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What to know before buying gold, silver, or platinum from Costco
Costco (COST) has added new products to its catalog, and they may someday rival the famous rotisserie chicken in popularity. The club store now sells gold bars, silver coins, and platinum bars — three precious metals that many investors use to diversify their wealth.
The timing of Costco's move into precious metals has been fortunate. The club store first offered gold bars in 2023, then added silver and platinum over the next year or so. Meanwhile, gold is hanging around its all-time high. Both gold and silver are up more than 30% in 2024. Platinum is lagging by comparison, roughly flat on the year and well below its peak price reached in 2008.
Intrigued by Costco's precious metals offering? Read on to learn key considerations for precious metals investing, the details of the Costco selection, and tips for managing your new investment.
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What to know about investing in gold, silver, or platinum
Investors view gold, silver, and platinum as stores of value, meaning they maintain their purchasing power over time without depreciating. However, the three metals have somewhat different characteristics. Those differences may influence how much of each you should own.
Gold is a "monetary metal," according to Vince Stanzione, CEO and founder of investment publisher First Information. Because gold prices often rise when the value of the U.S. dollar falls, many central banks hold gold to hedge against inflation and promote economic stability. Ongoing demand from central banks contributes to a generally positive medium- to long-term outlook for gold.
Silver and platinum have greater industrial uses relative to gold. Silver is used in consumer electronics, electric cars, and solar panels, for example. Platinum is used in automotive applications such as catalytic converters and in the production of glassware, among other things. Due to the industrial demand, these two metals are more dependent on the economy than gold. This can encourage volatility in the short term.
See related story: Costco still selling gold bars like hotcakes as prices surge
Costco's precious metal selection
Costco's precious metals selection includes:
1. 24-karat gold in 1-ounce bars
2. 20-count packs of 1-ounce silver coins
3. 999.5 pure platinum in 1-ounce bars
Costco’s precious metals pricing varies and is only visible online to members. In April 2024, one buyer reported paying $2,359 for a gold bar. By October 2024, the price had increased to more than $2,800 — roughly 2% above gold's spot price.
It is normal for dealers to sell gold above the spot price. Markups can range from 1% to 30%, depending on the services the dealer provides. Relative to that range, Costco's 2% markup is reasonable.
As of Nov. 7, 2024, you could buy Costco's silver coins for $699.99, and the platinum bars debuted in October at a price point of $1,089.99.
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How to buy Costco gold bars, silver coins, or platinum bars
To buy precious metals from Costco, you must have an active Costco membership. And, since the metals are often out of stock, you must also have good timing. All purchases of gold, silver, or platinum must be made online at Costco.com. Also, Costco does not sell gold, silver, or platinum in Louisiana, Nevada, and Puerto Rico.
Costco limits buyers to one purchase per membership and a maximum of five units. At current prices, this caps your gold purchase at about $14,000. Silver and platinum buyers can only spend about $3,700 and $5,500, respectively.
For many investors, these amounts are too low to satisfy a diversification requirement or ensure long-term wealth. For context, Brandon Thor, CEO of The Thor Metals Group, recommends investing 10% to 20% of portfolio assets in gold to mitigate the risk of loss in a financial crisis. The well-known “All Weather Portfolio,” designed by billionaire investor Ray Dalio, includes a 7.5% gold position.
Managing your precious metal investment
Precious metals do not need to be monitored the way stocks do, but you must safeguard your investment. Know that most standard homeowners insurance policies will not cover the full value of precious metals. Your carrier may allow you to add coverage for a fee, but the cost will dilute your returns.
With or without insurance coverage, you will need safe, secure storage. A safety deposit box may be an option, as is a hidden safe you keep at home.
Once your precious metal is locked away, you need only wait. Physical gold, silver, and platinum are long-term assets to hold until you need to use them. Historically, all three metals have demonstrated positive and negative growth periods in the short term. Committing to a longer holding period minimizes the chances you will need to sell when values are down.
Alex Ebkarian, COO and co-founder of precious metals dealer Allegiance Gold, explains, "If you look at gold through the lens of three to five years, then there will be less volatility and more meaningful growth."
Adding precious metals to your Costco cart
Although Costco's purchase limitations are restrictive in terms of diversification needs, you may have good reason to include precious metals in your next Costco.com purchase. First, Costco's markup is reasonable. Second, physical gold, silver, or platinum held safely in a home safe can provide peace of mind. You will know that if an unlikely crisis degrades the U.S. dollar or stock prices, your precious metals should be holding value — if not appreciating.
