As the earnings call progressed, a lighthearted exchange took place when veteran Evercore ISI analyst Greg Melich inquired whether Costco might consider introducing its private-label brand, Kirkland Signature, into the gold bullion market. While this suggestion elicited a chuckle, Costco CEO Ron Vachris responded, "No plans at this time," emphasizing the company’s current focus.

The recent surge in gold sales coincides with a rise in gold futures, which hit record highs of $2,708.70 an ounce during Thursday's trading session. Year-to-date, gold prices have climbed 30%, bolstered by the Federal Reserve's decision to cut rates by half a percentage point last week. Consequently, major gold stocks like Freeport McMoRan and Barrick Gold have seen significant gains of 22% and 18%, respectively, in 2024.

Currently, Costco offers a 1-ounce gold bar for $2,679.99, available exclusively to members. Purchases are non-refundable, and there’s a limit of five bars per membership. Industry experts predict that Costco's gold business will remain lucrative in the near future. Ben McMillan, CIO of IDX, noted that after a period of stagnation, gold is "firing on all cylinders" as investors look to de-risk their portfolios. He explained, “Gold historically has been associated with very risk-off, very flight to safety type trades like hard landing recessions.”

Despite the impressive gold sales, Costco’s core business still revolves around everyday essentials. The company reported a fiscal fourth-quarter same-store sales growth of 6.9%, surpassing estimates of 6.4%. E-commerce sales increased by 19.5%, slightly lower than the anticipated 19.63% growth rate, with growth driven by categories such as appliances, food, health and beauty aids, tires, toys, and gift cards.

Following the earnings call, shares of Costco saw a slight decline of 1.5% in premarket trading. Analyst Mark Astrachan from Stifel expressed optimism, stating, "We think strong comparable sales and membership growth, along with solid member retention rates, indicate the company’s value proposition continues to appeal." Astrachan anticipates that the recently enacted membership fee increase will largely be reinvested, further supporting sales, comparable growth, and traffic expansion over the next 12-18 months.

The bottom line

If you want to purchase gold, Costco isn't your only option. You can easily purchase physical gold, gold stocks and ETFs or other types of gold investments through a reputable dealer or broker. And, while gold can offer a range of benefits to investors, no investment is completely risk-free. So, just be sure to do your homework beforehand so you can make the most informed decision for your investment portfolio.