Costco’s decision to sell precious metals has caused a stir.
A report from Wells Fargo said the bank’s analysts expect the warehouse retail giant to sell $100 million to $200 million worth of gold each month.
Wells Fargo suggested that the precious metals offering was a way to add value to the company’s brand, noting that it was “a very low-profit business at best.”
“We believe the addition of gold/silver is a smart move for Costco as it only strengthens its value position,” the report said.
According to Zachary Scott, general manager of Wilshire Coin in Santa Monica, California, enthusiasm for Costco’s offering has led to increased interest in investing in the metal. Scott said he sees customers who are “not typical” after seeing him sell gold from “a trustworthy company.”
“It brings in new buyers and interest, although not in large quantities, who have seen the items about Costco’s gold sale,” Scott said.
How much gold does Costco sell?
Based on Wells Fargo report estimates and an approximate price of $2,000, Costco sells between 50,000 and 100,000 ounces of gold per month.
USA TODAY reached out to Costco to inquire about the amount of gold sold but did not receive a response.
Gold prices since Costco started selling
After Costco introduced the 1 oz. After gold bars were posted on its website last October, the metal’s spot price remained stable at around $2,000 until a rebound began in February.
The metal soared at the beginning of March, stabilizing at around $2,175 in the middle of the month. Gold is experiencing another breakout that began in late March and is continuing.
The metal’s spot price was $2,341.35 as of 9 a.m. ET on Thursday, April 11.
Should anyone buy gold?
Whether it is a good time to buy gold depends on a variety of factors, including your investment goals, risk tolerance and time horizon, the general economic outlook, and gold market forecasts.
Historically, many people view gold as a hedge against inflation and currency fluctuations. Others view it as a store of value during economic downturns. At the same time, it might make sense for some to diversify a portfolio of stocks and bonds since the correlation between both assets is low.
“If you look at gold’s historical performance, it is an asset that should perform well despite the uncertainty, as has been the case in five of the last seven recessions,” said Joseph Cavatoni, chief market strategist for North America at World Gold Council. “For people looking for a store of value and a diversifier for their portfolio, gold has a strong track record of providing these qualities.”
Contributors: Tony Dong and Farran Powel USA TODAY Blueprint
This article originally appeared on USA TODAY: Costco gold sales boost interest in metal, but don’t move the market