Wt Nat Gas 2x Discussion Threads

[gdasinv2] 03/9/2009 16:29

This is a commodity directly proportional supply and demand. The demand from emerging mkt will drive at some point. At least not going to be much down during winter time or may act opposite.

[jotoha2] 03/9/2009 16:20

Well I bought some yesterday and did what the big boys do and sold them later in the day for a few bob more , it certainly is very hairy to hold long term as has been shown today , the losses seem to grow very quickly , will wait for a real sign that the tide has turned for NG , its taken 7 years to get this low so lots of opportunities ahead.

[gdasinv2] 03/9/2009 16:17

This is tracked by UNG on the index


Now - The fact is here looking historic chart - the NG always been high flyer - The issue is here the NG inventories is large to hold the gas and currently on huge deposit but low demand because of recession. But the assumption is Winter will consume the GAS on fast rate and on economic recovery - they may also fly, but the issue supply is too high , sitting in the inventory, but the upside potential is 1000%....where is the down side is that is can further go down by another 50% - so holding on long term invest a/c like SIPP can be very fruitful looking at the previous trend.

[perfect choice] 03/9/2009 16:09

Agree redprince.

The risk on levereaged ETF dictated not to invest too much in one go. Never like making a loss but if it happens you might as well not make it too big!

I was thinking of buying in further batches but at this rate it would feel like I am catching a falling knife. Will see over the next few days whether it is right to buy more or exit completely and take the loss.

[mart] 03/9/2009 16:06

Must admit to picking up a few more. Probably live to regret it.

[redprince] 03/9/2009 16:04

Perfect Choice-you are welcome, that is what the bb`s are for to learn from each other.Glad you haven`t put the house on it and its not over till its over!

[perfect choice] 03/9/2009 16:00

Thanks redprince and bottompicker, haven't invested a lot on this as I only hold 1050 shares at 1.51. So while a loss, fairly minor against my overall investments. Maybe a lesson learned on leveraged ETF then! Will wait and see how the next few days go.

[mart] 03/9/2009 15:57

Hi H
I've written to my MP already and she passed the letter to Milliband. So far no joy. I had a wry smile seeing 5 energy supremos perform before the new Climate and Energy Commons Subcommittee (Chair - Eric Morley; remember him?) in February (?)[it can actually be viewed on line as it is archived on the Govt website]. They had it all off pat and the questioning wasn't very keen, but I notice that residential gas appears to have been 80% more profitable for BG in the last results. These boys will no doubt have their bonuses in mind. So much for the market delivering savings.

Can I suggest forming a collective of several households, say about 10 neighbours, and trying to negotiate a decent rate with an energy broker. I'm just in the process of doing this via the good offices of a mate of mine and he tells me that a deal he was privy to achieved a rate of 2.1p per KwH. This was for a contract for 1million KwH. I'm currently paying 2.488p per KwH.

Extortion? That's a hard word but I am warming to it.
I wouldn't mind so much if I was sure that the extra 'take' was put to good use
ie. insulation and other efficiency measures AND alternative sources. Certainly, not bleeding bonuses.

[redprince] 03/9/2009 15:54

Perfect Choice-this is copied from iii thread (apologies to author for plagiarism):

Just so long as people understand 4 things about contango:

1. Spot price trends down = lose more than 2* the change in the index
2. Spot price remains steady = still lose money
3. Spot price rises slowly = gains will be offset and LNGA may not make money
4. Spot price rises quickly and sustainably = potential to make a fortune

Given that many remain bearish on LNG futures and storage in the US is bursting (and the US is now a fairly closed, self sustaining market), it still looks a risky bet at this stage. If you're going to play this, I'd recommend waiting for the downward trend in spot prices to prove its stopped first. Getting into this even a couple of months too early will kill you. And it may yet be years before prices pick up... It's a shame its based on US prices, as these may be the last to recover of all LNG prices (which is still priced regionally, unlike oil).

[bottompicker] 03/9/2009 15:50

Yeah just a tip - if you read some of the above links on leveraged ETF's, they explain that most institutions which buy into these - hold them for less than a day. I think that goes to show that there is considerable long term problems with holding an ETF like this.

By the time this goes through the roof, I could be 80% down by that point and unable to get my capital back. No worries though, these things happen!

[perfect choice] 03/9/2009 15:50

A loss is only made if you sell though, so if you've paid and the view is that this will rise later in the autumn, then it is worth holding on. You may not have achieved the best gains yes by not catching the bottom, but what would be the view of the price by December say? 50% higher than today would well justify holding on if you do not incur any costs for just holding surely. There again the 50% rise could be to just get to the price it is today! Decisions, decisions.

[redprince] 03/9/2009 15:45

Ref post 85: this is bottom for now.Even if it bottoms you cant be sure it will lift suddenly.The reason its so low is because gas inventories are at record levels.It could stay here for months.Also if market price is less than futures price you will still lose so timing is the key.Better to wait for upturn or realise that you are taking a serious gamble.

If you like the price and dont want as much of a gamble ie a leverage then you should take the non- leveraged etf for this.

You are thinking that because you are in at a low price that you must therefore
be on a winner here.That is not necessarily the case because you could have half your stake wiped out by contango inside two months if market price doesnt exceed future price.Is market price is likely to do that when there is such a
glut of stored gas and no obvious demand/supply pressure on it?

[gdasinv2] 03/9/2009 15:41

As long as you are long term holder - At some point it will fly, the GAS producer will slow down supply as the current price may not meet the production cost - this will force to stabilize the price as winter getting closed. But loading into SIPP a/c makes sense.

[hectorp] 03/9/2009 15:37

We should all write to our MP's in no uncertain terms to force action at Government level to reduce gas bills in the UK. The profits the power cos are making out of us is extortion. We have gas pouring in from Norway, there is liquid gas starting to appear all over the world at new resources. There will be less demand from industry this winter too.
Fortunately, I'm not in the boat of most being 2 years into a 3 year fixed dual fuel term, I still have June 2007 pricing, so I wont pick up a larger tab till next June. Even so!
I hold some ETF nat gas, not this one, just in case it rallies in the Winter. I dont expect much though, there is a glut of gas.
H.

[redprince] 03/9/2009 15:34

babylon3- i am watching for now

[babylon3] 03/9/2009 15:33

redprince - do you hold or are you only watching?

[gdasinv2] 03/9/2009 15:33

Well this is the bottom at the moment - is has broken down to lowest so far - Good the get loaded to your SIPP a/c, thats I did , This is lowest in last 7 years. When it would fly - no one catch - just remember this.

[redprince] 03/9/2009 15:30

Trying to call the bottom is meaningless and very dangerous to your wealth imho.If it bottoms and flatlines for several months you will lose bigtime from contango unless market price exceeds futures price.Watching the graph here is only half the story.Trying to call bottom is pointless and very dangerous to your wealth as i suugested earlier this week.

[bottompicker] 03/9/2009 15:28

Natural Gas has falled off a cliff and sank to the bottom of the ocean from the looks of it.

NYMEX Natural at $2.52 - wow, I wonder if my bills will come down?

[mart] 03/9/2009 15:22

Whoa, what just happened?

[bottompicker] 03/9/2009 14:55

Hi Mart, this has lost 20% in the last week for me. If you can get the bottom right, then youll be quids in. If you look at the Natural Gas price over the last few years, it has spiked up in September or October.

[gdasinv2] 03/9/2009 14:54

I have diversified and loaded to my protofoili on this cheap NG SP, - GAS Bill is never been low - but Commodity is running 7 years low - OIL and GAS is lucrative - So will wait if it falls another 50% buy at worst level or else upside/fly at anytime....

[mart] 03/9/2009 13:05

Interesting. Thanks for that jools. I note that from the beginning of 2009 to end of August buying FAS (based on Russell 1000 Financial Services Index) would have returned about $80 from a $10 purchase; not bad. Hhm.

[jotoha2] 03/9/2009 12:38

If this is such a difficult product to make money in , why have there been such high trades in the last few months ? And can we assume that lnga has been shorted to death over the last year,