Before investing in a $1,089 platinum bar from Costco, here's what you need to know.

Costco is popular among shoppers due to its affordable gas, discounted consumer staples, and consistent $1.50 hot dog and soda prices.

Lately, the wholesaler has discovered a new reason to appreciate: precious metals.

Last year, Costco started selling physical gold, and due to high demand, Wells Fargo analysts predict that monthly sales will be approximately $100 million to $200 million.

This month, the large retail store started selling platinum on its website. A 1-ounce bar of the metal costs $1,089, which is slightly more expensive than platinum's current spot price of approximately $1,000 per ounce. The bars can only be purchased online, and a membership is required, which costs between $65 and $130 annually.

Costco's entry into the metals market has simplified the process of owning physical gold and platinum for everyday consumers. However, the popularity of precious metals as an investment option is not a new trend, particularly among those seeking to invest in them.

During economic turmoil, investors often seek refuge in gold, particularly when there are concerns about the stability of the fiat dollar, such as inflation or other factors.

According to Trevor Yates, an investment analyst at Global X, gold and other precious metals have a history of preserving purchasing power over time.

In the past year, the price of gold has increased by 46% to approximately $2,700 per ounce due to investor demand.

"U.S. Bank Wealth Management's senior investment strategist, Rob Haworth, suggests that other assets, which have not performed as well, may offer value for investors due to their potential for better returns," says Rob Haworth.

With gold's recent rise, investors may be wondering if platinum will also increase in value.

Investing in platinum vs. gold

Gold and platinum possess certain similarities, as well as notable distinctions.

Gold and platinum are both valuable metals due to their rarity and beauty. Humans can only mine a limited amount of these metals on Earth. Both are used in jewelry and have different investment behavior compared to traditional assets like stocks and bonds.

By owning uncorrelated assets, you can reduce risk in your portfolio by ensuring that not all your investments are moving in the same direction at once, according to Yates.

Perhaps individuals are seeking to diversify their portfolios with gold and precious metals as an uncorrelated asset class, which could potentially bring significant value, according to him.

Investors considering gold or platinum should be aware of some significant differences. Unlike gold, platinum has a relatively short history of value, with its primary use being in the automotive industry. Its demand mainly comes from industrial consumers.

Platinum is used as an industrial material in traditional and hybrid vehicles, which makes its demand more cyclical compared to gold.

Platinum is usually mined with a group of elements that includes palladium, rhodium, and osmium, while gold is often mined on its own or with copper and zinc.

It is wise for investors interested in platinum to closely monitor the dynamics of all platinum-group metals, as fluctuations in any one of them can impact the profitability of miners and subsequently affect platinum production.

How to invest in precious metals

The reason for owning platinum, or any precious metal, influences how you invest in it.

If you're seeking a portfolio diversifier, a precious metals exchange-traded fund may be the right choice for you. These funds hold a physical cache of precious metal and track the metal's spot price. By investing in a precious metals ETF, you can gain exposure to the metal of your choice at a low expense ratio, alongside your stocks and bonds in your brokerage account.

It is advised by many investors to avoid investing a significant portion of your portfolio in anything that sparkles.

According to Haworth, the challenge with these assets is that they do not generate a steady cash flow, such as income or dividends, for investors, and their value can only be realized through a price increase over time.

Warren Buffett's argument against holding gold is echoed in this sentiment. In his 2011 shareholder letter, Buffett imagined owning all the world's gold in the form of a cube. Even after 100 years, he believed you'd still own a cube.

By investing in income-producing assets like stocks, you could potentially become much wealthier in the long run with the same amount of money.

Some investors value owning the physical metal, either as a hedge against a future worthless dollar or due to distrust in financial institutions to hold their metals.

Yates says that if you're interested in owning platinum, Costco provides a competitive price from a reputable source.

""Costco effectively reduces the security aspect of purchasing and owning precious metals, thereby alleviating the fear of fraud and increasing credibility," he remarks."

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