Should You Invest in Costco Gold?

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As we collectively grapple with what a cut in the federal funds rate will mean for our savings accounts and budgets , some people are looking for other places to invest their money. Some may be considering the original best place to stash some cash: good old-fashioned gold.

Yes, you can still buy gold, and surprisingly enough (or maybe not), you can buy it at Costco . Costco offers gold bars periodically, but they sell out quickly, so if you want a bar, you'll have to be fast. But, they also sell gold coins, and those are still currently in stock, and contain just as much gold as a Costco gold bar.

So, should you buy any sort of gold at Costco? Let's discuss.

Why do people invest in gold?

Gold is a funny metal, it makes some people feel a lot of things. After all, for the longest time, gold was a significant and permanent store of value, due to its rarity and desirability. In early America, we used it for money in rugged parts of the country, along with other precious metals, and later on, tied the value of our currency directly to it.

Today, however, our currency is no longer tethered to the value of gold and is instead valued on its own merits and the economy in which it exists. Some people would argue that this is a terrible method of doing things, but frankly, you can't buy cryptocurrency in gold, so we really needed a different way to deal with a changing world.

Still, some people invest in gold certificates, which represent ownership in a share of gold, and others buy gold bars and coins, which are physical chunks of gold that you can hold in your hand, bury in your backyard, and sell as you please. For this last group of people, physically possessing gold gives them a sense of security should all of civilization go off the rails.

Sometimes I think we'd be better off to start over and try again, but I'm also realistic enough to know I'd never survive an apocalypse, both due to my lack of general survival skills and my lack of stockpiled non-currency currency.

Investing in Costco gold

I checked the Costco website today and the gold bars were all sold out, but the last time I did see them, on Aug. 13, 2024, they were going for $2,519.99 per ounce. That tracks with August's average gold price per ounce of $2,503.38.

Today, on Sept. 19, 2024, Costco only has gold coins in stock, but they're also one ouncers, and for the low, low price of $2,669.99. The average price of gold so far for September is $2,587.33, so the coins may have about a 3% premium to them, but it's still pretty close.

Looking at valuation charts for gold over the last 100 years, it seems like gold is pretty volatile, but can have a decent return in times of uncertainty. Since 2022, for example, gold has gone from a low of $1,723.79 to today's high of $2,587.33, but it was also as high as $2,395.59 in 2020, and peaked at $2,743.07 in 1980.

Let's look at some gold value trends, based off of today's date.

With gold being near an all-time high, it seems a little bit reckless to go out and buy it for posterity. After all, although there's been a 36% gain in gold prices in the last year, there's only been a 41% gain in the last five years, so you can't really count on gold to gain value at a steady pace, and if you look at a chart of gold value, it's extremely volatile, sometimes swinging wildly in response to various economic environments.

Buy this instead of gold

In my opinion, and looking at these charts, buying gold only pays off if you're going to hold it for literal decades, but you still risk extremely violent swings. For example, if you bought your gold in January 1980, you'd have paid MORE for it than you did today. That month, it averaged an inflation-adjusted $2,743.07. So, let's say you did that and sold it today -- you'd still lose money.

You know what won't do that to you? Investments like Treasury bonds, Treasury notes, and good old-fashioned certificates of deposit. Even though CD rates have dropped a little bit since the Fed announced rate cuts, the average yield for the 2-year CD is still around 3.91% for September, and the 5-year CD is hanging out at 3.71%.

If you instead spent your $2,500 on a CD, a 2-year CD will be worth $2,703.00 at maturity, an 8.12% increase, and the 60-month will be worth $3,038.83, a 21.5% increase. Maybe you can't bury it in your backyard, but that's not too shabby for a set-it-and-forget-it investment.

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We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team. Kristi Waterworth has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy .