Regular readers of “Gold News and Views” know I like to stay up to date on the news. Lately, a particular story has made a splash because of its surprising nature. The membership-based retailer Costco is selling 1-oz. gold bars to its members on their website—and they’re selling out within hours.
As someone who has spent many years in the precious metals industry, I can tell you that while this story may seem surprising at first, Costco’s foray into gold makes perfect sense given the state of our economy and the precious metal’s rising popularity. More importantly, this new entrant into the gold market could turn out to be very good for gold owners.
According to our President, former U.S. Mint Director Philip N. Diehl, big-box retailers selling gold may be a sign of a growing market for private precious metals ownership.
When I spoke with Director Diehl about this story, he agreed that it’s likely a positive development for gold. Specifically, Diehl pointed out that Costco’s new offering could boost the gold market overall by introducing new consumers to the benefits—or even the existence—of physical gold ownership.
In other words, as more and more people seek to own physical gold, whether to diversify their portfolios or use gold as a hedge against inflation, the overall market for gold could expand. And new people who may not have otherwise thought to look at physical gold for their portfolios will begin exploring new paths to diversification.
The intense demand for Costco’s gold bars reflects the demand for gold itself.
Even with a limit on the amount of gold a Costco member can buy, the Costco gold bars have been selling out at a rapid pace. During a quarterly earnings call, Costco CFO Richard Galanti said, “I’ve gotten a couple of calls that people have seen online that we’ve been selling one-ounce gold bars. Yes, but when we load them on the site, they’re typically gone within a few hours, and we limit two per member.”
To me, this illustrates a growing interest in gold ownership. Our Director of Education, Brad Chastain, agrees, saying, “Costco’s new offering of gold bars highlights the growing interest in physical gold ownership among the general public. It’s exciting to see more Americans begin their journey toward protecting their wealth.”
More Americans looking to gold as a source of wealth protection could also help drive gold prices higher.
Why are so many Americans turning to physical gold to protect their wealth? Because gold is one of the oldest-known stores of wealth and has a long record of retaining its purchasing power as inflation lowers the purchasing power of the dollar.
As we continue experiencing economic uncertainty and geopolitical volatility, gold’s increasing availability and allure as a form of long-term wealth protection may continue to support increased demand—and with greater demand may come even higher prices for gold.
