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?
Natural Gas ETFs
(21 posts)
rs1234
MemberPosted 2 years 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 2 years 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 2 years 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 2 years 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 2 years ago #roughbert
MemberwhyDNA are you aware of the leveraged LNGA? Are you in energy ETFs? COAP is doing rather well isn't it?
Posted 2 years 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 2 years ago #-
Hi, here is a list of natural gas ETFs/ETNs and charts for your reference:
Posted 2 years 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 2 years 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 2 years 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 2 years 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 2 years 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 2 years 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 2 years 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 2 years 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 2 years ago #-
Hello Friends
This a website for solving the natural Gas.........
================
Mitchell
vancouver flowersPosted 2 years ago # whyDNA
MemberThis article from UK may be of interest to those of us following natural gas opportunities.....
The ‘reshuffle’ opportunity in natural gas
BY THEO CASEY
Dear Reader,
Market indices are a simple way of keeping tabs on what’s happening in the market.
They provide a summary or ‘average’ view of what’s happening to a broad category of investments, for example the FTSE 100.
Every so often, the indices will ‘reshuffle’ their holdings and this reshuffle creates an investment opportunity.
You see, the FTSE 100 index reshuffle means the five (or so) smallest constituents are relegated to the FTSE 250. The five largest 250 stocks are ‘promoted’ to replace them.
The opportunity is that when stocks are introduced to, say, the FTSE 100, fund managers buy them to stay in line with their index. And that means only one thing for share prices in the affected groups. Those stocks will rise.
What’s behind this phenomenon? Index reshuffles are big business. It’s part and parcel of the way the investment management industry works today. A huge proportion of the investment industry (just under 25% of all managed funds in the UK) consists of passive and semi-passive funds that simply track the performance of an index.
This means that every time a few firms are relegated from the top tier, index funds sell off those companies. When stocks are cut from a popular index, funds have to sell these shares to continue accurately reflecting the ongoing performance of the market.
Just as those stocks that are relegated get sold, those that are promoted get bought.
Traders often look to buy those positions being promoted to profit from the likely changes in share price following a rebalance. Those in the know call this approach “index front running”. Indeed Société Générale research shows that “such a strategy has produced significant returns.”
The commodity kicker
The reshuffle effect isn’t just something for stock investors to get excited about. The same is true in the world of commodities. It’s the GSCI and DJ-UBS indexes, not the FTSE that we must look out for. These indexes rebalance only once a year, on 14 January. And there lies the opportunity…
Passive investors will follow the moves of these indexes very closely. That’s $150 billion linked to the value of those indexes according to data from Bank of America/Merrill Lynch.
Given these large sums that move in keeping with the two indexes above, expect the January rebalance to have a big impact on the market. It’s expected that copper, wheat, corn and natural gas will all be positively affected.
Each of these commodities should prosper in the reshuffle. But for the value investor, there is only one choice.
Oil’s poor relations
Which do we favour?
Gas.
Natural gas was a record cheap opportunity. It’s rallied nearly 100% from its credit crunch lows, but it’s still massively underperformed oil. Now that it’s getting a bigger slice of the index, investors are sure to buy it and bid up prices.
To buy gas, you can simply buy the ETFS Natural Gas (symbol NGAS) ETF. It provides like-for-like gains and losses with the movements in the American natural gas price. You can buy it just like a share and, unlike a futures contract, it has no set expiry.
However, our favoured gas play is BG Group. One of the most impressive statistics for BG Group is its after-tax return on
Best wishes,on alongside the rest of Theo’s tips, click here
The ‘reshuffle’ opportunity in natural gas
BY THEO CASEY
Dear Reader,
Market indices are a simple way of keeping tabs on what’s happening in the market.
They provide a summary or ‘average’ view of what’s happening to a broad category of investments, for example the FTSE 100.
Every so often, the indices will ‘reshuffle’ their holdings and this reshuffle creates an investment opportunity.
You see, the FTSE 100 index reshuffle means the five (or so) smallest constituents are relegated to the FTSE 250. The five largest 250 stocks are ‘promoted’ to replace them.
The opportunity is that when stocks are introduced to, say, the FTSE 100, fund managers buy them to stay in line with their index. And that means only one thing for share prices in the affected groups. Those stocks will rise.
What’s behind this phenomenon? Index reshuffles are big business. It’s part and parcel of the way the investment management industry works today. A huge proportion of the investment industry (just under 25% of all managed funds in the UK) consists of passive and semi-passive funds that simply track the performance of an index.
This means that every time a few firms are relegated from the top tier, index funds sell off those companies. When stocks are cut from a popular index, funds have to sell these shares to continue accurately reflecting the ongoing performance of the market.
Just as those stocks that are relegated get sold, those that are promoted get bought.
Traders often look to buy those positions being promoted to profit from the likely changes in share price following a rebalance. Those in the know call this approach “index front running”. Indeed Société Générale research shows that “such a strategy has produced significant returns.”
The commodity kicker
The reshuffle effect isn’t just something for stock investors to get excited about. The same is true in the world of commodities. It’s the GSCI and DJ-UBS indexes, not the FTSE that we must look out for. These indexes rebalance only once a year, on 14 January. And there lies the opportunity…
Passive investors will follow the moves of these indexes very closely. That’s $150 billion linked to the value of those indexes according to data from Bank of America/Merrill Lynch.
Given these large sums that move in keeping with the two indexes above, expect the January rebalance to have a big impact on the market. It’s expected that copper, wheat, corn and natural gas will all be positively affected.
Each of these commodities should prosper in the reshuffle. But for the value investor, there is only one choice.
Oil’s poor relations
Which do we favour?
Gas.
Natural gas was a record cheap opportunity. It’s rallied nearly 100% from its credit crunch lows, but it’s still massively underperformed oil. Now that it’s getting a bigger slice of the index, investors are sure to buy it and bid up prices.
To buy gas, you can simply buy the ETFS Natural Gas (symbol NGAS) ETF. It provides like-for-like gains and losses with the movements in the American natural gas price. You can buy it just like a share and, unlike a futures contract, it has no set expiry.
However, our favoured gas play is BG Group. One of the most impressive statistics for BG Group is its after-tax return on capital employed, and this has remained steady in the high 20% bracket (28.7% for 2008) for several years. Even though it is now worth over £37 billion, BG is still a growth story.
The company makes £5.2 billion a year through transportable gas alone. And it has been acquiring gas assets in Australia and Asia. The company is well placed to prosper from a continuing commodity recovery and is a great takeover target.
Both directly and indirectly, gas plays are likely to benefit from the coming reshuffle effect in commodity markets.
Word to the wise – make sure to place your bets before 14 January or you may miss the move.
Best wishes,
Theo Casey
For The Right Side
on gas that he believes has great potential. You can still get in now… ahead of the ‘reshufflePosted 2 years ago #-
UNG made a lower low today. Big deal! It has been making lower lows for over a year. This one is a little different from the lower lows over the last couple of months.
There is a clear five waves down since the 10/6/09 high. The fifth wave may not be complete, but if not, it should be near. Will this be the end to the long protracted down trend? We will have to see. One thing we can expect is a retracement of the move down from the 10/6/09 high.
Volume has increased above the 50-day average in the last three trading days as the price has closed down each day. Today’s volume was the highest. Could there be capitulation? Are bull traders finally throwing in the towel?
Posted 2 years ago # bighink1
Member...Interesting 6 months later since the original posting and UNG has been down 36%, Natural Gas Futures have been up 8%. Waiting around to "recapture" your loss from contango is not very wise...might as well buy a lottery ticket. NGAS by the way is down 27%... isnt there another product worth investing in for natural gas?
Posted 1 year ago #
