoing economic uncertainty in the US – could be the driving force behind the craze.

“The way I would explain the question is that for most of the year, people have been afraid of the stability of the banking system. “We were very concerned that monetary policy could push the world into recession,” he said. .

“Every time there is fear or anxiety in the financial market, investors turn to gold as a safe haven.”