Costco’s Gold Bars, Silver Coins Boost E-commerce Growth
Costco has seen a successful venture into the precious metals market, with a rapid increase in their silver coin sales. This followed the introduction of their 1-ounce, 24-karat gold bars in October 2023. Priced at around $2,000, these items opened doors for Costco to further extend its offerings. Snagging the interest of investors, the sales of these silver coins shot up. This successful expansion illustrates Costco’s adaptability in business trends.
The moment the silver coins were launched online, they sold out quickly. Costco has defined a limit, allowing each member to buy up to two coins. The leftover stock may still be available in local warehouses, potentially at lower prices. Investors should note that these coins are non-returnable and non-refundable.
Costco’s CFO, Richard Galanti, shared that the sales of precious metals significantly contribute to the company’s overall e-commerce growth for the quarter ending February 18. He acknowledged an unpredicted rise in consumer interest leading to increased sales, especially in their e-commerce sector. Without the sales of gold and silver, Galanti believes Costco’s growth figures wouldn’t have been as notable.
The boost in sales of gold bars and silver coins could be linked to the potential decrease in Federal Reserve interest rates. This, in turn, could enhance the cost of gold due to the dollar’s reduced strength. Joni Teves, a precious metals analyst at UBS, foresees gold prices reaching $2,200 an ounce by year-end. Similarly, heightened interest in silver coins reflects the belief of some investors that it is an undervalued asset. The increasing demand can also be attributed to its potential for increased industrial use and as a hedge against inflation.
Despite recording a high value a day earlier, Costco’s shares fell by 7.6% on Friday. The retail giant showed promising growth but the shortfall in revenue couldn’t be overlooked by some investors. This event indicates the high market expectations for Costco and how minor financial underperformance can impact investor sentiment. However, Costco’s top management, anchored by CFO Richard Galanti, who sets to retire on March 15, remains optimistic.
Galanti has assured that there won’t be immediate changes in membership prices, hinting any future increases may occur under his successor, Gary Millerchip, former CFO of Kroger.