As gold prices climb, precious metals at Costco are top sellers - and a cheat code for boosting its e-commerce business

"As gold prices hit new record highs, demand for the precious metal is running hot at Costco. The price of the yellow metal topped $3,600 per ounce on Wednesday, and is driving strong sales for the wholesale club. While the company didn't break out exact sales figures for the products in its third-quarter earnings call in May, it said the category continued to be a top seller online."

"Analysts previously estimated that the company sells around $200 million of gold and silver each month. Former CFO Richard Galanti has said the supply usually sells out "within hours" of its release. When the metal's spot price rises faster than the retail price, Costco's gold inventory can move quickly, according to posts on the CostcoPM subreddit. Costco's ultra-low markup is a big part of the wholesale club's appeal for professional and amateur collectors alike."

"But though Costco's profit on the gold and silver sales is comparatively low, these high-value items are a kind of cheat code for the wholesale club that is still developing its e-commerce business. Routing hundreds of millions of dollars in sales through Costco.com is a quick way for the company to show strong e-commerce growth with relatively low risk or complicated capital investment: it simply buys a batch of gold and sells every ounce of it to members."

Gold prices topped $3,600 per ounce, driving strong demand and sales at Costco. Analysts estimate Costco sells about $200 million of gold and silver monthly, and former CFO Richard Galanti said supply usually sells out within hours of release. Costco's ultra-low markup attracts professional and amateur collectors. When the metal's spot price rises faster than the retail price, inventory can move quickly. High-value bullion sales generate substantial online revenue with minimal capital investment because Costco purchases batches and resells every ounce to members. Costco's digital sales grew 14.8% in the third quarter year-over-year, after 20.7% growth the prior year.

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