Troy ounces on the rummaging table
US supermarket drives customers into a gold rush – and disillusionment
April 23, 2024, 9:17 p.m
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In addition to weekly shopping, Costco can also do a little more: customers of the supermarket chain can now shop for gold bars there. However, the promising investment also has its pitfalls, especially if you want to quickly turn it into money.
Americans can easily buy gold bars in the Costco supermarket chain. Costco customers spend $200 million on it every month. In the hope of a stable investment, a bad aftertaste only becomes apparent afterwards. As easy as it is to acquire gold, it is just as difficult to get rid of it, writes the “Wall Street Journal“.
The 24-carat troy ounce is sold at a surcharge of around two percent over the current price, which currently amounts to around $2,400. Gold is a stable investment with a future. The Bank of America recently predicted that the price of gold could rise to $3,000 per troy ounce by 2025. Accordingly, the gold offers from the supermarket chain are quickly sold out.
In the hope of finding a bargain from the bargain counter, many customers then learn a hard truth: gold is not the most liquid asset. Because Costco does not buy the bars back and does not accept returns. Gold changes hands with online and physical retailers who charge fees or only buy at a discount to the market price.
No quick profit to be made
Gold is typically an investment designed to maintain value through economic ups and downs such as inflation. But after gold prices rose by more than 15 percent this year, many investors want to get rid of their bars and jewelry. In March, customers of online buyer JM Bullion sold twice as much gold as the monthly average, said chief executive Robert Pacelli. The dealers at JM Bullion make a price accordingly, depending on supply and demand. And because of Costco customers, the offer currently predominates.
The fact that Costco Gold is not suitable as a quick profit option is also due to the trading options. Anyone who buys or sells gold online will face several fees in the USA. Shipping alone costs $40 and insurance costs another $40. This means that you have to take into account a loss in value of more than three percent at an ounce price of $2,400.
If you’ve followed the Costco gold rush, you still have a few options: pawn shops and local precious metal dealers. Here you can still achieve prices that are close to the purchase price; on eBay, Facebook Marketplace or Reddit you may find collectors who pay a little more.
However, anyone who makes a profit from the Costco gold now or in the future still has to consider the US tax authorities, who also want to get their share of the trade. Gains from gold held for more than one year may be taxed at a higher rate than other long-term investments. The US Internal Revenue Service typically treats gold as a collector’s item. This means that the capital gains tax rate can be up to 28 percent. According to the tax authority, the highest rate for a stock investment is 20 percent.