Costco has added a new precious metal to its range – following the huge sales success of its gold bars.
The wholesaler launched platinum bars on Wednesday for $1,089.99, which it sells alongside its now-famous gold bars and silver coins. On Thursday it turned out that the bars were sold out.
The 1-ounce platinum bars are only available online and to Costco members, and cannot be delivered to Louisiana, Nevada or Puerto Rico due to local laws there. CNBC reported.
It’s no surprise that the retailer is delving deeper into the precious metals market, as the company sells approximately $100 million worth of gold bars every month.
But while Costco may be hoping to create a similar buzz around its latest offering, are the new bars worth buying?
The wholesaler launched platinum bars for $1,089.99 on its website on Wednesday
The price of gold has risen consistently over the past five years, but platinum has been less predictable.
Although the value of platinum has risen by more than 15 percent in the past 12 months, CNBC reports, the value has fallen more than 8 percent since the $1,100 per ounce mark in May.
Gold, meanwhile, has risen more than 40 percent in the past year and the spot price for an ounce of gold is now around $2,700, according to precious metals company KITCO.
When Costco first started selling gold bars in September 2023, they cost about $1,949.99.
Although they were out of stock on the website this week, they were listed for $2,689.99 – an increase in value of $740.
Can Americans who invested in a new platinum bar also make the same profit in the coming months?
According to KITCO, platinum has a spot price per ounce of about $990 at the time of writing.
This means that the Costco bar is sold slightly higher than the spot price.
But Everett Millman, a precious metals specialist at Florida-based coin dealer Gainesville Coins, told DailyMail.com that the price is in line with other retailers.
“Given that platinum bullion is much less common than gold or silver products, the premium over spot (that is, the mark-up over the melt value of the bar) is almost always higher for platinum than for gold,” he said.
The roughly 9 percent premium for the Costco bar, especially from a highly reputable supplier like PAMP Suisse, is well within the industry norm, he added.
For Millman, there are strong arguments for investing in the precious metal given the current market environment.
“Platinum prices are around the same level as 10 years ago, and well below the long-term average of the past 20 years,” he said.
Platinum pricing is under pressure due to expectations that electric cars will dominate the market and that there will no longer be as much need for catalytic converters, which rely heavily on the metal.
But Millman argues that the metal has been chronically scarce, meaning prices should eventually rise.
Edward Sterck, research director at the World Platinum Investment Council, said MarketWatch that unless you believe that fully electric cars will really become the norm in the near future, platinum will continue to have great value in the automotive world.
While there is always a chance that investors will lose money in the long term, Millman thinks prices will rise in the medium to long term.
“With the platinum price still at about half the record highs of early 2008, the current price is a reasonable entry point where I expect there will be positive gains over a five- to 10-year time frame,” Millman added.
Platinum is needed to make catalytic converters, but the devices will be needed less and less as electric cars like Teslas become more common. For that reason, some analysts think the price of platinum could fall
When Costco started selling gold bars in September 2023, they cost about $1,949.99. Although out of stock on the website this week, they were listed for $2,689.99 – an increase in value of $740
Experts say it’s no surprise that Costco is delving deeper into the precious metals market given the sales success of its gold bars
The Costco bar is selling for a little more than spot price, but experts say that’s in line with industry standards
Everett Millman, a precious metals specialist at Florida-based coin dealer Gainesville Coins, said there is a good case for investing in the precious metal given the current market environment.
But not everyone is convinced that platinum is a good investment for various reasons.
Although many advisors see precious metals as a hedge against inflation, most people understand gold much better than platinum because of its ubiquitous nature and popular appeal, experts warn.
“Investors are not flocking to it,” Michael Martin, vice president of market strategy at TradingBlock, a trading technology company, told MarketWatch.
He added that it’s also hard to ignore that the auto industry could go all-electric in the long term.
And many experts agree that it’s better to buy precious metals in the form of an ETF than in the form of a physical bar like those sold at Costco.
An exchange-traded fund (ETF) acts like a stock and tracks the value of gold.
If you own a physical platinum or gold bar, you’ll need to worry about things like storage and insurance, as well as arrange for the bar to be shipped to a buyer if you decide to sell it.
Nevertheless, Jimmy Lee, CEO of consulting firm Wealth Consulting Group, told the newspaper that there is always “a certain segment that just wants to own some physical stuff.”
He said it most likely has to do with fear of an uncertain world, which means people like to have tangible possessions on hand.