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 about 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.
So, if you don’t have at least one of these timeless commodities in your portfolio (two of which have modern-day equivalents), now is your chance to add them.
Let’s get right into it and take a look at the yellow metal first …
Commodity No. 1: Gold
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Gold is the commodity that everyone is most familiar with. 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.
Gold is currently on a roller-coaster ride, spurred by geopolitical uncertainty and economic storm clouds on the horizon.
And it’s not just the metal itself that’s looking to move higher in the new year. Miners leveraged to the metal are also poised to move higher.
I’ve written about this recently. Specifically, in my Dec. 13 column, I noted that gold is a depleting resource, and if gold miners don’t find more deposits, prices are going to the moon.
The World Gold Council recently released its Gold Demand Trends report for Q3. Total gold supply — including recycling — increased 1% year over year, to 1,215 metric tons.
At the same time, overall gold demand soared 28% higher, to 1,181 metric tons. And gold demand is up 18% versus a year ago.
Simply put, we’re at peak gold.
Commodity No. 2: Frankincense — or Modern-Day Biopharma
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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 on the Arabian Peninsula.
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, Earth literally swallowed up Ubar.
Frankincense was also used for medicinal purposes and is still used in that way in Asia. In a way, frankincense was an early biopharmaceutical — very expensive and highly sought-after for health reasons.
Commodity No. 3: Myrrh — or Modern-Day Oil
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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. Earlier this month, I wrote about how modern wise men should recognize the opportunities that lie ahead in energy — oil in particular.
Fit for a King
The three Wise Men gifted Jesus gold, frankincense and myrrh because they were fit for honoring a king.
Gold has endured as a commodity. And while you may not be able to invest in frankincense and myrrh, their modern-day descendants — biopharma and oil — are great investments for the long haul.
No matter what investments you stuff in your portfolio’s stocking this holiday season, have a Merry Christmas. And remember that some of the most timeless investments are also some of the smartest.
All the best,
Sean
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