By Daily Mail (U.S.) | Created at 2024-10-04 04:18:56 | Updated at 2024-10-07 16:25:33
3 days ago
Costco has added a new precious metal to its lineup - following the roaring sales success of its gold bars.
The wholesale retailer launched platinum bars for $1,089.99 on Wednesday, which it is selling alongside its now-famous gold bars and silver coins. The bars showed as sold out by Thursday.
The 1-ounce platinum bars are only available online and for Costco members, and cannot be delivered to Louisiana, Nevada or Puerto Rico due to local laws there, CNBC reported.
It is no surprise that the retailer is delving deeper into the precious metals market, as the company sells around $100 million in gold bars every month.
But while Costco may be hoping to create 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 consistently in the last five years, but platinum has been less predictable.
While the value of platinum has risen more than 15 percent over the last 12 months, CNBC reported, it has dropped over 8 percent since topping $1,100 per ounce in May.
Gold, meanwhile, has risen more than 40 percent in the past year, and the spot price for 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 out of stock on the website, they were listed for $2,689.99 - a $740 rise in value.
Could Americans who have invested in a new platinum bar also make the same profit in the coming months?
As of writing, platinum has a spot price per ounce of around $990, according to KITCO.
This means the Costco bar is retailing for slightly higher than the spot price.
But Everett Millman, a precious metals specialist at Florida-based coin dealer Gainesville Coins, told DailyMail.com that the price is in line with other retailers.
'Given that platinum bullion is far less common than gold or silver products, the premium over spot (i.e. the mark-up above the melt value of the bar) is virtually always higher for platinum than for gold,' he said.
The roughly 9 percent premium for the Costco bar, especially from a highly reputable supplier like PAMP Suisse, is well within industry standard, he added.
For Millman, there is a strong case for investing in the precious metal given the current market environment.
'Platinum prices are at roughly the same levels they were 10 years ago, and well below their longer-run average over the past 20 years,' he said.
Platinum pricing has been challenged due to expectations that electric cars will come to dominate the market and there will no longer be as much need for catalytic convertors - which rely heavily on the metal.
But Millman makes the case that the metal has chronically been in short supply, which means prices should eventually begin to rise.
Edward Sterck, director of research at the World Platinum Investment Council, told MarketWatch that unless you believe fully electric cars are really going to become the norm in the near future, platinum will continue to have significant value in the auto world.
While there is always a chance of investors losing money over the long run, Millman added, he thinks prices will rise in the medium to long-term.
'With the platinum price still at roughly half of its record highs from early 2008, the current price is a reasonable entry point from which I expect there to be positive gains over a five to 10 year time frame,' Millman added.
Platinum is needed to make catalytic convertors - but the devices will be needed less and less as electric cars like Teslas become more common. For that reason, some analysts think the price for platinum could dip
When Costco started selling gold bars in September 2023, they cost around $1,949.99. This week, although out of stock on the website, they were listed for $2,689.99 - a $740 rise in value
Experts say it is not a surprise that Costco is delving deeper into the precious metal market, given the sales success of its gold bars
The Costco bar is retailing for slightly higher than the spot price, but experts say this is in keeping with industry standards
Everett Millman, a precious metals specialist at Florida-based coin dealer Gainesville Coins, said there is a strong case for investing 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 see precious metals as a hedge against inflation, most people understand gold much better than they understand platinum due to its ubiquitous nature and popular appeal, experts warn.
'Investors don't flock to it,' 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 fully electric in the long run.
And many experts agree that it is better to buy precious metals in the form of an ETF, rather than as a physical bar like those sold at Costco.
An an exchange-traded fund (ETF) behaves like a stock and tracks the value of gold.
Owning a physical bar of platinum or gold involves worrying about issues like storage and insurance - as well as arranging transporting the bar to a buyer if you decide to sell.
Nevertheless, Jimmy Lee, chief executive officer of advisory firm Wealth Consulting Group, told the outlet that there is always 'a certain segment that just wants to own some physical stuff.'
He said it most likely has to do with fear of an uncertain world, which means people like to have tangible assets on hand.
