There has been an increased interest in gold and silver as investments, mainly due to recent inflation and economic uncertainty. And Costco is getting in on the action.
In fact, it might surprise you to learn that Costco now sells between $100 million and $200 million worth of gold and silver per month, according to estimates by Wells Fargo. The retailer is currently offering one-ounce gold coins for sale.
But should you buy gold from Costco if you can fit the purchase into your budget? In this article, we'll dive into the gold coins Costco is selling, how the discount retailer's prices compare to the competition, and whether gold should be a part of your investment strategy.
Costco's gold coins
Costco is selling 2024 1 oz American Eagle Gold Coins, which are produced by the U.S. Mint and contain one ounce of pure gold.
As of this writing, Costco is selling these coins for $2,469.99 each. It is limiting purchases to one transaction per membership, and up to five gold coins can be bought in that single transaction. It's also worth noting a few things:
- The price could change by the time you're reading this if the spot price of gold fluctuates.
- Costco doesn't apply any sort of price adjustments to gold coins.
- Costco clearly states on its website that this price includes shipping and handling, and that the gold coins might be available in person for a lower price, since Costco won't have the expense of making sure they're delivered safely.
Costco's price per ounce vs. current gold prices
With those prices in mind, consider that the spot (market) price of gold at the same time was about $2,406 per ounce. So, you're paying about $64 more than the current market value for one ounce of gold.
Having said that, Costco's prices are quite low compared with other ways to buy the same gold coins. You'll always pay more for a U.S. Mint-produced gold coin than you would for a one-ounce bar of gold because of the coin's value as a collectible. For comparison, major precious metals exchange APMEX charges $2,532.59 (as of this writing) for one 2024 1 oz American Eagle Gold Coin, which includes shipping.
Is gold a good investment?
The short answer is that it depends on what you mean by "investment." Gold can be a good way to store value and protect against economic crashes, but it is unlikely to deliver comparable performance to the stock market over time. For example, since 2010 gold has increased in value by 91% through April 19. That might sound like solid performance, until you learn that the S&P 500 produced a return of 484% in the same period.
Legendary investor Warren Buffett once explained why he doesn't think of gold as a great investment.
In short, he classifies gold as an "unproductive asset." It doesn't produce anything of value (like a business would) and it doesn't generate income (like dividend stocks do). Other than making jewelry -- which a very small percentage of gold is actually used for -- it has little practical utility. Its value is simply based on what someone else is willing to pay for it.
The bottom line
Gold can be an excellent store of value and could work as a hedge against inflation. And to be fair, it's certainly a better investment than most purchases I've made at Costco. Its value also tends to hold up well in uncertain times and market crashes. The bottom line is that buying some of Costco's gold coins could be a smart idea, but it's important to realize that it doesn't replace a smart long-term investment strategy.
