The cyclical nature of Natural Gas is showing no signs of changing over time. Sure, we see the trend of higher lows in term of weekly storage – meaning that there is a long-term build in inventories occurring. But almost right on schedule, inventories, while high, are starting to come down into the winter.
The Natural Gas ETF (UNG) has been in losing money for investors, almost since its inception (Unless you were/are short ). The causes for the under-performance have been discussed here before and there is no reason to believe that there will be a change anytime soon.
We tried to invest in this ETF once or twice before, but quickly realized that is is only beneficial for a trading position as the shares are not actually indicative of rising or falling natural gas prices due to the fund’s construction.
New discoveries of natural gas have been showing up recently and the billions of cubic feet in finds should keep the price of natural gas depressed. United States Commodity Funds managers need to figure out a better way to combat the wide range of rolling contract prices from the front-month to the next delivery month in order to allow some potential for investor profits. a.k.a Contango…
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Disclosure: Horowitz & Company clients may hold positions of securities mentioned as of the date published.