Costco is making gold off its own gold.
The retail chain is making $100 million to $200 million a month by selling gold bars, according to a Wells Fargo equity research note. Last October, the company began selling 1-ounce bars made of nearly pure 24-karat gold priced at about $2,000.
“We view the addition of gold/silver as a smart move for Costco, as it only reinforces its value position,” the report said. “That being said, pricing at that level and shipping costs suggests it’s a very low-profit business at best.”
Equity analysts said the wholesaler priced its gold appropriately by selling about 2% above spot prices to members before a 2% cash back reward for executive members and an extra 2% in cash back for those with a Citi card.
The metal was responsible…
