Before Binging on Costco’s Silver Coins, Read This
How to really stack silver ...
Discount prices, the beloved Kirkland private label, free samples and the feeling of inclusion with a membership are all reasons how Costco Wholesale Corp. (COST) goes beyond just having “shoppers.”
It has a “community.”
But what Business Insider refers to in a March 8 report as a “treasure hunt” shopping experience is its true secret weapon.
Laura Jayne Lamb captures this “treasure hunt” on her Instagram account, posting different deals she scopes out at the megaretailer.
She has 2.5 million followers and millions of people watching just to see what she’s found.
And against a backdrop of consumer pessimism (with prices up 20% since 2020), the allure of buying-in-bulk to save money and the premium in-house Kirkland brand that delivers on quality but doesn’t skimp on quality is driving shoppers to Costco’s doors (foot traffic is up 4.3% here in the United States and 5.3% globally). And those shoppers SPENT more.
In the last few years, Costco has been ramping up its online business. So in addition to the “treasure hunt” Lamb was showcasing in the stores, Costco is offering a real treasure hunt on its website.
And by “real,” I mean one that can net you gold and silver.
Costco Strikes Gold … And Silver
In September 2023, when Costco listed $2,000, 24-carat gold bars on its website, they sold out within hours.
And in that quarter, the Washington-based warehouse king sold $100 million worth of those gold bars.
Now, it’s offering a 25-count of 2024 1 oz Canadian Maple Leaf coins.
It’s a shrewd strategy: CFO Richard Galanti told analysts during Costco’s earnings call last week that online sales jumped 18.4% in the just-finished quarter – and said precious metals accounted for most of the surge.
Even with those strong sales and the entrenched Costco brand loyalty, some customers are offering middling reviews about the silver-coin fulfillment.
To be fair, the review sample size is small. But the average is 3.4 on a scale of 5.0, which isn’t a ringing endorsement. And of those reviews, 23% – so nearly a full quarter – are single-star rankings:
Several complaints share a common theme: The seal was broken/torn/tampered with; and the coins arrived scratched.
Being a somewhat avid “Silver Stacker” myself, I’m a big fan of U.S. Silver Eagles and Canadian Maple Leafs – like those Costco is selling. But as much as I appreciate a lot of what Costco has done (for instance, the hot-dog-and-soda combo has maintained its $1.50 sticker price since 1985), and the shrewdness its employed to build its e-commerce business, it’s not where I’d do my precious-metal shopping.
I recently chatted with Peter Krauth, a friend, author and former colleague who now runs the Silver Stock Investor, an investment publication focused exclusively on the “common man’s precious metal.” And while we didn’t talk about Costco’s silver-coin-sales strategy, we did talk about the money to be made with gold’s precious metal cousin.
Peter believes silver could hit $30 an ounce by the end of 2024. And he detailed the catalysts that could rocket it to $300 or beyond in the years to come – a scenario he explains in his 2022 book “The Great Silver Bull.” Peter’s offering is one of the top books in the Amazon bookstore’s Investing and Trading Commodities collection.
You can find that full interview here, but I wanted to highlight a section because of its succinct (and powerful) relevance to this very topic.
“Bill, I love the messaging of Stock Picker’s Corner (SPC) that investing has been made complicated ... but shouldn’t be. My advice falls right in line with that straightforward approach.
Demand is increasing for precious metals, so it’s important to pay attention to premiums and not overpay.
Also, take the time to find a reputable dealer.
By that I mean … do your homework. Find out how long they have been in business and study the customer reviews and testimonials. A lack of reviews … or a stack of negative reviews … gives you a quick red flag that it may be a service to avoid.”
Indeed, take heed of Peter’s advice:
1. Shop around for silver coins and bars.
2. When you see a good price, make sure the offering is from a reputable dealer who keeps customers happy and has done so consistently for long periods.
Follow those simple-but-powerful rules and you won’t have to give yourself a one-star review for a poorly executed metals strategy. You’ll “stack” the silver – or gold – that will bolster your wealth in the years to come.
And according to that silver price target from Peter’s research, you’ll want to make those purchases soon for what’s ahead.
