Should You Buy Gold Bars at Costco?

by | Jan 12, 2024 | Videos

Should You Buy Gold Bars at Costco?

Costco recently began selling one ounce gold bars.
Should you take advantage of this?

  • Costco recently began selling gold bars online, not in stores, and sold one hundred million dollars’ worth in the recent fiscal quarter.
  • Buying gold bars from Costco doesn’t offer the spot price.
  • And buying gold bars anywhere – including Costco involves storage costs, possibly shipping costs, and requires insurance.
  • Warren Buffett has criticized gold as an investment because it’s not a productive asset and has appreciated at much less than 1% per year, close to zero.

We are not fans of this new development, in part because we do not view gold as a productive asset.

 

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Transcript for Should You Buy Gold Bars at Costco?

You can now buy gold bars at Costco, which is something that a lot of people are starting to talk about. However, is this something that you really should be doing?

Costco recently began selling gold bars. They are only available online; you cannot purchase them in your local Costco store. Yet, they are selling a lot. They sold one hundred million dollars’ worth of gold bars in the recent fiscal quarter, and they sell out within hours.

So, people are flocking to buy these items. But again, is this something you should consider? If you’re a gold collector, perhaps. If you’re looking for gold as an investment? Probably not.

When we talk about gold, there are different things to consider when investing in it. It seems like there are some positive reasons to buy gold bars from Costco, and some negatives as well.

You don’t get the spot price. You don’t have some of the shipping costs. You still have to insure it. There are a lot of factors involved when buying gold.

Every time we discuss gold, I am reminded of some of the comments that Warren Buffett has made about gold as an investment. I want to share this with you because I think it’s something you should remember.

It comes up in a lot of our client conversations, “Should we be putting a certain percentage of our assets into something like gold, silver, or cryptocurrencies?”

Understand that gold and cryptocurrencies are not productive assets.

Buffett has given an example where he bought a farm in the 1980s. Every year, the farm produced crops like soybeans and corn. He was able to sell these crops each year for a significant profit, and he still had the underlying farm, an asset that was worth something.

Buffett used another example where he invested in an apartment house and received rental income every year. Yes, he had depreciation, write-offs, and good income. But at the end of the day, he still had an asset that was increasing in value and that he could sell.

By comparison, Buffett has said, “If you go back to the beginning of time, gold has appreciated at less than 1% per year. In fact, way less than one percent, close to zero.”

You can certainly overpay for a productive asset, like a farm or an apartment house, or even by investing in a company. But you still get these distributions, the good income that comes every year.

With cryptocurrencies and collectibles like gold, you’re not getting anything. It just sits there. There is no value that you’re going to get year after year by owning an asset like that.

The only way to realize a profit in something like a cryptocurrency or gold is you need to sell it to somebody else.

That’s going to wrap up episode 366. Thanks, as always, for tuning in.

 

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