Did You Know That You Can Buy Gold Bars at Costco? But Should You?
Yes, you read that right - Costco, the retail giant known for bulk groceries and household items, now sells physical gold bars. But just because you can buy gold at Costco, does that mean you should? Here is what you need to know about the process and whether it's a good idea to invest in physical gold.
How to Buy Gold from Costco
If you want to purchase gold at Costco, you will find one-ounce bars for sale online, though they appear, oddly enough, under the "Sports Memorabilia and Collectibles" section. Some local stores may also occasionally carry bullion, although availability is limited. In-store, head to the jewelry section. If they have gold in stock, speak to the jewelry associate, who will fill out a form. Then take that form to the cashier to pay and present your receipt at the designated pickup area past the checkout to collect your gold bar.
Should You Buy Physical Gold?
Costco began offering gold bars just last year, and with inflation concerns on the rise, more everyday Americans - not just large investors or banks - are turning to physical gold as a hedge. But before you jump in, there are important considerations to weigh.
Buying physical gold is easy, but selling it can come with unexpected challenges. Many buyers don't think about the selling process beforehand.
Premium: The amount charged above the spot price, covering the seller's costs and profit.
Costco charges a premium of several percentages above the spot price (the current market price of a commodity). And when it's time to sell, dealers often buy gold below the spot price, meaning you could take a loss, depending on market conditions and dealer's fees.
Spot Price: The spot price refers to the current market price at which a commodity, such as gold, can be bought or sold for immediate delivery.
Also, physical gold (and other precious metals) is classified as a collectible for tax purposes and is taxed at a maximum rate of 28% on long-term capital gains, which is higher than the standard rates for other investments like stocks and bonds, typically 0%, 15%, or 20%, depending on your income.
Once purchased, there is also the cost and logistics of safe storage to consider, and possibly insurance premiums to protect your investment. You will need to store it securely, which may involve renting a safe deposit box or purchasing a home safe, and insuring it. All of these factors add to the overall cost and complexity.
When it comes time to sell, it may not be as simple or safe as buying. To sell your gold, you will need to have it appraised or surveyed - where do you go for that? Finding a buyer at the right time can be challenging and may result in selling at a lower price than expected.
Is Gold a Good Investment?
While gold is often viewed as a stable asset, the Commodity Futures Trading Commission (CFTC) advises caution. Precious metals like gold can be highly volatile, and prices fluctuate based on demand. In times of economic anxiety, it's often the sellers - not the buyers - who profit. Gold prices rise when demand spikes, but that doesn't make it a guaranteed investment.
If you are interested in investing in gold, consider other options like exchange-traded funds (ETFs), which allow you to invest in gold without the headaches of storage, insurance, and selling physical bars. There are many ways to invest in gold, but purchasing the actual commodity may not be the best choice for everyone.