Costco began promoting the pure gold bars in August or September 2023, Wells Fargo fairness analyst Edward Kelly mentioned in a notice to purchasers on Tuesday, which Enterprise Insider has seen.
Costco’s then-CFO Richard Galanti mentioned in September that the bars had been “usually gone inside just a few hours” and later mentioned it had offered $100 million value of gold bars within the quarter to November 26.
The bars promote for about 2% over the spot worth — about $2,350 as of Tuesday morning — however are sometimes out of inventory.
The retailer has additionally began promoting $625 packs of silver cash. Kelly mentioned within the notice that gross sales of the cash started in January.
Every coin weighs one troy ounce and is fabricated from 99.99% pure silver. However some Costco members mentioned in evaluations that the tubes weren’t sealed after they arrived and that in some instances the cash had spilled out, leaving them scratched or in any other case broken because of this.
The gold bars are restricted to 5 per Costco membership, whereas the cash are restricted to 5 instances. The value consists of insured, signed-for air transport through UPS.
“We view the addition of gold/silver as a wise transfer for Costco, because it solely reinforces its worth place,” Kelly mentioned in his notice on Tuesday, referring to the low costs.
He mentioned the variety of Reddit posts concerning the bullion, the fast sellouts, and Costco’s sturdy e-commerce gross sales advised that there had been “a pointy uptick in momentum for the reason that launch.”
CNBC first reported on the notice.
Kelly mentioned that Costco’s gold and silver gross sales appeared to have “grown significantly” since Galanti’s earlier disclosure. Kelly estimated Costco was promoting between $100 million and $200 million of gold bars and silver cash every month, which he famous would add virtually 1% to Costco’s whole comparable gross sales and three% to its normal merchandise gross sales. Costco does not publicly launch its comparable gross sales, however mentioned that within the quarter to February 18, they had been up 6% year-over-year.
Kelly, nevertheless, famous that the gross sales of gold bars and silver cash would probably be bringing “minimal revenue” for Costco. In addition to the low costs, Costco offers its Government members a 2% cashback reward, in addition to an additional 2% cashback for these with a Costco Citi card.
“Pricing at that stage and transport prices suggests it is a very low revenue enterprise at finest,” he wrote.
