Should you buy Costco's gold bars? What investors should consider

Costco, the warehouse retailer known for offering bulk groceries and household goods at affordable prices, recently made headlines in the investment world by adding 1-ounce gold bars to its list of for-sale merchandise. This move has piqued the interest of many investors who are looking to add this precious metal to the assets in their portfolios. 

And, there are a wide range of reasons investors may want to do that. For starters, gold can add a number of unique benefits for investors, including its use as a hedge against inflation and a store of value — which makes it a smart option for portfolio diversification. 

But while buying gold can be a good move in many cases, are Costco's gold bars a wise investment? It's important to understand the answer to this question — and know what your alternatives are — before you take the leap. 

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Should you buy Costco's gold bars? What investors should consider

Costco is currently offering two types of gold bars: a 1-ounce gold PAMP Suisse Lady Fortuna Veriscan bar and a 1-ounce bar from South Africa's Rand Refinery. These bars come from reputable mints — and each one is priced at slightly under $2,000.

It's important to note that they are not being sold in Costco's physical stores but rather through their website. And, they have been selling out within a few hours of being listed — making it difficult for many buyers to purchase them.

Here's what you should consider before buying Costco's gold bars:

Pros of buying Costco's gold bars

There are a few potential upsides to buying gold bars from Costco, including:

• Accessibility: Costco's foray into selling gold bars provides an accessible option for individuals who are interested in investing in precious metals. The affordable price point compared to other forms of gold, such as coins or larger bars, makes it attractive for beginners.
• Reputable sources: Costco is known for selling high-quality products, and its gold bars come from reputable mints, which adds credibility to the product's authenticity and quality. 

Cons of buying Costco's gold bars

And, there are a couple of potential downsides to consider, including:

• Limited availability: The fact that these gold bars are selling out within hours of being listed can be frustrating for investors who are not quick to make a purchase. The limited availability could lead to missed opportunities.
• Premiums: While the price of Costco's gold bars may seem reasonable, investors should be aware that there are premiums attached to buying physical gold. These premiums can affect the overall cost, making it slightly higher than the spot price of gold.

Find out how gold investing could benefit you here.

Alternatives to buying gold bars at Costco

If you can't or don't want to purchase gold bars from Costco, there are several good alternatives to consider instead, including:

Online gold dealers

Another option for investors who want to buy gold bars is to purchase them online from reputable dealers. There are plenty of trusted gold dealers who offer gold bullion to investors via their websites, and this route could be easier and more affordable if you can't or don't want to purchase your gold bars at Costco.

Plus, online gold dealers typically offer a wide range of gold bar sizes and brands, which gives investors more flexibility. And, the pricing by online gold dealers is typically competitive, too. 

But it's crucial to do thorough research and choose a reputable online dealer with a track record of delivering authentic and high-quality gold bars. Look for reviews and ratings from other customers to gauge their reliability.

It's also important to ensure that the online dealer provides clear documentation and certificates of authenticity for the gold bars you purchase. Transparency in the transaction is essential to verify the quality and legitimacy of your investment.

Gold stocks 

Another way to invest in gold is through gold stocks. These stocks are tied to the performance of gold mining companies and can provide exposure to the gold market while potentially offering growth through company profits. Be aware, though, that gold stocks are a lot riskier than buying gold bars and coins, as the share price is directly affected by the overall market and the performance of the companies you invest in.

Gold ETFs and mutual funds 

For those who prefer a more liquid and convenient investment, gold exchange-traded funds (ETFs) and mutual funds that track the price of gold can be viable options. These investments provide exposure to gold without the need for physical storage, but as with gold stocks, they can be riskier than buying gold bars from Costco or a reputable online dealer due to market fluctuations.

The bottom line

The decision to buy Costco's gold bars or invest in gold in any form should be made after careful consideration of your investment goals, risk tolerance and overall financial strategy. While Costco's gold bars offer accessibility and the assurance of reputable sources, they aren't easy to get your hands on right now. Luckily, there are alternatives to consider, including online gold dealers or another type of gold investment instead. Just be sure to weigh the pros and cons of any gold investment you make to ensure it's the right move for your finances.