Costco gold vs. gold investing companies: Which one is the smarter choice?

Over the past year, there has been a surge in gold investing, driving up the price of gold substantially compared to one year ago. Part of the driving force is the Federal Reserve, which has kept interest rates high. And, as sticky inflation continues to erode Americans’ purchasing power, even more people are turning to gold as a safe-haven asset. After all, gold can be an effective hedge against inflation and a solid tool for portfolio diversification. 

And while your gold buying options used to be limited, you now have the choice to buy gold bars at big box retailers like Costco and Walmart or through gold investing companies. If you’re interested in buying gold, either of these options can help you with your goal, but there are some key considerations to weigh first. So, to help you determine whether Costco or a gold investing company may be best for your situation, we spoke to investing and gold experts about the potential benefits and downsides of each option. 

Compare your options and add gold to your investment portfolio now.

Costco gold vs. gold investing companies: Which one is the smarter choice? 

Here’s what gold experts have to say about the choice between Costco gold and gold investing companies:

Costco gold purchase pros and cons

Costco gold bars provide an easy entry point for new investors who want to add the precious metal to their portfolio. Despite that, here are some of the downsides to consider. Here we break down the main pros of buying gold bars from Costco alongside the different cons. 

Pro: Convenience

Just like you do any other shopping in person or online, you can buy gold bars and coins at Costco, and one of the primary benefits of doing so is the convenience factor. You have the option to purchase gold bars at certain warehouses and online through the Costco website. 

“You’re getting what you’re bargaining for, and so I would think that if you’re a new investor and you wanted gold, that Costco is probably a great way to do it,” says Joshua Barone, wealth manager at Savvy Wealth.

Find out how adding gold to your portfolio could benefit you today.

Con: No returns 

Today’s online shopping culture makes it easier than ever to buy something, and most retailers allow for returns or refunds of those purchases. That’s not the case with a Costco gold purchase, though, which is considered a final sale. 

“You cannot return it to Costco. So it’s a final sale once you purchase it,” says Steven Conners, founder and president of Conners Wealth Management.

Pro: Lower markup 

The price of gold per ounce has increased significantly in the past couple of years, even hitting new record highs at certain points. Currently, the cost of gold is over $3,300 per ounce. Given the already high costs, gold investors need to be aware of the markup that comes with buying physical gold. And a Costco gold purchase tends to come with a lower markup compared to other options, making it an appealing choice.  

“A lot of the independent dealers, the markups can be anywhere from 2% to 30%, whereas with Costco it’s a 2% markup,” says Conners

Con: Limited options 

At Costco, the convenience factor is high — but the options are low when it comes to buying gold. 

“The other thing that people or investors should be aware of is that Costco is not going to have the broadest array of different types of gold,” says Conners. 

Depending on what type of gold investment you’re looking for, Costco may not offer the range of options you need. If you’re looking for gold bullion, it can be a great place to start. But if you don’t want to deal with the costs and hassle of storing physical gold and prefer to invest in gold exchange-traded funds (ETFs), gold stocks or gold individual retirement accounts (IRAs), you’ll have to look elsewhere.

Costco also limits how much gold you can purchase, so you may not be able to buy the amount you want in the timeframe you want. 

Pro: Trust factor 

Unfortunately, there can be bad actors in the gold investing space, so you want to do your due diligence and work with a reputable company, which is a big plus for a household name like Costco. That trust and confidence can be especially crucial if you’re buying physical gold for the first time. 

“There’s a lot of distrust when you’re buying a precious metal like gold…you go to a local dealer, or you go to a pawn shop, or you go online, and you may not know if you’re really buying gold,” says Conners. “So when you buy gold at Costco, one of the biggest advantages Costco has is that the trust level is very, very high.”

Con: No gold buybacks 

When you buy gold from Costco, it can be easy to get, but the retailer won’t buy back your gold bars and coins if you want to liquidate your investment. 

“If you purchase at Costco, you will need to develop a relationship with a precious metals dealer elsewhere when you wish to sell,” says William A. Stack, financial advisor and author at Stack Financial Services LLC. “Dealers often give a better repurchase price to products you purchased from them initially, and sometimes will not purchase gold from a different source.”

Gold investing companies pros and cons

While gold investing companies can be a good choice for many people, there are drawbacks you should be aware of beforehand. Below, we cover the pros and cons of working with a gold investment company to purchase gold. 

Pro: More options 

The primary benefit of working with a gold investing company is that you have more options to choose from. Whether you’re going to a precious metals dealer for physical gold or working with an investment company to buy gold-backed securities, you have a range of choices. Options at Costco, on the other hand, are limited, as the retailer only sells physical gold bars and coins.  

Con: May have a higher markup 

When you buy gold, you’re typically paying for the spot price and a markup by the seller. With a gold investing company, that can be much higher than Costco’s 2% markup. 

Pro: Different strategies

Gold investors should have a strategy before buying gold. When you buy from a gold investing company, the company may offer ways to facilitate those strategies, which is something that Costco does not offer.

“Tracking the gold-silver ratio allows you to convert gold to silver (and vice-versa) at an opportune time, when working with a precious metals dealer. Costco will not help you facilitate such a strategy,” says Stack. 

Con: Potential fraud 

The potential for being sold fake or low-quality gold is also a concern when working with a gold investing company. If you end up working with a company or seller that isn’t reputable, you could end up paying for a lesser-quality product under the guise of buying the real thing.

Pro: Accessibility 

Gold investing companies are widely accessible, either in person or online, meaning that the average person can easily purchase what they’re offering. On the other hand, you must be a member to buy gold at Costco. And, Costco’s gold bars sell out quickly, so you’ll need to time your purchase accordingly or run the risk of missing out.

Con: Sales pressure 

Depending on where you go to buy gold, you may face high-pressure sales tactics. If you’re new to gold investing, you may be persuaded to buy something that’s not the right fit for you and pay the price. 

“When you buy gold from a retailer like Costco, your product choices and quantities available will be limited. On the other hand, it is a relatively inexpensive way to secure some gold bullion without the sales pressure applied by some gold dealers to purchase other types of gold with higher markups,” says Stack.

The bottom line 

If you’re interested in adding a gold investment to your portfolio, now could be a good time to do so, before another potential price surge occurs. And, you have a range of options to buy from, including Costco and gold investing companies. Before you make a decision, though, you should weigh the pros and cons to determine which route makes the most sense for you.