In a surprising turn of events, Costco's foray into selling gold bars and silver coins has become a massive success, according to a recent analyst note from Wells Fargo. The sales of these precious metal products are estimated to contribute between $100 million and $200 million per month to the company's revenue, albeit with low profit margins.

Costco began selling one-ounce gold bars, made of 24-karat gold, last October. Priced at approximately $2,000 each, these bars have attracted a significant number of buyers. However, the report suggests that the real value for Costco lies in how the price of gold reaffirms the company's brand as a provider of value. As of Wednesday morning, the spot price of an ounce of gold stood at $2,332.

With gold prices rising by 13% year-to-date, outperforming the S&P 500's 8.6% increase, Costco's timing for entering this market seems impeccable. The gold bars have been likened to the highly popular rotisserie chicken, acting as a premium product that grabs customer attention and drives foot traffic to the store.

Taking advantage of their online platform, Costco expanded their precious metals offerings in March by introducing silver coins on their website. This move proved to be even more successful, driving increased e-commerce sales. Then-CFO Richard Galanti highlighted the boost in online sales during an earnings call, stating that gold and silver sales were significant contributors.

Costco initially sold packs of 25 one-ounce silver coins for $625, but they quickly sold out due to high demand. However, some customers expressed dissatisfaction with the shipping process, reporting unsealed cases that caused coins to fall out and, in some cases, become scratched.

Unfortunately for these customers, Costco's policy has made it difficult to address these issues as the coins cannot be returned or refunded. Additionally, customers face a limit of five cases per membership and have only one opportunity to make a purchase.

Despite the challenges faced by some customers, the popularity of gold bars and silver coins among Costco shoppers showcases the potential of precious metal sales for the company. With their gold rush enticing customers both in-store and online, Costco has found yet another way to solidify its position as a retail giant.

As gold prices continue to rise and interest rates remain uncertain, Costco's venture into the world of precious metals seems to be paying off, both in terms of financial gains and reinforcing its value-oriented brand.