Market Talk: Is this a huge buying opportunity for Natural Gas?

by Scott Martindale, Senior Managing Director

Scott Martindale

Did UNG (natural gas ETF) really dip below $9 today? And NYMEX Natural Gas Oct Futures (NG) are below $2.7/MMBTU. Is natural gas destined for no value, or is this a great time to be accumulating for long-term investments?

The worry about UNG has to do with the premium it has accumulated due to the restriction on new ETF "creates," which is supposed to be a key advantage of an ETF structure over a CEF. Once shares are again created, this will bring down the premium, and possibly erode the value paid for by current purchases. On the other hand, UNG seems to track pretty well with NG despite the premium. In any case, whether now or imminently, natural gas appears to be shaping up as a great long-term buy.

-- Scott Martindale