A new report from Wells Fargo (WFC) estimates that Costco (COST) is selling $100 million U.S. to $200 million U.S. a month of gold bars as the price of the precious metal hits record highs.
Management at Costco have said that gold bars have become a big seller at the warehouse club ever since it started offering bullion last summer.
In a note to clients, Wells Fargo says that sales of gold bars “may now be running” at as much as $200 million U.S. per month as gold fever rises among consumers.
Costco sells one-ounce bars made of pure 24-karat gold. While the price is not disclosed online to non-members, it’s estimated that the product sells for about 2% above the spot price of the metal.
The price of gold is currently at an all-time high of $2,365 U.S. per ounce. Based on the current price, Costco would be selling gold bars for more than $2,400 U.S. each, says Wells Fargo.
Gold’s price has been rising on expectations that interest rates will be lowered later this year and as central banks stock up on bullion with geopolitical uncertainties on the rise.
Currently, Costco limits sales of gold bars to five per customer, and while sales are brisk the commodity isn’t adding much to the company’s profit due to the low premium charged, according to Wells Fargo.
Costco’s stock has increased 46% over the last 12 months and currently trades at $718.59 U.S. per share.
