(Kitco News) - Not only has the gold market seen an unprecedented rally this year, but demand has also broken established trends as physical demand has remained robust despite higher prices, if Costco’s sales figures are any indication.
Last week, the giant retail wholesaler reported net sales of $78.2 billion for its fourth quarter and fiscal year-end of 2024. Sales are up 1.0% compared to net sales of $77.4 billion in the fourth quarter of fiscal year 2023.
The store’s bullion products continue to drive its online sales, with the company stating that its gold sales increased by “double digits” over the last three months.
During Thursday evening’s conference call, Costco CFO Gary Millerchip said that gold was a "meaningful tailwind" to e-commerce sales in the quarter. The store’s online gold bullion products often sell out rapidly.
The success of the precious metal is even attracting the attention of some analysts. Greg Melich, Senior Managing Director at Evercore ISI, asked a tongue-in-cheek question: “You called out the gold bullion again. I'm just curious, are there any plans to maybe bring Kirkland Signature into the gold bullion market?”
“No plans at this time,” responded Ron Vachris, President and CEO of Costco.
Kirkland Signature is Costco's large private-label business.
Costco’s bullion sales have attracted significant attention this year as gold prices have pushed above $2,000 an ounce, setting consecutive record highs. According to analysts, this attention has driven online sales and membership sign-ups.
Although the company doesn’t publish exact sales numbers for its gold bullion, in April, equity analysts at Wells Fargo estimated that Costco is selling between $100 and $200 million worth of one-ounce bars and coins.
Some analysts note that Costco gold bullion offers an advantage compared to traditional dealers, as customers can earn extra rewards as members.
Costco is also offering more unique bullion products. Last week, the store announced a partnership with the Royal Canadian Mint to offer its members the first opportunity to acquire a Gold Maple Leaf Single Mine bullion coin. The gold in the coin comes from Canadian mining giant Agnico Eagle's Detour Lake mine in Northern Ontario.
Although gold prices have struggled since hitting fresh all-time highs last week, they are still holding solid support above $2,600 an ounce. Spot gold last traded at $2,633.20 an ounce, down nearly 1% on the day.
Traditionally, higher prices hurt physical demand as they price many retail consumers and investors out of the marketplace, but analysts expect physical bullion demand to remain elevated through the rest of the year.
“We continue to see demand for gold looking strong in the investment category, which includes consumption in physical form. In many instances, investors are taking on their gold holdings through investment in physical gold,” said Joseph Cavatoni, Senior North American Market Strategist at the World Gold Council.
Despite high prices, analysts note that gold remains an attractive investment as the Federal Reserve embarks on a new easing cycle, which could be more aggressive than initially expected.
