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‘Tis the Season

Black Friday has come and gone in the USA.   Wal-Mart, Target, Sears and other major retailers took another step towards completely commercializing all holidays by opening early on Thanksgiving evening rather than waiting for early on Friday.  If one does it the others feel they need to follow or lose sales.  Best Buy seems to be on the verge of going the way of Circuit City and other “big box” electronic stores.  They are closing their operations in Europe and attempting to downsize their footprint in the USA.  But is it too little too late?  Has Amazon won?  What if instead of competing in a race to the bottom in terms of price, service and quality of merchandise, a store actually understood what its customers really wanted and offered a refined and edited selection of quality merchandise at fair prices? 

Where do you shop to find that special gift?  What constitutes something special anymore?  Are there investment opportunities with the season?  How about those first three Christmas gifts?  Gold, Frankincense, and Myrrh. 

In Roman times one Roman aureus  gold coin equaled .23 troy oz. which was the equivalent of about one month’s  pay for a soldier or 400 bottles of cheap wine.  That would equal approximately $1,600 today or about $6,500 an oz.  So over a very long period of time, gold has not been a great store of value nor kept pace with inflation.    At that time, frankincense and myrrh were worth about the same as gold per ounce.  Today however, you can buy frankincense for about $120/kg. and Myrrh is about  $24/kg so gold has held it value much better than the other two.   The reasons why frankincense and myrrh have not held their value is due to many factors; primary being that modern bathing and burial practices have alleviated the need for strong masking scents; secondarily is that African nations have lost their prominence in global trade (remember Timbuktu was once one of the wealthiest cities in the world) and thus their goods do not command the high prices more developed nations products do. 

As a gift, it is hard to go wrong with a nice golden bauble, especially if it is meticulously handcrafted.  However, as the correlation between gold spot prices and equity markets has begun to approach one, it does not seem to be the best investment nor is it offering the inflation hedge or the store of value for bad times that it once did.  One might be correct to think that maybe gold mining stocks would make a good investment, after all it only costs about $400-$600 per ounce to extract it, however, you would be mistaken, at least in recent years, as the gold mining companies have trailed the performance of overall equity markets by a wide margin.

So shop like a wise man this holiday season both in the stores and in the markets and may the new year bring peace and prosperity for all.


About the author: Dan Martin is an American citizen registered representative of Greenberg Financial Group (www.greenbergfinancial.com) 

 
 
 
 
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