Guest Post: "Costco Selling Gold and Silver", by AGXIIK and Renozep

Costco is selling gold and silver on line. Are they anticipating future consumer trends? Or are they getting Sound and Real money into their customer's hands due to issues with the dollar and CBDCs?

Which one is it?

Something totally new? A marketing test run? A means to bring in new customers? Satisfying a survey that said some people want to buy precious metals? Or is it something else?

All of the above?

Costco is acutely tuned to their members and daily buying habits as they dial in products, pricing and specials as they work off hourly and daily trends. If their 2 hour 'Hit and Git' window for ASE is any indicator they are doing one heck of a Beta Test for ASE and AGE. Costco has already been selling Canadian Maples.

RENOZEP, our editor, saw that offering too. Much like the ASE, the offer said "Out of stock' As a guess, these Maples might only be offered in Canada. The real game changer will be the day they start selling ordinary .999 silver rounds and the original silver coins that some call junk bullion.

Will Costco see $5,000,000,000 in gold and silver over the next 2 years? That would be hard call since 3 other major bullion banks are doing big business, maybe low 10 figures of collective volume in a year.

How much more could Costco offer when buyers like you or me see that Costco ASE is around $4 over spot plus 2% rebate on the card and no credit card swipe fee. Will members pile on? That's the billion dollar question.

The race for bullion sales is now well engaged by bullion banks, local coin dealers and other internet precious metal sellers. Could Costco take the lead with a 5% price spread given they charge no swipe fees on bullion buys while offering a 2% rebate on their Costco credit card? That 5% is a big differential.

If their bullion logistics warehouse outside Costco HQ in Kirkland WA is working effectively and they can get enough inventory to satisfy all buyers on a 24/7 basis they could become a player. If they slip up and have serious fulfillment problems that model could crash and hurt their reputation.

At breakfast RENOZEP gave us a personal inspection of the shipping/delivery and packaging of a single tube of American Silver eagles. It cost $540 'all in' with free shipping and insurance plus fast delivery that was paid for by a Costco card. Since delivery took 4 days we were of the opinion that the delivery system was effective.

None of us could tell if the ASE was anything more than a 2024 20-coin tube of inventory shipped by any bullion bank from warehoused inventory. Note-- THE TUBE HAD THE USUAL SEAL ACROSS THE TOP PUT ON AT THE MINT --BUT HAD AN ADDITIONAL FANCY STICKER ON ONE SIDE WITH THE PICTURE OF AN EAGLE AND MORE INFO DETAILING THE CONTENTS.

Costco is nothing without their good reputation. All bullion dealers must work overtime to make sure their reputations are spotless. That takes big money to maintain, as anyone can see from SD Bullion's video of how their huge vault in Michigan operated.
Want to See Inside SD Bullion Vaults? Watch This Jaw Dropping Video

Can Costco assure buyers of the same service? Time will tell. A Bullion Bank's growing pains can be daunting and complex. Without a major vaulting complex Costco could have trouble processing and shipping $1 billion in silver and gold.

How does Costco deal with counterfeit coins? That problem is ubiquitous in the industry. How does Costco train employees who are dedicated to the job at hand? Those matters must absolutely be dealt with.

Time will tell.

Silver sales could be a category killer if more people become aware that silver is the poor man's gold, offering a secure redoubt or hedge against predatory inflation, grabby tax authorities and greedy bankers. Costco might the first big box retailer into this space but RENOZEP believes that Walmart was offering bullion on a small scale before Costco started. This almost went unnoticed by the PM blogosphere.

Is there enough room for Walmart, Sam's Club or other major retailer to do any significant PM sales? ASEs are minted in limited numbers so a wholesale feeding frenzy for mint coins would quickly show supply chain troubles. If we see weeks for delivery or even speculation that the physical won't be delivered that's when these systems start to show real problems and some dealers have to step back.

Bullion dealers generally have 3% for swipe fees. That fee trend could grow substantially if people decide they have to go 'ALL IN' and do it fast. Small purchases are easy peazy if a retail customer wants to dip a toe in a single tube of sealed ASEs. $540 for a single tube is a healthy sum for families on a budget. I've used my Costco card at SD Bullion several times for snapshot low price deals in the last few years. Swipe fees might be moot for the small buyer to get into the silver market with credit card fees; a small cost for a quick buy.

I get a decent rebate from Costco but I would not buy ASEs with Costco as my loyalty supports SD Bullion and a local dealer despite a nominal price difference and the credit card rebate. There are two other bullion dealers who offer good pricing as well as Kinesis for digital purchases. Some prefer local coin stores for the convenience of buying and selling plus anonymity. Trading with local or internet bullion dealers supports small and medium sized business everywhere so there are many choices.

I have silver in loose ASEs, Monster Boxes, junk and .999 rounds so buying more even at these prices won't move the needle much for me as it'smy retirement and rain day fund. Unless I have serious amounts of loose cash in the sofa cushions and carpets I don't see buying more just now.

Many people don't have the special Costco rebate membership so they get little in the way of general Costco benefits. If they let their balances roll over they could end up paying 20.9% variable rate on that card, making any rebates moot. The membership fee is hugely profitable for Costco, helping them keep prices lower than most. $4,000,000,000 in membership fees? Wow. But a rebate from buying stuff at Costco makes that fee worthwhile.

This system kicks butt on the Kroger/Albertson Industrial Complex (KAIC ) and their slippery digital pricing. I don't have to deal with the incredible invasion of my privacy with Digital Coupons, a form of electronic snoopery that's second only to the mark of the beast. QR codes give companies a lot of data that I'd prefer kept confidential.

Yes, Costco keeps detailed records of everyone who buys there but I doubt if they're selling this extraordinarily valuable data to outside vendors or agencies who have no right to know anything. QR codes disclose large quantities of data from smart phones. Costco doesn't use QR codes which is a big plus for me.
Costco Made Over $4 Billion in Membership Fees in 2022. Here's Why That's a Good Thing

2023 Costco sales were $237 billion with a 2.6% net profit. That's $6.52 billion. I assume that number reflects the profit from membership fees.

Speculating that 20% of the buyers let their balances ride could mean $9 billion in interest for whoever owns that interest strip even though it's a Visa card. Does Costco get a kick back from bank? Maybe. That bit of intel is pretty opaque, not that it's of concern so long as it works for Costco. Maybe Costco will start a bank too.

I'd agree this sounds like a case of Double Think; being able to hold two divergent thoughts at one time but it's getting so hard nowadays to save a buck that even I've had to do things today that I wouldn't have done in the past. Fortunately I can do Double Think pretty well and not go nutzo I think.

One thing I do appreciate is when Costco has 20-25% off sale prices. We back up the truck on those. It's one of the few ways to turn back the inflation clock.

Walmart started a bank to harvest $350 billion in CC sales plus offer actual consumer banking. They won that race but WMT is way down on our list of places to shop as are plenty of local merchants who deserve our business. Just like loyalty to SD Bullion, APMEX or JM Bullion, LCS's and private dealers, it's vital that we support those companies that do far more than play lip service to their clients and customers. They might assume a much greater importance in the days ahead.

Banking at Walmart Worth It? - Consumer Reports

While Costco makes 15% markup on average over their cost of good sold it's hard to figure how they make a buck on ASE when there's free shipping and insurance plus the additional expense of high security order processing at their fulfillment center. A 15% mark up seems like a stretch and still provide competitive pricing when something as costly as shrinkage can happen with bullion dealers. As a loss leader product designed to jump start Costco's precious metal sales, this is a pretty good way to work out the bugs and kinks to their system

Why Costco Only Accepts Visa Cards | Reader's Digest

Visa's Costco skim is .4%, pretty low as merchants go.

The Secret Code Behind Costco’s Prices | Reader's Digest

Once you go bulk you'll never sulk.

If Costco takes that saying to the precious metals marketplace it could be a big deal. If they start offering ASE in monster box 500 coin units I think that would represent a real turning point.

Will Costco help us avoid the worst parts of the death of dollar by offering these discounted silver and gold offers? It's probably part of their main stream thinking but could it help those who are waking up to the threat of CBDCs in the Panopticon surveillance state? Main stream precious metals dealers have been a decade ahead of the curve when it comes to privacy. For that they deserve our respect It'll be seen if Costco is of the same mind set.

In a adult US population of around 250,000,000 eligible for Costco's membership, there are 123,000,000 Costco members. Granted that's world wide membership but it's still a huge cohort of Americans who use Costco.

Understand, this is not a promo piece for Costco. Taking data about this company and presenting it to get an idea of what Costco could do if they want to overwhelm the silver and gold market is to provide some context to this article. That they are a precious metals dealer is fascinating and worth the discussion when discussing how Costco works.

What happens if even a tiny slice of the Costco membership decided to buy precious metals? If Costco management knows they are offering an alternative to digital money it's a ballsy move because precious metal dealers of any type are always targets for banks and the government's Precious Metals Grudge Complex.

Costco's silver and gold sales are usually only open for a day or two with a limit of 5 rolls then the site says 'out of stock'. RENOZEP got lucky. He says you have to keep checking to catch it open for business and before the inventory is sold. Yet 'Hit and Git' still makes for $100,000,000 a quarter. $400,000,000 a year in bullion sales for a few days work makes Costco a pretty big player as they bump up against the giants such as SD Bullion, APMEX /A Mark and JM bullion and the higher volume LCS.

I don't know the exact sales of the big three but some say they each have revenues in excess of $1 billion a year.

Will Costco customers find that owning gold and silver allow them to avoid CBDCs?

How will this benefit Costco?

Will Costco take ASEs for payment of goods and services thus turning each retail outlet into a defacto LCS when someone pulls out a roll of ASE from their pocket to pay for the goods?

Will Costco offer a digital product tied to their Visa card? Maybe this is part of the larger plan. If anything, the senior officers and board must have taken into account many ideas.

As a customer of Price Club in San Diego since 1976, then through its merger with Costco in 1993, what is abundantly clear is this almost half century old firm doesn't wing it. If nothing else it's consistent in its sales models. If ASE becomes embedded into the Costco story it'll be interesting to see how PM sales evolve.

But what if social credit scores like seen in China reduce the ability of certain groups to buy their goods and services and all they have is silver to purchase Costco stuff? It would be interesting to see Costco rack prices in dollars, silver and Bitcoin. Using present silver prices--- 10 lbs of steak? $60 or 2 ASE. A set of tires. $1,100 or 2 tubes of ASE. Could this happen? I see a time when it might.

While we don't have an inside view of what Costco top brass is talking about, with the looming threat of CBDCs it must be a big deal to the top officers and board of directors and nearly impossible for the board to not address CBDC. Commitment to selling an on line product that costs $540 per tube with very low margins is quite a move no matter what the reason. $2,500 65 inch Sony TVs or a $1,500 Apple phone are main stream big ticket items. A $540 tube ASEs offered in a 5 tube sale could cost $2,700. Now that's going main stream.

Any merchant large or small who's not thinking about and planning strategies to work with, or maybe countering CBDCs, will be caught flat footed or worse. The small and medium sized businesses were given absolutely zero warning of the lock downs that hit Mid March 2020. Millions were crushed into permanent closure or bankruptcy with the Covid shutdowns and the ensuing US GDP crash that happened like 'Everything Everywhere All At Once.'

Today many more people are paying attention to fiscal and economic trends that have them worried about savings, income and return on capital. Maybe people will start looking at return OF capital as a predominant factor in their decisions. Silver and gold fill that niche nicely.

Preserving buying power with something other than stocks bonds and typical tangibles has people seeking alternatives. The incredible Bitcoin price increase is part of that growing awareness. Extremely high stock valuations are another sign people are seeking yields with safety even as stocks move to bubble territory Gold and silver are usually slow to reach public awareness but when it hits we could see a rush to metals not seen since 1979-80 or 2010-11.

Being caught on our back foot will be completely on us. Preparing for what's coming with CBDCs just one part of the new paradigm that has people concerned. The Great Taking is another element that we've been warned about and almost certainly to become an increasing important factor in silver and gold purchases. I think Costco has wet its finger, seen which way the wind is blowing and decided that silver and gold sales are a good idea.

As percentage of the US population, how many people will it take for for public awareness to become so overwhelming that people light up the net, seeking bullion dealers, or race to the LCS to buy anything that helps them preserve their wealth and survive what might be some tough times.

This video gives a short attempt to explain Costco's silver sales.

Guess we're not the only ones interested in what Costco is doing.

About the Author

tfmetalsreport [at] gmail [dot] com ()

Subscribe or login to read all comments.

Support TFMR

Donate Buy Silver

Access Subscriber Benefits

Listen to TFMR on the go in your favorite podcast app, and join our member-only forum discussions!

Key Economic Events Week of 5/28

5/28 9:00 ET Case-Shiller home prices
5/28 10:00 ET Goon Kash-n-kari
5/28 10:00 ET Consumer Confidence
5/28 1:00 ET Goons Cook and Daly
5/29 1:45 ET Goon Williams
5/29 2:00 ET Beige Book
5/30 8:30 ET Jobless claims
5/30 8:30 ET Q1 GDP 2nd guess
5/30 8:30 ET Wholesale inventories
5/30 10:00 ET Pending home sales
5/30 12:00 ET Goon Williams again
5/31 8:30 ET PCE and Core PCE
5/31 8:30 ET Personal Inc and Spend
5/31 9:45 ET Chicago PMI

Recent Comments

by Connie, 17 min 59 sec ago
by turd ferguson, 23 min 8 sec ago
by chrtoo, 25 min 3 sec ago
by turd ferguson, 1 hour 27 min ago
by boomer sooner, 1 hour 50 min ago

Forum Discussion

by Patriot Family, May 25, 2024 - 5:46am
by Titus Andronicus, May 17, 2024 - 3:54pm
by erewenguy, May 17, 2024 - 1:37pm
by AccidentalTourist, Apr 6, 2024 - 4:01am