Which natural gas etf is suitable for tracking the long-term price (1 or more years) of natural gas? I'm leaning toward NGAS.L but also considering UNG. Or would neither be appropriate? Essentially, I'm curious about how to buy the commodity (much like gold or silver) and hold for a while. Any suggestions?
ETF Trends Forum » ETF Forum
Natural Gas ETFs
(16 posts)-
rs1234
MemberPosted 2 months ago # -
whyDNA
Memberhello,
Unlike gold or silver which can be stored in a bank vault a natural gas ETF is linked to the futures market so make sure you are familiar with with the way it is priced.It is NOT directly linked to daily price of gas. Im in the UK and have held ETFS short natural gas (SNGA)for most of 2009. I have been in while it was above its 200 day MA and had and 8% rolling stop loss which triggered a sale in 1st week of September.
Im now watching ETFS NGAS to try and capture any uptrend. As Im in sterling, currency conversion has an impact but at moment this is working in my favour but it can change like the weather. This is volatile territory so you must monitor the trend and have a stop loss in place to protect you from losing your shirt or losing a nice profit! Also if youre not in dollars make sure you understand the currency risks 0R benefits.
Unable to comment on UNG as my broker doesnt offer it but keep an eye on the news....its in it a lot.
Do your homework and GOOD LUCK.Posted 1 month ago # -
mmaker215
MemberRegarding UNG, it appears that this ETF has been forgotten about. Although gold and silver are breaking new highs, I am being told that Nat. Gas is the next to run. I am searching into the Nat Gas sector these days and I am probably going to get long very soon. My question is, should I buy companies like CHK, MTW or WMB instead of buying UNG or NGAS. I know Aubrey McClendon has to sell a bunch of CHK shares in the teens when the market got hit, but it seems he has been acquiring more recently.
I do not know much about NGAS,except that it is at 2.28 right now. I guess I need to look at the people who put it together.
I believe that UNG was halter for a couple of days going back around 2 months ago, but I can not seem to find out exactly when and why??
Any advice on the best way to play the Natural Gas rally that is among us shortly????Posted 1 month ago # -
NutSkin
Memberhttp://www.fool.com/investing/value/2009/10/07/this-just-in-upgrades-and-downgrades.aspx
Read this - covers UNG, nat gas prices, and nat gas drillers
Published 10/7/2009
Posted 1 month ago # -
Donato
Membermmaker215 . . .
Who told you that UNG was forgotten? And who told you that it is about to run? Mmmm, love those hot tips!Three month average for UNG has been trading over 35,000,000 shares daily. That is a lot of shares. Hardly forgotten. Of course, most of that is day traders. Regarding getting ready to run, it might. Or, it might not. Typically, natural gas lags oil.
So, to answer you question, when oil starts going up . . . That's the time to get into gas. Might take a year or two, you know, for the value of the dollar to continue falling, the economy to pick up a bit, and for inflation to really kick in. Stick with stocks for a position trade. If you can tie up some bucks for the long term, then UNG may be appropriate.
Disclosure: Yes, I own UNG.
Posted 1 month ago # -
roughbert
MemberwhyDNA are you aware of the leveraged LNGA? Are you in energy ETFs? COAP is doing rather well isn't it?
Posted 1 month ago # -
whyDNA
Memberroughbert. Yes I know the leveraged ETF LNGA but I never trade on margin. Im just a retail investor who cant afford to get burnt!!!
my other golden 3 rules are:
1.Keep fees down. Which is why Im a big fan of ETFs.
2.Make most of your tax breaks. I use a pension account to invest in.
3.Be contrarian. Which is why natural gas is so interesting at moment!I read a blog on the Financial Times website recently (August I think) where an unnamed hedgefund had placed a massive trade on natural gas to triple by March. At the time I was still shorting it.
Another piece I read recently is that Labor day is the traditional start of the US heating season and traders see this as a seasonal opportunity to go long on natural gas and sell oil until 2nd week of December.
Im aware of the massive glut/low industrial demand of natural gas and hence its low price but when something is historically cheap and Joe public hasnt yet noticed then its worth monitoring.Another thing from the UK is that sharetippers are starting to mention British Gas (BG) and Gazprom (GZ) as beneficieries of any recovery.
I became aware of moving averages and how to profit by them some time back in the UK by Mark Shipman whose methods are similar to Tom Lydons. I instantly liked the fact that this method blew orthodox buy and hold or trying to second guess the market out of the water and started to research it in depth and came across Tom Lydon and this website.
Personal experience has shown me this is a powerful and profitable strategy.Posted 1 month ago # -
Hi, here is a list of natural gas ETFs/ETNs and charts for your reference:
Posted 1 month ago # -
roughbert
MemberwhyDNA, Thanks for mentioning Mark Shipman. I do not use TV or frequent bookshops much so he had not shown up on the radar. I did find this precis of his method:
He uses a 40 week moving average and goes long if the closing price at the end of the week is higher than all the previous 12 weeks closing prices and if the price is above the 40 week moving average (only if the 40 week moving average is rising). He then sells that long trade if the price dips below the 40 week moving average.
Is this a fair summary?
I have also made a note to buy one of his books - which do you recommend?
And noted too that he trades via spreadbetting therefore avoiding tax and appears to be based in Ireland - where authors can presently avoid paying any tax at all. Am beginning to warm to the feller.
I shall have a bit of fun backtesting his method. Not sure if there is much point in goind further back than March 2009 because a) conditions like those are unlikely to be repeated, b) the markets seem to have been "reseeded".
BTW not sure I followed your comment about margin wrt LNGA, I think the leveraging is built in to the fund which would make it a good punt if the fund pops.
Posted 1 month ago # -
whyDNA
Memberroughbert...
Your summary is accurate for one of his methods but in his book "Big Money Little Effort" Mark Shipman gives a refined version using 50 week and 30 week moving averages. When the 30 MA is above the 50 MA then its a buy signal when it dips below then sell and keep cash readily available for next move. He lists in exact detail his method, logic, charting website instructions and many years of examples. I can recommend the book highly. His lists ways to exploit this including low cost trackers and ETFs. This method is really meant for an index and he explains why in the book also.I also like both of Tom Lydons books as they break down ETFs in much more detail. In his recent book Tom refers to levergaged ETFs as high octane and for now not sure if thats for me.
As you say if gas is about to pop we could do well on this one.
Good luck buddy......
Posted 1 month ago # -
roughbert
MemberWhyDNA, thanks again - I just placed my order on Amazon for Shipman's books.
If I got my punt right with LNGA then it will pay for my heating oil for several years.
Won't know for months though.Regarding the scariness of leveraged ETFs, I think that the predicted commodities bull market plus seasonal factors makes LNGA less scary - but then, I am new to this particular game.
Posted 1 month ago # -
roughbert
MemberResearching Natural Gas I came across the interesting statistic that it has about 1/5th of the "heat value" of oil, which would suggest a price of $10 to $12. I suspect that the true story is more complicated than that and has more to do with pipelines and dedicated generating plant. Penetration of the vehicular fuel market is also very low.
So, any suggestions for a target in April 2010?
Posted 1 month ago # -
roughbert
MemberSo Crude was up today and UNG was down. Is it because of the diversification of the UNG ETF away from (although still retaining a core of) futures? The people need to know...
Posted 1 month ago # -
whyDNA
Memberhttp://etfdb.com/2009/the-definitive-guide-to-natural-gas-etfs-natural-gas-etf-investing-101/
Keeping an eye on natural gas again myself and hope others find this article useful.
Posted 1 month ago # -
roughbert
MemberNice post on www.iii.co.uk re. LNGA from The Angry Banker:
LNGA exacerbates the effects of contango.
<<<<<<<<<
Contango effects typically cost 6% per annum, so that would be 12%+management fees with LNGA. So, you've got to be confident of at least 6-7% uplift in the spot price per year to just break even with a double bull etf like LNGA.For more info, check out the resources (education) section of the Horizons Beta Pro website. specifically, check out their "focus on energy" conference call presentation...towards the end they offer a tactic to counter contango using their double bear eft (HND) to take advantage of contango costs combined with their "winter" gas single bull ETF to take advantage of more general drift upwards.
This appears to have been a very effective tactic when gas prices have been less volatile, generating an awesome year on year return (if you believe their figures).
>>>>>>>>Posted 1 month ago # -
roughbert
MemberWhyDNA, I have acquired and absorbed Shipman's books. Actually I like the minimalist approach so I was not dissappointed!
I thought I could do a lot worse than to follow Shipman's example, and invest a part of my fund in this way, using index-tracking funds to start with. However I think we are overdue for a correction and will wait awhile before doing so.
Thanks for the suggestion!Posted 1 month ago #
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