Costco and gold investing

Investment Analysis Clubs Macro Economic Trends and Risks
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I trust Costco quality. I bought my hearing aids at Costco because of their reasonable price and my trust in Costco service. (Which has turned out to be excellent.)

Now Costco is offering gold to investors. I trust Costco to make sure that the gold is pure and not adulterated. This is a real concern since some Chinese outfits are sandwiching tungsten (a cheap metal with a density almost identical to gold) into counterfeit gold products.

https://www.wsj.com/personal-finance/the-costco-shoppers-putting-2-000-gold-bars-in-their-carts-d4e8aeb5?mod=hp_featst_pos4

The Costco Shoppers Putting $2,000 Gold Bars in Their Carts

Young investors say the old-school store of value is a hedge against inflation and catastrophe

By

Katherine Hamilton, The Wall Street Journal, April 4, 2024

…

Americans can’t get enough gold. 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…

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…

Some gold buyers said Costco’s prices were lower than they had seen at other retailers. The warehouse retailer said it sold $100 million in gold bars in 2023. The bars, less than 2 inches long, are sold primarily online from Swiss-based refiner MKS PAMP or South Africa’s Rand Refinery. Costco sends out gold ordered online through insured UPS packages. … [end quote]

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I think it’s brilliant to stamp the gold bars with “Year of the Dragon” since they will appeal to Chinese buyers. I think there’s a basically infinite demand for such a product from China and would make a great export product if the Chinese government allowed it.

Whether or not you’re a “gold bug,” it’s clear that Costco is building on its brand loyalty in this potentially lucrative new business.

How long will gold continue its recent ascent? Hard to say.

Wendy

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Costco attracts immigrant shopkeepers and shoppers in general.

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There’s a reason for this. Costco doesn’t earn much on product margin, they earn a large majority of their profits from the membership fees.

You Won't Believe How Much Money Costco Just Made on Membership Fees.

Over the past year, Costco brought in almost $4.6 billion in membership fees. And those fees represent 72% of the company’s profits.

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The Mint of the People’s Republic of China has been producing a Gold Proof Panda Coin since 1982. Each year has a different design. Fairly popular with collectors.