The Fundamentals Haven’t Changed In Natural Gas [United States Natural Gas Fund, LP, Chesapeake Energy Corporation]

Should you be worried about the long-term perspective of natural gas?

I certainly am not. Long-term investors have to keep one important phenomenon in mind: assets sometimes go through a period of massive speculation, but then speculators eventually run out.

The fundamentals haven’t changed.

If natural gas continues to trade the way I expect, in the next few years, investors could profit heavily. They may consider exchange-traded funds (ETFs), such as the United States Natural Gas (NYSEARCA:UNG) ETF, as one way to profit from it.

But some words of caution: now that natural gas prices are coming down after seeing a speculative pop, you want to be careful. They are finding support around the $4.50 area for now, but don’t be surprised if they break below. It is also interesting to note that as the prices came down from their peaks above $6.00, we saw volume decline. This means there weren’t many sellers, which can be potentially bullish.

This article is brought to you courtesy of Moe Zulfiqar from the Daily Gains Letter.

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