Christmas is a season for many things … and it’s also a time for commodities.
No, I don’t mean the jewelry you’ll inevitably buy your sweetheart. I’m talking the old-time commodities: gold, frankincense and myrrh.
Those were the gifts of the Magi to baby Jesus. In one form or another, these commodities or their replacements are still highly sought-after more than 2,000 years later.
Gold is the commodity that everyone knows. And, yet, it’s also misunderstood. The three wise men didn’t give Jesus gold so he could bling it up. Gold represents eternity — it lasts forever.
And it certainly holds its value better than fiat money. You know that gold is on a rollercoaster rocket ride up, spurred by geopolitical uncertainty and economic storm clouds on the horizon. Miners leveraged to the metal are also poised to soar higher.
Take a look at this chart …
You can see that the yellow metal was in the dumps as the year started. And it continued to grind along until May 31. Then … Bang! Zoom! Gold soared over $1,400.
That led to another, month-long consolidation. Then gold zoomed higher again. It didn’t peak until $1,566 on Sept. 4.
Now, we’ve had MORE months of consolidation. What do you think happens next?
Folks, we’ve seen this movie. It’s a re-run. Gold is primed for blast-off.
Now, the blast-off doesn’t have to happen over Christmas. But it wouldn’t surprise me.
Frankincense is a tree resin with a woody, fruity smell. When burned, it gives off a sweet-smelling white smoke. In biblical times it was used in religious rituals. And it’s still used in modern Catholic masses. In its heyday, frankincense was as valuable as gold. It came from the region around the fabled lost city of Ubar.
Scientists rediscovered Ubar three decades ago, using satellite imagery. Changing weather patterns caused the land of Ubar to dry up. The city was built over a limestone cavern, and when that cavern emptied of water, the earth literally swallowed up Ubar.
(Ubar was located in what is today Oman. Oman is now better known for another important commodity: oil. Interestingly enough, satellite imagery — the same technology that found lost Ubar — is now revolutionizing how we look for new oil deposits.)
Frankincense was also used for medicinal purposes and is still used that way in Asia. In a way, frankincense was an early biopharmaceutical — very expensive and highly sought-after for health reasons.
Myrrh is a bitter-smelling, flammable resin from a gum tree native to Arabia. In biblical times, it was used both as a perfume and to anoint the shrouds of the dead. Its flammability made myrrh popular in religious ceremonies. It was often converted into oil.
The sky-high price of myrrh was its own worst enemy. The ancient people of Judea and Egypt discovered that flammable, oily bitumen, which floated up in big chunks from the bottom of the Dead Sea, could also be burned in religious ceremonies. Bitumen was quickly substituted for myrrh.
We now know bitumen as oil sands. That’s the stuff that Canada is digging up, refining and shipping around the world.
I’m thinking that if Jesus were born today, one of the three wise men might be hauling a barrel of bitumen.
The three wise men gave Jesus gold, frankincense and myrrh because they honored a king. Gold has endured as a commodity. And while you may not be investing in frankincense and myrrh, their modern-day descendants, biopharma and bitumen (oil), are great investments for the long haul.
No matter what investments you stuff in your stocking this holiday season, have a Merry Christmas. And remember that some of the most timeless investments are some of the smartest.
All the best,