Thursday, August 20, 2009

Natural Gas: UNG vs

In the last 30 days the USD has devalued around 2% vs the CAD dollar, and in the last 90 days it was about 5%. Something is very off here.

5 days:

30 days:

90 days:

One of these two is overvalued. UNG is broken due to its lack of new shares issue, so it is currently overvalued vs. NAV. Claymore's doesn't follow NYMEX natural gas contracts, it follows AECO (Alberta) natural gas contracts. It seems that nobody wants anything to with natural gas there. Will precede UNG prices?

Prices will be wild, they could conceivably go to zero as storage overflows. Throw in a hurricane or two and you have a trader's paradise. Not for the long term (unless you are talking a decade out). Straddles here will likely also be highly profitable.

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