Commodity markets are in the news more than I’ve ever seen. And that’s both good and bad. Good that investors are aware of commodity markets and that they should consider including them in their portfolios, be it as an investment or as a speculative venture. Bad that some of the commentators–and some of our elected officials–clearly do not understand the purpose, function or workings of the commodity futures markets.

Speculators are a vital element in futures markets, supplying both liquidity and a counterbalance to the other main group of participants–commercial users who use futures to transfer their inherent business risk. And, when taking futures positions, both groups are doing nothing more than expressing an opinion about where they think the price of a certain commodity, such as crude oil or the S&P 500, will be when that futures contract expires.

Commodity futures markets are thermometers, not the fever that makes the temperature rise or fall.

This article, “Let’s Shoot the Speculators!” by Robert J. Samuelson, and published in this week’s issue of Newsweek, is one of the best I have seen on this subject. Finally, someone who knows what he is talking about.