For bargain hunters, Costco has long been a go-to destination. Case in point: gold bars.
In late 2023, Costco began selling two types of 1-ounce gold bars: the PAMP Suisse Lady Fortuna Veriscan bar and the Rand Refinery bar, priced at US$1,979.99 and US$1,949.99, respectively, according to Business Insider.
Despite the hefty price tag, both quickly became hot sellers. “When we load them on the site, they’re typically gone within a few hours,” then-CFO Richard Galanti said during a September 2023 earnings call.
Similarly, in October 2023, Canadian Costco stores also started offering the 1-ounce 24-carat gold bars for sale at CA$2,679.99 apiece, with limitations set to buying a maximum of two bars every seven days for each participating Costco member (1).
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The value of gold and its return on investment (ROI) can’t be overstated. Physical gold appreciated by approximately 72.77% over a five-year period, priced at approximately US$1,518.40 an ounce on January 1, 2020 (2), then rising to around US$2,623.96 an ounce one year later (3). This growth reflects gold’s role as a hedge against inflation and economic uncertainty, factors that influenced its price trajectory during this period
In light of high inflation and the geopolitical instability over the past year, analysts have approached their outlook on the gold market with caution as a speculative and highly volatile investment. Still, gold is widely considered an investment safety net, holding or increasing its value amid market disruptions.
Why investors are flocking to gold
Gold is considered a classic safe haven. Since it isn’t tied to any one country, currency or economy — and in times of economic turmoil or geopolitical uncertainty — investors often flock to it, driving prices higher.
“People don’t have, typically, an adequate amount of gold in their portfolio,” billionaire investor Ray Dalio told CNBC. “When bad times come, gold is a very effective diversifier.”
So, exactly how much gold should you own?
Dalio recently advised that investors should consider allocating around 15% of their portfolios to alternative assets such as gold or cryptocurrency as a hedge against systemic economic risks.
During periods of high inflation, gold prices have increased more than 20%, according to a report by The World Gold Council (4). The same report recommends allocating 6% to 10% of your portfolio to gold.
Read more: Are you drowning in debt? Here are 3 simple strategies to help crush your balance to $0 in no time
A golden opportunity
Buying gold bars from Costco might grab headlines, but it’s far from the most practical way to invest in gold. Two ways to invest in gold that also provide significant tax advantages is to buy gold ETFs or gold stocks.
Exchange-traded funds
Gold exchange-traded funds (ETFs) are a simple option to give you broad exposure to physical gold or gold-related assets. ETFs let you invest in gold just like buying a stock — no vaults, no safes, no stress. It’s a low-maintenance way to diversify your portfolio while tapping into gold’s timeless value and long-term security. It’s a compelling option for those aiming to protect their finances from inflation and economic instability — you can purchase gold ETFs through most major stock brokerages.
Stocks
If you choose not to buy gold as a physical commodity or gold ETFs, another option is purchasing gold-mining stocks. These stocks offer investment with more growth potential than physical gold, and you can own mutual funds that include gold-mining stocks. Mining companies tend to yield better returns as gold prices rise, and can often redirect their extraction efforts to other minerals if gold prices suddenly slump.
It’s crucial to do your research on which mining companies are the most solid, as poor management and bad strategies can affect individual company performance and solvency even in a bull market. Other obstacles can come into play as well, including geopolitical uncertainty, environmental liabilities and lower-than-expected gold reserves.
Diversification is one good way to avoid these hurdles, as spreading capital over numerous companies helps investors reduce company-specific risks.
Getting started with gold investments
Gold has long been a proven hedge against inflation and market volatility — but you don’t need to buy physical bars to benefit. With CIBC Investor’s Edge you can easily invest in gold ETFs or mining stocks right from your online account. Enjoy low commissions, intuitive tools, and educational resources to help you diversify with confidence. Start building your inflation hedge with CIBC Investor’s Edge today.
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Professional advice is key
As with any asset or strategy that may spark your attention, meeting with a financial advisor to flesh everything out is your first best step when making the soundest financial decisions. Never underestimate their advice in ensuring your portfolio is robust and secure with the best products to meet your financial goals.
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Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
CBC: Costco now sells gold bars. Are they a good investment? (1); Bullion Rates: Gold Prices (2); Goldprice.org: Gold price on 01 January 2025 (3); World Gold Council: Investment Update – Beyond CPI: Gold as a strategic inflation hedge (4)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.