Weeks of rising gold prices have sent the precious metal soaring to a record high of $2,500 an ounce earlier this week, with a standard gold bar now worth $1 million, Business Insider previously reported.
But if you’re one of the shoppers who’s bought gold bars at Costco in recent months, don’t be too quick to celebrate your new fortune.
Gold prices have risen about 20% since the start of the year, outperforming technology stocks and attracting a wide range of buyers, including central banks and Costco customers who see the metal as a useful inflation hedge.
Market Insider reported earlier this week that a standard-sized gold bar, usually around 400 troy ounces, is now worth more than $1 million due to a surge in gold prices.
However, the gold bars sold at Costco are much smaller than standard sizes, usually ranging from 20 to 500 grams. One troy ounce of gold is roughly equivalent to 31 grams.
Sure, Costco’s gold bars are smaller, but they’re also more affordable for buyers looking to buy the metal for under $10,000 instead of $1 million.
Costco makes up to $200 million a month in revenue from selling gold bars and silver coins, with new lots of the metal typically selling out within “a few hours,” Business Insider previously reported.
Costco’s markups on metal sales are low, but higher-value items are driving the retailer’s online sales significantly.
But turning it into cash is hard. Given the difficulties of trading commodities, shoppers are quickly discovering that buying gold is much easier than reselling it.
Despite its record performance, gold prices are expected to continue to rise, especially ahead of an expected Federal Reserve interest rate cut next month.
Falling interest rates typically encourage increased investment in gold due to the metal’s tangible and long-proven value, BI has previously reported.
Despite the surge in gold prices, investment strategists at Bank of America told Market Insider that investors should keep buying gold.
