Costco Limits Gold Bar Purchases Amid 77% Stockout, Gold at $3,248

Costco, the retail giant, has implemented new purchase restrictions on its gold bars due to a sudden surge in demand. The 24-karat gold bars, which were introduced in June 2023, have seen unprecedented demand, driven by all-time high gold prices and inflation concerns. By the first week of October 2024, approximately 77% of Costco locations across the US that sell bullion bars were out of stock, despite receiving fresh supplies in the preceding weeks. The price of gold has since risen significantly, currently trading at $3,248 after reaching an all-time high of $3,500.

In response to the high demand, Costco has updated its checkout page for gold bars to include the following restriction: "Limit of one Transaction Per Membership, with a Maximum of two Units Per 24 Hours." This move is aimed at managing the influx of customers seeking to purchase gold bars. According to an estimate from a banking giant in April of last year, Costco was generating as much as $200 million per month in revenue from its gold bar sales alone. The equity analyst at the time noted, "Our work suggests there has been significant interest given COST’s aggressive pricing and high level of customer trust… The accelerating frequency of Reddit posts, quick on-line sell-outs of product, and COST’s robust monthly eComm sales suggest a sharp uptick in momentum since the launch."

In addition to gold, Costco is also offering silver and platinum bars to its customers, further diversifying its precious metals portfolio. The retail giant's aggressive pricing and high level of customer trust have contributed to the surge in demand for its gold bars. The implementation of purchase restrictions is a strategic move to ensure that all customers have an equal opportunity to purchase the gold bars, while also managing inventory levels effectively. The high demand for gold bars at Costco reflects the growing interest in precious metals as a hedge against inflation and economic uncertainty. As the price of gold continues to rise, it is likely that demand for gold bars at Costco will remain strong, and the retail giant may need to continue adjusting its purchase restrictions to meet customer demand.