Investment markets – Natural Gas

97% down to May 2012 – this is not a dot com craze

Pension type investors should perhaps look at this seriously.

Down 97% from mid 2008 to May last year.  It is the fund which aims to track the US price of Natural Gas.  There is a UK Fund.  NG has plummeted too around 75% because the extraordinary lower costs of getting it out of the ground via Fracking.

The process has a bad press. It’s quite ridiculous.  But whatever your view gas is coming.  If it’s this cheap then the people and businesses will clamour for it.  You may have noticed home and business heating has gone through the roof.

Also, from an investment point of view, how much more can it go down?  What have you to lose?  What can you gain over 5, 10, 20 + years.

I would say, think property late 1970s to today…

For more reading:

UNG 3 year chart

Update to Investment Markets of 16 October

but first JP¥ has to fall through lower support of triangle.

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Copyright Jonathan Davis 2014
 
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5 Responses to Investment markets – Natural Gas

  1. Not my field. So if a parent company goes down the ETF assets do too? is that a major issue? Why should the company go down? Why would the etf go down if the company does? The assets are still there? is that in the rules of all etfs?

    • Ted says:

      Hi Jonathan. ETFs are investment vehicles run by banks/hedge funds/whoever backs the etfs. Hard to find clear guidance on how ownership works etc but here is the clearest i could find “An ETF originates with a sponsor, the company or financial institution which chooses the investment objective of the ETF. In the case of an index-based ETF, the sponsor chooses both an index and a method of tracking its target index.”
      It is not the same as owning the commodity outright via a futures contract etc (not that you own it via a futures contract).
      See also here http://www.bloomberg.com/news/2011-07-05/exchange-traded-funds-marketing-said-to-face-u-k-fraud-prosecutor-review.html

      Note “Terry Smith, chief executive officer at London-based inter- dealer broker Tullett Prebon Plc, has said the products often fail to track the underlying asset whose behavior they’re designed follow, are exposed to a provider going bankrupt and vulnerable to short-selling.”

      I don’t expect a broker to be able to suggest anything different. Buyer beware.

    • Ted says:

      As for it being a major issue if the provider goes down-how confident are you in the banking system? If you’re confident then great. If not then ETFs may well give you exposure to the parent banks who are providing the ETFs without you realising it….

  2. Ted says:

    I’ve been looking at it but am mystified how to get on board. I don’t like investing in companies as a bad company in a good NG market could go down without a trace, and an ETF is out as idf the parent company goes down then the ETF goes with it. Can you trade it as a commodity in a viable investment vehicle?

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