Meanwhile, gold’s value is skyrocketing, reaching near-record highs. Investors are pouring into this precious metal as they look for shelter from the geopolitical turmoil and accelerating inflation. That’s because the current spot price of gold just skyrocketed to nearly $3,390 per ounce. That’s a staggering jump of about 45% over this time last year. If you purchased gold at Costco a year ago, you’re fortunate! Your typical 1-ounce gold bar continues to provide a substantial unrealized gain on your investment.
It’s normal for investors to turn to gold in an uncertain climate. They go in hiding when they’re unsure about the strength of the U.S. dollar or the entire economic climate. As uncertainties abound on global political stages and inflation continues to stay high across economies, gold’s attractiveness as a safe-haven asset is heightened.
Costco’s Purchase Restrictions and Their Impact
With demand soaring, Costco raised purchase limits on gold sharply in late May 2024. Members are currently limited to one transaction per day, with a maximum of two bars permitted in that 24-hour period. This unexpected policy about-face illustrates how prominent gold’s performing as a hedge against growing economic headwinds is.
Even with these caveats, purchasing gold through Costco is still an excellent opportunity for members. The price paid in June 2024 for a 1-ounce gold bullion bar was $2,399.99. Now, it’s worth $3,390, leaving you with an unrealized gain of $990. That’s a fantastic 41.3% appreciation!
The demand for gold goes well past retail orders. Average sellers, making a traditional brick-and-mortar bullion dealer, are usually 1%—5% below the spot price. This analogy holds true only for a typical 1-ounce gold bar. The spot price serves as an important marker against which prices in longer-term contracts are negotiated. In reality, sellers typically only take home an estimated 5% to 10% less than that.
Tax Implications for Gold Investments
If you are thinking about selling your gold then it is crucial to understand the tax liability that will accompany the sale. If you sell gold before one year, the proceeds will likely be taxed as normal income. Then you are missing a key — and sometimes huge — positive effect on your net return on investment. Bill Shafransky advises investors to “be adding up the tax bill you pay to Uncle Sam,” indicating that potential profits could be diminished by tax liabilities.
A lawyer and investor advocate Jon Ulin advises investors not to rely on private buyers or online marketplaces such as eBay or Facebook Marketplace to sell gold. He warns that these platforms don’t always get the best return and can often make the eventual selling process more complex.
The Future of Gold Investments
As a result, gold prices are shooting up in the gold capital of the world. Investors cannot miss a beat with the metal’s potential for making sound investments. The ongoing geopolitical tensions and persistent inflationary pressures suggest that demand for gold may remain strong in the foreseeable future.