You can strike gold and silver investment opportunities at Costco

• Costco known for its wide array of products ranging from groceries to electronics and sporting goods, also offers a distinct opportunity for investors: precious metals
• Costco began selling 1-ounce 24-karat gold bars, in the United States in October 2023 and sold more than US$100 million by November
• Investors are looking for inflation-proof opportunities and as Stockhouse’s recent Thematic Insights report details, the gold supply has remained essentially flat over time, so it is never diluted
• Costco Wholesale Corp. stock opened trading at US$726.10 on the NASDAQ and C$34.05 per share on the NEO Exchange

With gold prices hovering around all-time highs, one of the top warehouse retailers and Canada’s favourite grocer has brought the precious metal to its consumers.

Costco (NDAQ:COST), known for its wide array of products ranging from groceries to electronics and sporting goods, also offers a distinct opportunity for investors: precious metals. While the retail giant might not be the first place that comes to mind when thinking about gold and silver investments, Costco’s offerings in Canada have caught the attention of savvy investors looking to diversify their portfolios.

Let’s delve into what Costco Canada has to offer in terms of gold and silver investments and explore the potential benefits and considerations.

Gold and silver bullion at Costco

Costco began selling 1-ounce 24-karat gold bars, in the United States in October 2023 priced around US$2,000 and sold more than US$100 million by November.

Observing Costco shoppers can provide interesting economic and cultural indicators. Just like the early days of COVID-19 in 2020 when consumers emptied pallets of toilet paper, the supplies of gold and silver at Costco might reveal how confident the public is in Canadian currency and the economy.

Costco Canada stocks a selection of gold and silver bullion available online at Costco.ca, providing investors with the opportunity to add physical precious metals to their investment portfolios. Gold and silver bullion are typically offered in the form of bars or coins, each carrying intrinsic value based on the metal content.

Benefits of investing in gold and silver

1. Portfolio diversification: Gold and silver have historically served as a hedge against inflation and economic uncertainty. By adding precious metals to their portfolios, investors can diversify risk and potentially protect their wealth during times of market volatility.
2. Tangible assets: Unlike stocks or bonds, which exist only as digital entries or paper certificates, gold and silver bullion offer investors tangible assets they can hold in their hands. This physical presence can provide a sense of security and stability, especially during turbulent economic times.
3. Liquidity: Gold and silver are globally recognized as valuable commodities, making them liquid assets. Investors can easily buy and sell gold and silver bullion in various markets around the world, providing flexibility and accessibility.
4. Store of value: Throughout history, gold and silver have maintained their value over the long term. While fiat currencies may depreciate because of factors such as inflation, political instability or economic crises, precious metals have proven to retain their purchasing power over time.

Considerations when investing in precious metals

1. Price volatility: Like any investment, the prices of gold and silver can fluctuate based on supply and demand dynamics, geopolitical events, and macroeconomic factors. Investors should be prepared for price volatility and hold a long-term perspective.
2. Storage and security: Owning physical precious metals requires adequate storage and security measures to protect against theft or damage. Investors might opt for secure vault storage services or invest in home safes to safeguard their bullion.
3. Transaction costs: When buying and selling gold and silver bullion, investors might incur transaction costs such as premiums, commissions or storage fees. It’s essential to factor these expenses into investment decisions to accurately assess potential returns. Costco also marks up its precious metals at a few hundred dollars above its market value, but you will likely find it slightly cheaper than what the big Canadian banks offer, if their stock isn’t sold out.
4. Market timing: Timing the market is notoriously difficult, and attempting to predict short-term price movements in gold and silver can be challenging. Instead, focus on the long-term fundamentals and consider dollar-cost averaging as a strategy to mitigate market timing risk.

Why buy gold and silver at Costco?

Already up more than 5 per cent since the beginning of the year, the value of gold is expected to continue to climb this year. Earlier this month it hit record highs above $2,181/oz. as speculation rises around the prospects of June interest rate cuts.

… but is it a good investment?

In an interview with CBC Radio’s The Current, Will Huggins, an associate professor of finance and economics at McMaster University’s DeGroote School of Business called this a good marketing strategy by Costco, but believed that buying gold from Costco doesn’t offer any advantage compared with the big Canadian banks.

“It’s not like a herd of cattle or some land or a corporate entity that we can keep bringing new people into,” he said. “It’s just a yellow rock.”

Final thoughts on buying gold and silver

Costco Canada’s offering of gold and silver bullion presents an intriguing opportunity for investors seeking to diversify their portfolios with tangible assets.

Investors are looking for inflation-proof opportunities and as Stockhouse’s recent Thematic Insights report details, the gold supply has remained essentially flat over time, so it is never diluted and is essentially immune to inflation.

Whether you’re a seasoned investor looking to bolster your portfolio’s resilience or a newcomer exploring alternative investment avenues, the availability of gold and silver bullion at Costco Canada may offer a convenient and accessible option to incorporate precious metals into your investment strategy.

While investing in precious metals carries certain benefits and considerations, it is important for investors to conduct due diligence, assess their risk tolerance, and consult with financial professionals before making investment decisions. As with any investment, prudent decision-making and a long-term perspective are key to navigating the complexities of the financial markets.

Costco Wholesale Corp. (NDAQ:COST) stock opened trading at US$726.10 on the NASDAQ and C$34.05 per share on the NEO Exchange.

Join the discussion: Find out what everybody’s saying about this stock on the Costco Wholesale Corp. Bullboard, and check out the rest of Stockhouse’s stock forums and message boards.

The material provided in this article is for information only and should not be treated as investment advice. For full disclaimer information, please click here.