Gold has a long-standing reputation as a safe haven asset that investors turn to in times of economic and geopolitical distress. Historically, those looking to access the precious metal would purchase it in coin or bar form from precious metals dealers.
In September 2023, Costco, the popular membership warehouse company, began offering gold bars for purchase to its members online. The gold bars ended up being an immediate hit with its members, with CNBC reporting that “Costco Chief Financial Officer Richard Galanti said Costco sold more than $100 million in gold bars during its most recent quarter.”
Despite Costco’s initial success in its venture, experts say purchasing the precious metal in physical form poses several potential issues for investors. As a result, ETFs may be a better choice. This would be especially true for advisors and investors looking to gain access to the asset class to take advantage of its predicted price appreciation in 2024.
See More: “2 Gold Miner Funds to Consider for 2024“
The Downsides to Costco’s Gold Bars
Debbie Carlson reported in the Wall Street Journal, “Costco buyers may be getting good deals on their purchases at the store, but they have other costs to consider once they receive their goods. There are the potential costs to safely and securely store the gold. And if and when they want to sell it, they need to do their homework to find a gold dealer who will negotiate a fair price since Costco isn’t a dealer and doesn’t allow gold-bar returns.”
She cites the storage costs and dealer discounts as contributing factors regarding why many investors typically tend to turn to gold ETFs.