'It's not like trading stocks,' shoppers are warned after Costco taken over by gold rush sparked by world downfall fears | WKBL783 | 2024-04-25 17:08:01
THERE has been an uptick in buying gold from retailers like Costco as people look to put their money into something that holds value.
But gold buyers have been warned that making a return on your money with the precious metal is much different than trading stocks.
The unpredictability of the economy has many consumers fearing regular money will devalue, which is why they've turned to buying gold bars from Costco.
But people looking to buy gold and quickly sell it for a profit, or what they originally paid for, may be disappointed.
"It's not like trading stocks," Lark Mason, a New York-based appraiser, told The Wall Street Journal.
"There's a friction between what you pay and what you actually get."
Tom Graff, chief investment officer at Facet, a wealth advising company, said people should expect to lose around 5% of what they paid if they are trying to sell their gold bars after a few months of purchasing them, per The Wall Street Journal.
But there are a few ways to ensure you're using the gold you purchased properly.
COSTCO GOLD RUSH
In December 2023, Costco announced it had sold $100 million in gold bars in its fiscal first quarter and a recent update from analysts at Wells Fargo shows this increased to $100-$200 million a month, CNBC reported.
The Costco gold debuted only in August 2023 and has seen major success in a short period of time.
"You've probably read about the fact that we're selling 1-ounce gold bars," Richard Galanti, the chief financial officer of Costco said in December, Fox Business reported.
"We sold over $100 million of gold during the quarter."
<!-- End of Brightcove Player --> Edward Kelly, an equity analyst at the bank insisted Costco's gold rush should be examined carefully and not ignored.
This is due to its aggressive pricing and customer trust.
"The accelerating frequency of Reddit posts, quick online sell-outs of product, and COST's robust monthly eComm sales suggest a sharp uptick in momentum since the launch," Kelly said Tuesday, CNBC reported.
DOOMSDAY GOLD
There has also been an increase in purchasing gold out of fear there may be a doomsday situation nearing.
Cell service outages and the upcoming 2024 election are some of the red flags that have sparked the fear.
Jonathan Rose, the CEO of Genesis Gold Group told The U.S. Sun in March that these factors have caused an "absolute surge" in gold sales.
But people purchasing gold in fear of a world downfall are looking to hold onto the gold for a long period of time – or when the doomsday situation ends – so they can continue to have wealth.
The gold could also be used as a bartering tool if money is no longer valuable and they need to get their hands on something, Rose said.
"On terms of prepping, preppers do want gold, and preppers want small denomination gold coins and small denomination silver coins – something tradable and something bartable," Rose said.
"So we've seen a spike in small denomination coins which are considered more bartable/tradable and there has been a massive uptick in that, like absolute surge in that type of metal."
Gold has been seen as a "safe haven" precious metal for centuries which has added to its recent lure.
</div> </div> "I think these people are realizing that, hey we don't have a crystal ball per se, but we have a good road map and they are looking at the problems the economy is having right now," Rose said.
"And the dollar losing its value, there's just the general economic concern of combating inflation and that's why many people will move to a safe haven."
HOLDING/SELLING GOLD
Gold can be useful to increase and hold wealth in many ways.
But people who are getting in on the gold uptick to try and make a quick profit may not be putting their money into the right investment.
For example: Adam Xi, 33, bought a gold bar from Costco for $2,000 in October and recently was only able to get a $1,960 return after selling it, WSJ reported.
Xi received a payback of $20 under the market price because he only held onto his gold for a few months.
In another situation, Luke Greib, from Michigan, held onto his gold bar for almost a decade that he paid $1,500 for and ended up selling it for $2,350, WSJ added.
Graff who works for Facet said, "You need a holding period that's long enough to overwhelm that cost," per WSJ.
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