Understanding the Way Costco Works
Costco Wholesale is an extremely popular retailer with 600 stores across the United States and another 271 around the world.
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In order to shop there, one must be a member and pay an annual fee of either $60 or $120, depending on the type of membership they choose.
Shopping at Costco Can Mean Big Savings
But almost everyone agrees that the membership fees are absolutely worth it, as after only a few shops, a customer can save not only what they spent on the annual fee, but even hundreds of dollars more.
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And that’s because Costco has a unique and successful business model; they keep their overhead costs extremely low by stocking large packages and offering bulk-buy discounts.
It’s Not Pretty, but it’s Efficient
Another way in which Costco ensures it can offer the lowest prices in the industry is that they don’t spend hours of labor on unpacking.
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Its products are displayed in the boxes they arrived in throughout their warehouse-like stores.
Adding Something Interesting to Coscto’s Shelves
Recently, in addition to selling food, drinks, accessories, electronics, and pretty much everything else a person could need, Costco also started selling gold bars.
Source: Wikipedia
The bars held just one ounce of gold, for which Costco charged between $1,950 and $1,980. And the gold bars were such a big hit that Costco sold out in mere hours.
Costco Made a Whopping $100 Million on Gold Bars
CFO of Costco, Richard Galanti, spoke at an earnings call for the company at the start of December and told them exactly that.
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Galanti said that the gold bars sold out almost immediately, even though inflation is ongoing, and made the company $100 million in additional income that month.
Costco’s Stock Raised Significantly After the Gold-Bar Sale
Shortly after the gold bar sale, Costco’s stock rose by 3% to $653. And then, just a few days later, up again to $675.88.
Source: MarketWatch
As with any stock price, it has had its days of decline over the past week, but it seems that Costco’s shares are generally going up.
Costco Is Doing Well Overall
It’s important to note that while the gold bar sale certainly increased the company’s quarterly earnings by a significant amount, the wholesale store is doing quite well overall.
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In fact, the company made 17% more in net profits last quarter than they did in the same time period last year.
Let’s Talk About Gold
Gold, of course, is most often purchased in the form or jewelry or even coins, but bars are actually quite a fantastic investment.
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Although the worth of a one-ounce bar of gold does vary depending on the economy, it’s generally understood to be a great inflation hedge, especially during economic unrest.
How Much Are One-Ounce Gold Bars Worth Right Now?
One ounce gold bars rise and fall in value, but not nearly as much as other types of currency.
Source: SD Bullion
Currently, a one ounce gold bar is worth about $2,110.52, while sometimes it dips a few hundred dollars, its value has been steadily increasing over time. And experts believe there’s no reason why it won’t continue to do so.
Will Costco Restock Gold Bars?
Costco knew that the gold bars would be popular among its members, but they had no idea that they would sell $100 million worth in just a number of hours.
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And although Costco officials haven’t officially spoken out about restocking, customers are under the impression that they will be available again soon. Though whether or not they will be fast enough to buy one before they sell out is another story.
What’s Next for Costco?
It seems that Costco’s stock is rising, even though this tumultuous economy the country and the world is experiencing.
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And with gold bars available for sale, it’s no doubt that they will likely have a flood of new members willing to pay their annual fees in the hopes of getting their hands on some real gold.