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Some shine will come from the red-hot gold trade.
“Gold is fascinating, and I think people are definitely starting to hedge their bets,” Kathryn Rooney Vera, chief market strategist at StoneX, told Yahoo Finance Executive Editor Brian Sozzi on the Opening Bid podcast (video above; listen below) . Gold is starting to look “long in the tooth,” Rooney Vera said, adding: “I would also book gains if I anticipate any correction in that.”
Gold (GC=F) was one of the best performing assets this year.
The price of the yellow metal is up 27% year to date to around $2,600 an ounce. Prices reached a new record high of $2,694 per ounce on September 26. By comparison, the S&P 500 (^GSPC) is up 20% this year.
The SPDR Gold Shares GLD (GLD) ETF is also up about 27% this year.
Many factors have contributed to the surge in demand, such as geopolitical and economic instability, which tends to drive demand for hard assets such as gold.
Benefits point to US dollar weakness and the Fed’s new rate cuts as further support for gold prices.
However, one of the most fascinating potential contributors to the surge in interest in gold this time around is beloved storage club giant Costco (COST).
Although it’s a well-known bastion where consumers can buy a year’s worth of items like paper products, trash bags, food and household goods, Costco began selling 1-ounce gold bars to its members last fall.
The product has seemingly performed well since its introduction as consumers look for the easiest way to gain exposure to an asset that is increasing in value.
During a recent earnings call, Costco CFO Gary Millerchip said: “Continued strength in [gold] bullion was a meaningful tailwind for the quarter and sales were up by “double digits.”
Analysts at Wells Fargo recently estimated that Costco sells between $100 million and $200 million worth of gold bars every month. It could sell more, but Costco gold bars are limited to five per member and are only available to warehouse club members.
Gold is doing so well for Costco that the company is now expanding into platinum bars.
Traditionally, demand for physical gold has been driven by key financial players such as central banks, not Costco’s. “We are talking about China, Saudi Arabia and Russia,” said Rooney Vera. “But recently demand has grown to include price-insensitive buyers who are less likely to buy government bonds and more likely to buy gold,” she said.
Although StoneX hasn’t been around as long as the great gold rush of the mid-to-late 19th century, the old investment company still has a place in the financial world and celebrated its 100-year milestone this year. A century of observing what makes investors tick comes in handy when we look at gold’s meteoric rise over the past year.
Three times a week, Yahoo Finance Executive Editor Brian Sozzi fields full of insights and chats with the biggest names in business and markets Opening bid. You can find more episodes on our videohub or check your favorite streaming service.
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