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  • Why I Believe Natural Gas Should Be Selling For $1.50-$2.00 3 comments
    May 15, 2013 12:32 PM | about stocks: APC, BBG, BP, BTU, C, CHK, COG, COP, DVN, ECA, ELP, EQT, FST, GDX, GLD, GS, JPM, KWK, LNG, MS, NFX, QEP, RRC, SLV, SPY, SRE, SWN, UNG, UPL, WPX, XCO, XEC

    Why I believe natural gas should be selling for $1.50-$2.00

    (click to enlarge)

    Many people thought I was crazy when I called the natural gas market a "bubble" over the last 8 weeks, and many people still think I'm crazy because I continue to call natural gas a "massive bubble" at $4.00.

    I am here to tell you that natural gas should only be selling for $1.50-$2.00.

    The first corroboration for this comes from a master in the energy markets, Mr. Pickens. Just this morning he stated " there is 4,000 Trillion natural gas in the U.S. and Canada which equates to a 125-130 year supply" (CNBC, Video, 05/15/2013).

    The second point is that total natural gas rig count has dropped to 350 which is the "the lowest total since June 1995" coupled with the fact that the EIA expects total production to top last years by 1 % (Doan & Stubbe, Bloomberg, 05/10/2013, EIA Website).

    The third reason is that total speculation on contracts in the natural gas markets represent between 900%-10,000% of what actually get delivered in any given month (CME, CFTC).

    The fourth reason is that derivative products in options, swaps and ETF's distort the underlying market through volume enhancement (Theory, as volume increases while number of market players stays relatively stable then pressure is increased. [All equal to hype and investor craze]).

    The fifth reason is that using the Five Year average or the Last Year average for comparative purposes is naïve, given that the EIA bases its calculations on an actual date-to-date comparison, which does not take into account calendar to orbital-space relationship (EIA Methodology, NASA Earth Orbit). (Such an example can be seen where in Ethiopia and their using the Alexandrian calendar today is actually the 7th day of 2005. So when it comes to our calendar for market purposes it makes a difference to compare exact orbital positions instead of dates on a calendar. For this reason a five year average may be off as much as months to a years. Understanding this the market would plummet.

    These five reasons give rise to a real value for the massively plentiful resource in the range of $1.50-$2.00.

    Let me say this again, natural gas is so plentiful and our technology in recovering is so advanced that natural gas real market value is only $1.50-$2.00.

    This is my call, and I stand by it. I only ask that you rationalize these points, and then take them and digest them for yourself. When cool heads prevail, the market participants will understand that they are all dancing on the surface of a plane of glass and at any moment this glass will and can break.

    Disclosure: I am short APC, BBG, BP, BTU, C, CHK, COG, COP, DVN, ECA, ELP, EQT, FST, GDX, GLD, GS, JPM, KWK, LNG, MS, NFX, QEP, RRC, SLV, SPY, SRE, SWN, UNG, UPL, WPX, XCO, XEC.

    Themes: nATURAL GAS Stocks: APC, BBG, BP, BTU, C, CHK, COG, COP, DVN, ECA, ELP, EQT, FST, GDX, GLD, GS, JPM, KWK, LNG, MS, NFX, QEP, RRC, SLV, SPY, SRE, SWN, UNG, UPL, WPX, XCO, XEC
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Comments (3)
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  • GJN
    , contributor
    Comments (52) | Send Message
     
    Sir Monaco, it really doesn't matter what you think NG should be trading for. What matters is what it is in fact trading for. We are now well into May, and I have not seen you post an apology for your previous wrong predictions that we would see NG at 3.30 or lower by this time. Admitting you were wrong could salvage some of your crediibility, sir.
    16 May 2013, 10:46 AM Reply Like
  • Sir. Monaco
    , contributor
    Comments (367) | Send Message
     
    Author’s reply » GJN, at least I am not chicken in taking a position.

     

    You on the other hand seem to run around and mock those who do.

     

    In the same light, go bother someone else,

     

    I am sticking to my guns and my bets are all doing fantastic, it is what the investment community thinks that matters, and I bet you everyone is scratching their heads saying "$4 is way too high for natural gas, $3 is more in-line, and $2.50 is possible if we get 6 weeks in a row of 100 injections"

     

    today's was 99 and injections are rolling in,

     

    everyone knows this, keep up the annoying comments GJN we all know you're a double-agent
    16 May 2013, 12:33 PM Reply Like
  • GJN
    , contributor
    Comments (52) | Send Message
     
    OK - - now I'm a double agent. LOL. And the price of NG hasn't come near your predicted bubble burst price that was predicted to occur by this time in your previous articles. So don't apologize to those you have mislead to maintain some kind of positive reputation and keep on writing articles to bolster your own opinion that continues to be off track with the real price. As you would say .... Cheers
    16 May 2013, 09:36 PM Reply Like
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