Costco has added a new precious metal to its range, following the great sales success of its gold bars.
The wholesale retailer on Wednesday launched platinum bars for $1,089.99, which it sells alongside its now-famous gold bars and silver coins. The bars seemed sold out Thursday.
The 1-ounce platinum bars are only available online and to Costco members, and cannot be shipped to Louisiana, Nevada, or Puerto Rico due to local laws there. CNBC reported.
It’s no surprise that the retailer is delving deeper into the precious metals market, as the company sells around $100 million worth of gold bars each month.
But while Costco can hope to generate a similar buzz around its latest offering, are the new bars worth buying?
The wholesale retailer launched platinum bars for $1,089.99 on its website on Wednesday.
The price of gold has risen steadily over the past five years, but platinum has been less predictable.
While the value of platinum has risen more than 15 percent over the past 12 months, CNBC reported, it has fallen more than 8 percent since topping $1,100 per ounce in May.
Meanwhile, gold has risen more than 40 percent in the past year, and the spot price of an ounce of gold is now around $2,700, according to precious metals company KITCO.
When Costco first started selling gold bars in September 2023, they cost around $1,949.99.
This week, although they were out of stock on the website, they were listed for $2,689.99, an increase in value of $740.
Could Americans who have invested in a new platinum bar also see the same gains in the coming months?
As of this writing, platinum has a spot price per ounce of around $990, according to KITCO.
This means that the Costco bar retails at a price slightly above the cash price.
But Everett Millman, precious metals specialist at Florida-based coin dealer Gainesville Coins, told DailyMail.com that the price is in line with other retailers.
“Since platinum bullion is much less common than gold or silver products, the premium over the spot price (i.e. the margin over the melt value of the bar) is virtually always greater for platinum than for gold,” he said.
The roughly 9 percent premium for Costco’s bar, especially from a highly reputable supplier like PAMP Suisse, is within the industry standard, he added.
For Millman, there are strong arguments to invest in the precious metal given the current market environment.
“Platinum prices are at roughly the same levels as 10 years ago, and well below their long-term average of the last 20 years,” he said.
The price of platinum has been questioned due to expectations that electric cars will dominate the market and there will no longer be as much need for catalytic converters, which rely heavily on the metal.
But Millman argues that the metal has been chronically short of supply, meaning prices should begin to rise over time.
Edward Sterck, director of research at the World Platinum Investment Council, said Market surveillance that unless we believe that fully electric cars will truly become the norm in the near future, platinum will continue to have significant value in the automotive world.
While there is always the possibility that investors will lose money in the long term, Millman added, he believes prices will rise in the medium to long term.
“With the price of platinum still at about half its all-time highs from early 2008, the current price is a reasonable entry point from which I expect positive gains over a five to ten year period,” Millman added. .
Platinum is needed to make catalytic converters, but these devices will be needed less and less as electric cars like Teslas become more common. For that reason, some analysts believe that the price of platinum could fall.
When Costco started selling gold bars in September 2023, they cost around $1,949.99. This week, although they were out of stock on the website, they were listed for $2,689.99, an increase in value of $740.
Experts say it’s no surprise that Costco is delving deeper into the precious metals market, given the sales success of its gold bars.
Costco’s bar sells for slightly above the cash price, but experts say this is in line with industry standards.
Everett Millman, precious metals specialist at Florida-based coin dealer Gainesville Coins, said there are strong arguments to invest in the precious metal given the current market environment.
But not everyone is convinced that platinum is a great investment, for a variety of reasons.
While many advisors view precious metals as a hedge against inflation, most people understand gold much better than platinum due to its ubiquitous nature and popular appeal, experts warn.
“Investors are not flocking,” Michael Martin, vice president of market strategy at TradingBlock, a trading technology company, told MarketWatch.
He added that it is also difficult to ignore the fact that the automotive industry could go all-electric in the long term.
And many experts agree that it is better to buy precious metals in the form of ETFs than in physical bars like those sold at Costco.
An exchange-traded fund (ETF) behaves like a stock and tracks the value of gold.
Owning a physical platinum or gold bar means worrying about issues like storage and insurance, as well as arranging to transport the bar to a buyer if you decide to sell it.
However, Jimmy Lee, CEO of advisory firm Wealth Consulting Group, told the outlet that there is always “a certain segment that just wants to own a few physical things.”
He said it most likely has to do with fear of an uncertain world, meaning people like to have tangible assets on hand.