Amid soaring gold prices, Costco has enacted new purchase limits on its popular gold bars.
Costco has adjusted its purchasing policy for gold bars due to a spike in demand and high spot prices, Daily Mail reported.
Costco's initial offering of gold bars began in 2023 and quickly gained traction, selling out frequently due to their low profit markup.
The company traditionally sets a markup ranging between 0.8% to 2.4% above the gold’s spot price, making these bars an attractive investment.
This strategic pricing likely contributed to the rapid sales, leading to intermittent shortages at their facilities.
Gold is traditionally viewed as a 'haven' during economic instability. Recent tariff policies introduced by President Donald Trump have exacerbated market uncertainties, amplifying gold's allure.
As a direct consequence of mounting uncertainties and attractive pricing, the demand for Costco's gold products surged, pushing the retailer to implement stricter purchasing caps.
According to an analysis of sales from February to April of this year, there were over 2,000 transactions related to Costco’s gold bars, underscoring the soaring demand.
Under the new rules, customers can now buy only one two-ounce gold bar per transaction, a reduction from the previous limit of two bars.
For the larger 100-gram bars, the limit has dramatically decreased from five per transaction to just one, indicating a strategic move to make gold more available to a broader customer base during these uncertain times.
This policy change mirrors adjustments seen in other Costco warehousing policies where, at one time, a Wisconsin warehouse allowed the purchase of up to five one-ounce gold bars.
Reacting to gold’s profitability, in 2024, Costco reported monthly earnings of up to $200 million from gold sales alone, showcasing the significant role it plays in the global gold market.
Experts are now predicting that by 2026, Costco's annual gold sales could surge to between $1.2 billion and $2.4 billion, with prices potentially rising to $4,000 per ounce.
This follows a pattern where, since their introduction, gold bars were initially priced at $1,950 in September 2023, but have now escalated beyond $3,400 per ounce, according to recent figures.
The restrictive purchasing policy has spurred varied reactions among Costco's clientele. Members on Reddit have expressed dissatisfaction with the escalating prices, reminiscing about when prices ranged from $1,800 to $2,300.
In response to the successful gold sales, Costco also ventured into selling platinum bars, which, despite being considered less valuable, sold out within the first 24 hours of being introduced.
While the global trade downturns threaten to reduce the demand for platinum, Costco's foray into diverse metals points to its strategic positioning in the precious metals market.
The recent agreement between China and the US to significantly reduce tariffs could further influence the metal markets, potentially affecting prices for gold and platinum.
This evolving market landscape will likely inform Costco’s ongoing strategy in precious metals sales, as they continue to react smartly to global economic trends.
The newly enacted purchase limits stand as a testament to Costco's adaptive strategies in managing stock and meeting consumer demand amid fluctuating market conditions.
