Some time ago, a discussion with some modern college graduates revealed an interesting fact. In spite of their graduate degrees, these people had never heard of a commodity. I explained as best I could, and they seemed to accept my explanation. I mentioned propane and palladium. They watched me closely for more aberrant behavior. Their eyes began scanning the surrounding area for the mother ship as I mentioned rapeseed and barley. Perhaps they were only trying to protect the community from threats. That is what social workers and child psychologists are supposed to do. Child Protective Services is an official government agency, and these women were its employees. Perhaps the rapeseed word caught their attention. Rape is definitely a word that meets the profile. Was I distributing seedy rapists? Oh My God, I might be a seed rapist! The very mention of the Winnipeg Commodity Exchange implied an international network. Perhaps palladium is the latest designer drug. One cannot be too careful in these terrifying times!

The next event occurred when a young man recognized me in a restaurant He introduced me to his lady, and some small talk occurred. They invited me to sit with them at the bar. He told me that they were soon getting married. I offered my congratulations, and asked them about their plan. The young lady was soon bored, and began to play the video poker machine in front of her. Dutifully, the young man turned, and placed a large amount of coin in front of the video poker machine. Now very curious, I asked if it might not be a good idea to save the money. I mentioned that the money might come in handy in their new life as a married couple The young lady informed me that they were going to win enough money playing the video poker machine to have a nice honeymoon. I was fond of the young man, and mentioned that money might be made by trading the long side of copper the next week. The young lady looked at me with horror. "That’s insane" was her retort. "Why should we just gamble our money away?" This conversation slammed shut.

The next incident occurred during a discussion with a casual friend. The subject of the markets came up. He immediately started talking about the stock market. I suggested that the world of investments was bigger than the stock market, but to no avail. He continued to discuss his "safe" investments. When queried as to their safety, he retorted that his financial planner has already optimized his portfolio for his age and income. Now curious, I asked him what he was talking about? He looked at me as if I had just escaped from the psychiatric wing of Bellvue Hospital, NYC. He took a deep breath and began to slowly explain about his optimized mix of balanced investments. I thought he was going to perform an exorcism on me when I mentioned gold and currencies.

Houston, we have problem! The commodity industry has a non-reputation at best. The antichrist gets a better reception. People pay their hard won video poker winnings to have channelers bring Ramtha and her good buddy Beelzebub into their living rooms. None of these people would pay a commodity advisor to come into their living room. The commodity community has been snookered! We see an industry based on the reality of the supply and demand of the basic necessities of life being ignored at best, or castigated as a fraud. People who will invest in a mutual fund due to the influence of a full moon are adamant that commodities are for crazy people. "What we have here is a failure to communicate."

Why is most of the public totally ignorant of commodities? The few members of the public who are aware of commodities believe that they are a scam. This compounds the problem of discussing commodities. The question is how did this happen? Part of the mystery is found in the 1950’s. Merrill Lynch started a major marketing campaign in the high schools. They distributed brochures on investing in the schools. Some schools even allowed Merrill Lynch to conduct seminars on investing. There was no mention of commodities. We all witnessed the famous lion leaving the subway. Was this a harbinger of things to come? The lions were now afraid of the NYC subways, and began seeking shelter on the streets. This lion was the symbol of the Dreyfus Fund. Jack Dreyfus pioneered the mass marketing of mutual funds. Again, there was no mention of commodities. Time moved on, and the ads changed. Merrill Lynch continually stated "We are bullish on America". We witnessed John Houseman bellowing "Smith Barney. They make money the old fashioned way. They earn it." Can we ever forget that old saw "When E. F. Hutton speaks, people listen"? Have you ever wondered why you have this uncontrollable urge to buy stocks or mutual funds? Please note that we never witnessed Clara Peller asking "Where’s the Commodities?".

The other part of the mystery is the profound change the American economy is experiencing. Does anyone remember the argument that the new "service economy" was going to revitalize America? This position was very popular with the Reagan administration in the 1980’s. Service workers are unaware of the various activities of a production economy. The existence of basic commodities was common knowledge to most Americans when we were a production economy. Raw materials are acquired, treated, processed, or consumed in a production economy. The only function in the service economy is consumption. The service economy removes people from the reality of production. Salesmen, school teachers, nurses, and other white collar workers have no reason to think about commodities. Shopping at Office Max, Home Depot, and Costco are the closest they come to a production process. We are witnessing the spectacle of the American airline industry being overwhelmed by fuel costs. Only one major airline had the sense to hedge its fuel cost exposure in the futures market.

The commodities industry needs to develop a new approach when dealing with the public. The public needs to be informed as to the value of commodities and the futures markets. We live in a political economy, and that means the most votes get what they want. Invisibility is a dangerous strategy. The public couldn't care less about the industry. The mines, farms, and forests are not meaningful to most people. The futures market is of no relevance to the public. Compounding this problem is the current hysteria over the attempted manipulation of prices in the gold and silver markets. Most commodity web sites carry these articles. The public will become more uneasy due to these allegations. MARKET MANIPULATION, written by Sol Pahla, discusses the problem that arises from emphasizing conspiracy themes. More participants in the market increase the liquidity of that market. Making the public more wary is not the way to go. The public needs to know that the gold and copper markets trend very well. Directing the public to information that will help them understand trends helps everyone. J. L. Livermore had much to say about the chances of success in manipulating markets, and held to the view that the only way to successfully manipulate a market was to go with the underlying trend. Richard Davoud Donchian was in complete agreement with J. L. Livermore on this rule of the trend.

Forget the drama, trade with the trend, and prosper

Wayne N Krautkramer onlypill@cox.net