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It’s all about trust.
The country may have left the gold standard behind in 1933, but Costco (COST) shoppers are proving that gold is the most popular buy.
Sure, it’s an investment, but it also “reflects a yearning for real money,” said independent research senior fellow and economist Judy Shelton, a Yahoo Finance executive on Yahoo Finance’s Opening Bid podcast. He spoke to editor Brian Sozzi (watch the video above, listen below). “Gold is a type of real economy, representing not only a commodity but also the traditional role of reliable money.”
The wildly popular Costco bullion was introduced to Warehouse Club members last year through 24-carat 1-ounce bars. The product has disappeared from shelves, and Costco is reportedly selling $200 million worth of gold bars a month. Demand was so great that retailers began offering platinum bars.
Costco’s gold rush is likely to have personal meaning for cash-strapped consumers, Shelton said. Over the past few years, consumers have become accustomed to seeing inflation rates reach as high as 9% while the US dollar has lost 20% of its purchasing power. This did not necessarily increase Americans’ confidence.
Judy Shelton will be attending Yahoo Finance’s Invest conference in November. Click here to register!
Gold’s sudden rise in popularity may also have to do with consumers’ overall confidence in the precious metal and what it represents. “This is a meaningful unit of account. It works across borders,” she said. “It has universal value and is highly valued.”
Precious metals such as gold are currently performing well. Year-to-date, gold prices have increased by 31.72% to $2,750 per ounce. Silver and platinum prices rose 41% and 3%, respectively.
Solita Marcelli, chief investment officer for the Americas at UBS, said there was more room for gold prices to rise, citing the possibility of further interest rate cuts and worsening geopolitical tensions.
“Despite the rally, we believe gold’s hedging properties remain attractive. Alongside physical gold, investors may consider exposure through structured strategies, ETFs or gold mining stocks. Investors unaccustomed to volatility in individual products may also consider exposure through actively managed strategies that aim to provide alpha above comparable passive indices. Marcelli wrote in a note to clients.
Three times a week, Yahoo Finance Executive Editor Brian Sozzi has insightful conversations and chats with some of the biggest names in business and markets on Opening Bid. Find more episodes on our video hub or watch on your favorite streaming service.
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