Should You Get Costco Gold Bars?

Costco gold bars have been becoming popular in the U.S. and gained the attention of various people.

Today, I decided to shed some light on these gold bars along with the pros and cons of investing in physical gold.

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Before getting to know about the gold bars, let us have an insight into the information related to Costco.

About Costco

Costco Wholesale Corporation (NASDAQ: COST) is the third-largest retailer in the world, with Walmart being the first and Amazon being the second.

Costco operates retail warehouses in the USA, as well as some select locations in Asia and Latin America.

The offerings of Costco include:

• Packaged Foods
• Grocery Items
• Automotive Supplies
• Toys
• Hardware
• Sports Items
• Jewelry
• Electronics
• Apparel
• Healthcare Products
• Beauty Products
• Furniture

Costco Wholesale Corporation plays a pivotal role in the global warehouse membership club narrative.

Its founding can be traced back to 1983 when Jim Sinegal and Jeffrey Brotman established it.

However, its historical roots extend to 1976 when it merged with Price Club.

Initially known as Costco Companies, Costco rapidly expanded during its first two years.

The company became the first to generate $3 billion in revenue within the initial three years, starting from zero.

In 1985, the company went public through an IPO.

Price Club, founded by the Price family in 1976, was among the earliest warehouse membership clubs.

Price Club started its business by catering to small-scale merchants and businesses.

It also enjoyed swift success and became a publicly traded company in 1980.

Notably, the Price family opted for a merger with Costco over an offer from Walmart’s Sam’s Club, believing it to be a suitable partnership.

Interestingly, Jim Sinegal, the founder of Costco, embarked on his retail career working for Sol Price at his original membership club, FedMart.

The merged company came into existence in 1993, initially known as PriceCostco, with ownership of 206 stores.

Eventually, the Price family ventured into new business ventures, leading to a rebranding as Costco Wholesale Corporation.

The Price family’s new enterprise, PriceSmart, operates a chain of membership clubs in the Caribbean and Central America.

The first store of Price Club is still operational and has become known as Costco #401.

Today, Costco is headquartered in Issaquah, Washington, and stands as one of the world’s largest corporations.

It operates as a members-only big-box retailer, boasting over 118 million members.

The company used to be 10th on the Forbes Fortune 500 list (now 26) and is the third-largest retailer globally.

In terms of scale, it is the leading retailer of choice and prime beef, organic foods, and rotisserie chickens, with the latter being a tradition Costco pioneered.

These chickens are sold at prices lower than the cost to attract customers to the store.

The company operates through a network of subsidiaries that possess warehouses in 11 countries, including the U.S. and Puerto Rico.

It offers a wide range of branded and private-label products across various sectors and categories, all at discounted or bulk-rate prices.

Nearly 70% of its stores are situated in the U.S., with an additional 13% in Canada and the remaining spread worldwide.

Beyond retail, Costco provides an array of services, including pharmacy, eye care, food and beverage, and auto care centers.

It also operates over 665 gas stations throughout its network and maintains a robust eCommerce channel.

Other services involve delivery, gas stations, pharmacies, travel, and curbside pickup.

By the end of the 2022 calendar year, the company operated more than 840 stores and had plans to open new locations in the coming years.

Its total revenue in 2022 surpassed $226 billion, and the company employed over 304,000 individuals (now 316,000 employees).

It is a member of the S&P 500, S&P 100, and NASDAQ 100.

By the time of writing this article (19 October 2023), the stock-related information of Costco Wholesale is as follows:

Stock Price: $565.63

Market Capitalization: $250.43 billion

P/E Ratio: 39.95

Dividend Yield: 0.72%

Average Volume: 1.81 million

Net Income: $6.29 billion

Annual Sales: $242.29 billion

Recent Membership Changes

Reports now indicate that the retail giant is clamping down on the sharing of membership cards.

This is shortly after rumors began circulating about possible adjustments to Costco’s membership program.

As per CNBC, Costco is intensifying its efforts to prevent non-members from using cards belonging to their friends and family.

Costco will now request photo identification from individuals when they use their cards during checkout.

The abuse of card-sharing is said to have surged, especially at Costco’s self-checkout kiosks.

The company shared its perspective with CNBC, stating:

“We don’t feel it’s right that non-members receive the same benefits and pricing as our members.”

One individual on Twitter disclosed that the recent change has left people feeling uneasy while waiting to check out.

Some are already contemplating canceling their memberships in response to this stricter approach.

Another social media user questioned why Costco is choosing to tighten its policy now.

Especially when they’re attracting more customers due to card sharing.

Nonetheless, the membership would still have traction because of the gold bar sales of Costco.

Costco Membership

Costco offers three different membership options, which are as follows:

• Executive Membership: $120 per year

• Gold Star Membership: $60 per year

• Business Membership: $60 per year

Are there options for complimentary or reduced-price Costco memberships?

While Costco does not offer free memberships, there are special promotions for new members belonging to specific groups.

Teachers, college students, medical professionals, military personnel, government employees, and first responders qualify to receive a $30 digital Costco gift card when they enroll.

What distinguishes the various Costco membership options?

The Executive and Gold Star memberships are both individual membership choices.

There is only one Business membership available, and you must also be a business owner to qualify.

For Gold Star or Executive memberships, two individuals can be included.

The primary member and a second household member must be residing at the same address and over the age of 16 years.

If you are a Business member, you have the option to add more individuals to your membership for an extra fee.

Perks of a Costco membership

Executive Membership:

• Valid at all Costco locations worldwide and online at Costco.com.

• Includes a free household card.

• Offers an annual 2% reward, up to $1,000, on qualifying Costco purchases, which can be redeemed for eligible Costco merchandise.

• Provides additional advantages and savings on Costco Services, including auto and home insurance, pet insurance, photo printing, and more.

Gold Star Membership:

• Valid at all Costco locations worldwide and online at Costco.com.

• Includes a free household card.

Business Membership:

• Includes a free household card.

• Allows for the addition of affiliate cardholders for a fee.

• Valid at all Costco locations worldwide and online at Costco.com.

• Permits the purchase of items for resale, contingent upon providing the necessary resale information.

How can you enroll in a Costco membership?

To sign up, you can visit the membership desk at any Costco location.

Alternatively, you can enroll online or contact Costco’s Member Services line at 1-800-774-2678.

When signing up, you will be asked for your name, date of birth, address, email address, and phone number.

If you choose to enroll online, you will also require:

The confirmation email received from Costco and a valid government-issued photo ID to obtain your membership card in-store.

What payment methods can you use for purchases at Costco?

In physical Costco stores in the U.S., Visa credit cards are the only type of credit card accepted.

They also accommodate debit/ATM cards, cash, checks, traveler’s checks, EBT cards, and mobile payment options like Apple Pay and Google Pay.

Costco.com accepts multiple credit card types.

Is a Costco membership ideal?

A Costco membership can be worthwhile if you reside in a multi-person household and intend to buy items in bulk.

This would help individuals potentially save on groceries and household goods.

All Costco memberships offer benefits like savings on gas, travel deals, medications (in some states), and certain business-related expenses (for Business members).

However, considering that the most affordable Costco membership costs $60 annually, it might not be a valuable investment.

Particularly if you don’t plan to shop at Costco frequently or use its services and purchasing in bulk isn’t suitable for your living situation.

You might have the potential to earn more cashback with the Costco Anywhere Visa® Card by Citi.

What’s with the sales of Costco gold bars?

So, most people go to Costco to get everyday items or just to get the weekend shopping experience.

But now, they can buy gold with the services offered by Costco.

You don’t even need to go to the Costco store to get your hands on these gold bars.

The gold bars are being exclusively sold on Costco’s website, which is similar to online shopping for other items as you need a membership.

There are two types of gold bars offered by Costco, which cost approximately around $2,000.

For the actual price, you will need to sign in on the Costco website and navigate to the “Sports Memorabilia & Collectibles” section.

Let us have a look at the details of these gold bars as mentioned on Costco’s website.

1 oz Gold Bar PAMP Suisse Lady Fortuna Veriscan

• Shipping and handling included.

• 24 Karat Gold.

• Non-Refundable.

• Limit: two per membership.

• Approximate Delivery: 2 to 3 business days from order.

1 oz 999.9 fine gold minted bar with a proof-like finish, which is Swiss-made by an LBMA Good Delivery Refiner.

Bullion Identification Security System VERISCA as well as iPhone App.

Certified as Carbon Neutral according to the global PAS 2060 Carbon Neutrality Standard by the Carbon Trust, marked with a ‘footprint’ label.

Every bar is meticulously monitored, documented, and safeguarded within secure CertiPAMP packaging.

Furthermore, they are complete with an official Assay Certificate, and an accessible digital certificate through a QR Code.

Each assay card is shielded by a thin, peel-off protective film.

1 oz Gold Bar Rand Refinery

• Shipping and handling included.

• 24 Karat Gold.

• Non-Refundable.

• Limit: two per membership.

• Approximate Delivery: 2 to 3 business days from order.

1 oz 999.9 fine gold minted bar, which is South African-made by an LBMA Good Delivery Refiner.

Provided in a sealed black assay card with an individually stamped unique serial number.

Rand Refinery is deemed the largest global integrated single-site precious metal refinery and smelting complex.

Contenido relacionado: Physical gold vs ETFs vs gold mining stocks

Are Costco gold bars worth the hype?

One question that is common among various individuals is whether the Costco gold bars are worth it.

First of all, there is no guarantee that you may get your hands on these gold bars because of high demand and limited stock.

As these gold bars usually get sold off within a mere couple of hours after being loaded, the company set a limit of two per customer.

Therefore, customers typically have to check the website regularly to see whether they have been restocked.

Once they are available, a customer can order and receive it encased in a secure packaging.

Upon delivery, the customer needs to provide a signature and the item is non-refundable.

Considering the rise of demand for precious metals in the U.S., I personally think it is a great decision made by Costco.

As I said, these gold bars come with a price tag of around $2,000, which is typically higher than the spot gold price.

Previously, they were on sale with a price tag of $1,949.99, which had a 4.3% markup above the spot price of $1,869.30 on that day.

Upon purchasing these gold bars, you would already be down by 4 – 7% as the price is generally higher than the fair value.

It just doesn’t end there because you might lose a similar percentage when you try to resell them.

Individuals might have to lose out on 10 – 15% (actual percentage may vary) of the value just to buy in and out of your gold investment.

Let us delve into some of the details regarding why this Costco gold bar investment may or may not be a good choice.

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What are the pros and cons of investing in Costco Gold Bars?

Pros of Costco gold bars investment

Let us take a look at why people wish to invest in the gold bars offered by Costco.

Physical Presence

Well, most people just love to get their hands on investment that tends to be physical.

This is because physical assets such as gold, real estate, antiques, paintings, etc., offer a sense of ownership.

This is a feeling that investors lack when they invest in non-physical assets such as bonds, stocks, etc.

Even though assets such as bonds and stocks may be present on paper or digitally, they lack physical presence like that of gold.

No Connection to Stock Market

Gold is favorable to most investors as it isn’t connected with usual investment vehicles like stocks or bonds.

Hence, even in situations when stocks and bonds experience a decrease in their value, gold will increase.

This allows investors with gold in their investment portfolio to shield themselves from broader market downturns.

Even in events of uncertainty, such as war or political turmoil, gold prices kept rising.

This is because gold is not linked to any specific country and geography-specific events have no control over it.

Therefore, gold can be a great way of diversifying your investment portfolio.

Contenido relacionado: Is gold a hedge against stocks?

Beats Inflation

In most countries, gold investments are said to offer returns that can help you beat inflation.

Most investors consider gold to be the ultimate hedge against inflation because of this reason.

However, this tends to be the case when the gold investments have been held for the long term.

Best Way to Save and Pass On to the Next Generations

Instead of holding in cash or cash-related instruments like savings accounts, gold can be a great way to save money.

This can be passed on to the next generations in a secure way compared to any other asset.

Other benefits include universal recognition, price stability, less maintenance, liquidity, etc.

Risks of Costco Gold Bars investment

Not everything related to buying physical gold is positive as it too has a few drawbacks.

Spreads

Usually, you buy gold at a price that is higher than the market price in most cases.

At the same time, you will have to sell it for a price less than the market price.

If we assume that you buy it for 5% higher than the fair value and sell it 5% lower than the fair value, then you will be at a loss of 10%.

Timing

If you want to make quick profits, it may become hard without buying in bulk or having contacts in the industry.

This is because you may not be able to get your hands on gold without paying extra money over the fair price.

Storage

It may be hard for people to store gold efficiently, especially when purchased in significant quantities.

In general, people would have to safely store them in their house or a locker at a bank.

Investing in gold without storing physical bullion may be a practical way to benefit from gold investments.

Seguros

Even when you store your gold assets in a secure place, you might still be required to have insurance.

Homeowners insurance may not cover your gold investment in the event of theft or other similar situations.

Even the bank lockers do not provide insurance for your gold assets, which may lead to additional costs.

Taxes

In most countries, including the U.S., gold investments are taxable.

In some states of the U.S., there is no sales tax, whereas, for some others, there is a sales tax that is up to 10%.

Apart from the sales tax, there is a capital gains tax on the sale of gold, which varies based on the timeframe.

If the gold asset is sold after holding for less than 12 months, it would be taxed under short-term capital gains.

The short-term capital gains on the sale of precious metals are taxed as per the usual income tax rates.

When the asset has been sold after 12 months of possession, the capital gains are considered long-term capital gains.

The long-term capital gains are taxed at a marginal tax rate of up to 28%.

Alternatives to Physical Gold

If you think that physical gold investment isn’t for you, there are other investment options to explore.

Some of the options to invest in gold include stocks, ETFs, and IRAs. If you are unsure of which option to explore, a financial expert may assist you in selecting the right option.

Yet, people who invest in gold typically do it for physical ownership of their assets.

Contenido relacionado: 5 Best Investments to Consider as Gold Alternatives

What do I think?

Well, I think that only a small percentage of your investment portfolio should comprise gold.

Even that is based on certain factors like your age, risk tolerance, investment goals, etc.

Stocks usually provide an optimum performance compared to various asset classes, including gold.

However, if you insist on purchasing physical gold assets like Costco gold bars, you should proceed with caution.

I say this because of the price you’re paying over the fair price and some other factors mentioned above.

It is wise to have a careful evaluation of whether or not you can benefit from your investments.

$4,000 worth of gold bars is not going to have a significant impact on your investment portfolio.

Nonetheless, if you are considering it as an investment, then I strongly suggest choosing an alternative instrument.

Even most experts suggest that buying Costco stocks is profitable compared to buying Costco gold bars.

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Conclusión

I strongly hope that the information presented in this article was helpful to you in knowing about the Costco gold bars.

If you are an expat or high net worth individual (not from the U.S.) searching for an expert wealth manager to cater to your needs, you are in the right place.

I have helped numerous clients achieve financial freedom through my best-in-class investment solutions.

Feel free to reach out to me to find out whether you can potentially benefit from my services.

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Adam es un autor reconocido internacionalmente en temas financieros, con más de 830 millones de respuestas en Quora, un libro muy vendido en Amazon y colaborador de Forbes.