some interesting analysis about UNG (ZT)

fmln06

Here is an excerpt from Barron.

Recall some posts here show the positive relation between HSI and US stock. This one shows a relevant opinion.

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THE IDEA THAT NATURAL-GAS PRICES might be bottoming as winter waned, aired here at the end of February, was premature, to say the least.

While the downward thrust has slowed dramatically, the exchange-traded U.S. Natural Gas Fund (UNG), which tracks the commodity, has dropped 15%, from 17 and change at the time, to 14.56 currently, yielding to an oppressive excess of gas in storage and continued weak industrial demand. Yet as most other commodities -- including crude oil -- have sprinted higher in the broader weak-dollar/asset-reflation trade, the relative cheapness of gas has become much more glaring.

The ratio of a barrel of crude to a thousand cubic feet of natural gas last week rose above 18-to-1, a rather elevated level not seen since the 1990-'91 period.

This reflects the way that commodities that travel easily across the globe -- oil, crops, copper -- have been bid up aggressively by investors betting on another go-round of the "gluttonous China" trade, in which free money and fast Asian growth fuels a boom in materials. Natural gas remains a mostly regional good, especially as captured by the traded futures and the ETF.

Bespoke Investment Group points out that each of the three times the oil/gas ratio topped 18 in 1990-'91, it proved a good time to bet on gas relative to crude. Twice, the subsequent outperformance of gas was dramatic, the other time merely impressive. This probably won't go unnoticed too long, which could mean that it makes sense to own UNG outright, or versus a short position in the U.S. Oil Fund (USO).

buctusa

trueself

1# fmln06

thanks!

wlee

thanks.

gege88

老船

Ding!

anyone

That's a good analysis. Thanks.

gulf

thanks!

bbbuyi

globe