This is from Matt Levine's column at Bloomberg, published today: Costco I guess the hedge-fund trade here is: Sell spot gold. Have all your employees get Costco memberships and credit cards. Have them buy as much gold as possible at Costco at a 1.6% markup to spot prices. Collect the 4% cash-back rewards from Costco. Arbitrage profits! Bloomberg’s Yvonne Yue Li reports: Costco started selling bullion in June 2023 in US stores and on its website. … In its fiscal first quarter, the company said it sold more than $100 million in gold bars — equal to about 51,740 ounces, based on calculations using average gold prices during that period. There are benefits buying from Costco. The retailer offers 2% cash rewards for using an affiliated Citi credit card on purchases at Costco. Shoppers also get a 2% reward on purchases with an executive membership, which costs $130 a year. Costco was selling one ounce bullion bars on Sept. 28 for a 1.6% premium to spot gold’s price — below what precious metals retailers charge. Add a potential 4% in rewards, and Costco members get an even bigger break. I’m putting this here only because I fully expect someone to email me to either say “yes my fund does this” or else “we looked into this and we found the operational problem was ________.” Do you, like, buy credit default swaps on Costco to hedge the cash-back counterparty risk? https://www.bloomberg.com/opinion/articles/2024-10-07/retail-investor-had-too-much-tesla
say a firm has 50 employees, who is going to hand the rewards to your boss? can you get timely reimbursement from your firm?