Costco, the retail giant known for bulk shopping, has made headlines with its foray into precious metals. After a wildly successful launch of gold bars last year, the company is now offering platinum bars, available exclusively to its members. These Swiss-made, one-ounce platinum bars are priced at $1,089.99, following in the footsteps of Costco's gold and silver sales, which have surged in recent months due to economic uncertainties and rising interest from doomsday preppers.
The retailer’s success with precious metals began in late 2023 when it introduced 1-ounce gold bars to its online store. These bars were so popular they often sold out within hours. Costco reported gold sales of over $100 million in just three months between September and November 2023. This demand spurred the company to add silver coins to its offerings earlier this year, and now platinum has entered the mix.
It is reported that Costco is seeing double-digit growth in its gold sales and has added new bullion products to its lineup – indicating an increase in retain investors appetite for gold.https://t.co/9dtwE36YUq
— Paramount Gold (NYSE: PZG) (@ParamountNV) October 1, 2024
The high demand for precious metals like gold, silver, and platinum is largely driven by economic instability and inflation fears. Gold, often viewed as a hedge against inflation, saw its value increase by 30% over the past year, particularly after Russia’s invasion of Ukraine in 2022. Platinum, though slightly more volatile than gold, has also experienced a steady rise, climbing 14% in the last year.
One of the key factors driving Costco’s sales is the growing interest among doomsday preppers. These individuals see precious metals as essential assets in the event of an economic collapse or a societal breakdown. For preppers, gold, silver, and platinum are not just investments; they are valuable bartering tools in a post-apocalyptic world. Along with their famous bulk emergency food kits, Costco’s precious metals offerings seem to appeal to this survivalist mindset.
It's not just $2,000 gold bars you can buy from Costco — customers can now snap up $625 packs of silver coins, too, as the retailer expands its precious metals business.
Its CFO said that sales of the coins and Costco's 24-karat gold bars had led its e-commerce growth.
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— I AM👑 (@efuseekaywhyohu) March 9, 2024
Though Costco's platinum bars are priced at a slight premium compared to market rates, they continue to attract collectors and investors. The bars are 999.5 pure platinum and are only available for purchase online, with strict limits on how many can be bought per transaction. Due to shipping restrictions, some states, including Louisiana and Nevada, are unable to receive these precious metals.
Costco’s membership model also plays a significant role in its success. The company charges between $65 and $130 annually for access to these exclusive products, and its reputation for quality and reliability further boosts consumer confidence. This membership approach, combined with limited availability, has created a sense of urgency among buyers, especially given the quick sellouts of previous gold bar releases.
While it remains to be seen whether platinum will achieve the same level of success as gold, Costco's venture into precious metals has proven lucrative. Analysts estimate that the company is making $100 million to $200 million per month from these sales. However, experts caution that the company’s profit margins on these items are likely thin due to shipping costs and the low markup, which is typical of Costco's broader business model.
For doomsday preppers and investors alike, Costco’s expansion into platinum represents a unique opportunity. As concerns about inflation and geopolitical instability continue to grow, precious metals are likely to remain a hot commodity.
