Apr 10, 2024 - Business

"Smart move": What's going on with Costco's gold bars strategy

Illustation of pallets of gold being brought in with a crane.

Illustration: Aïda Amer/Axios

Costco's gold bar sales are generating between $100 million to $200 million a month, per a Wells Fargo equity research note out this week. Yes, that's actual precious metal.

Why it matters: The super store — known for its passionate fan base, $1.50 hot dog combo and cheapish apparel — has leaned into a quirky marketing move that appears to be working.

  • The retailer last year started selling 1 oz. gold bars online and in some stores for just over $2,000 a pop, with a limit of two bars per Costco membership, per the online store. It also sells silver coins.

Zoom in: Wells Fargo said it views "the addition of gold/silver as a smart move for Costco, as it only reinforces its value position."

  • The bank also attributed the "sharp uptick in momentum" since the 2023 launch of gold bars to the "accelerating frequency of Reddit posts, quick on-line sell-outs of product, and COST's robust monthly eComm sales."
  • Read: Posts like this one are only helping Costco, founded in Seattle more than four decades ago.

Between the lines: Month after month, jewelry has marked a top performing general merchandise category for Costco, per Wells Fargo.

Catch up quick: Costco had already sold $100 million in gold bars in its first quarter ending in late November.

  • The gold bars at Costco have been selling out within a matter of hours, per the Wall Street Journal.

💭 Thought bubble from Axios Communicators author Eleanor Hawkins: Unlike its competitors, Costco rarely engages in paid advertising or public relations.

  • The gold bars have not only generated a media frenzy, but also serve as a collector's item for tried and true Costco shoppers, who are likely to create more buzz by posting the bars across social media.

Go deeper: Shoppers snap up $100M in gold bars from Costco in last quarter

Go deeper