In a surprising move, Costco Wholesale Corporation (NASDAQ: COST) has made a successful venture into the gold market. According to a recent report by CNBC, the retail giant's gold bars are selling out within hours of their availability.
What Happened: CNBC reported on Tuesday that Costco has added 1-ounce gold PAMP Suisse Lady Fortuna Veriscan bars to its product range. The price, although only available to Costco members, has been reported to be just below $1,900.
Costco's CFO, Richard Galanti, confirmed the gold bars' extraordinary popularity during the company's recent quarterly earnings call. They typically sell out within a few hours of being stocked on the site, prompting the company to limit purchases to two bars per member.
The gold bars are exclusively available online and to Costco members, who pay either $60 or $120 annually, depending on the membership program. This new venture comes at a time when gold has seen a surge in value due to current economic uncertainties.
Why It Matters: Costco's dive into the gold market comes on the heels of a successful fiscal fourth quarter. According to a Benzinga report, the company's net sales increased 9.4% year-over-year to $77.43 billion. The impressive figures also included total revenues of $78.939 billion, beating the consensus estimate of $77.9 billion.
The introduction of gold bars as a new product line not only diversifies Costco's offerings but also taps into a market that has seen a steady increase in value over the past five years.
Amid the current economic climate, gold has gained popularity as a safe haven, witnessing a price increase of over 55% in the past five years and 15% in the past year alone.