The great enemy of the truth is very often not the lie—deliberate, contrived and dishonest—but the myth—persistent, persuasive and unrealistic.
John F. Kennedy
As is the case with most myths, the source of the misconceptions about commodities can be traced to misinformation and lack of knowledge. After reading the first two chapters of this book, you probably know more about the commodity markets than most investors. Most people, however, still lack a basic understanding of the futures markets. Instead of picking up a book and educating themselves about the world's hottest markets, they rely on misinformation that is passed along from other sources. A friend of a friend might have relayed a horror story about how he lost money investing in gold or oil. A financial advisor might have cautioned against investing in commodities. Perhaps a CNBC guest proclaimed that commodities were too risky for investors.
In all of these cases, a good number of assumptions were made along the way. Take for example, the seemingly common friend-of-a-friend story. Often the facts behind the story are left out. What trading strategy did the friend implement? Was he overly aggressive? Did he even know what he was doing? Instead, the focus is simply on the fact that he lost money trading commodities. Pretty soon the story is told over and over again, and the myth that you will definitely lose money trading commodities is created. ...