Abe Mishima

Thursday Outlook: Commodities, Global Markets

UNG hit an intraday 52-week low for the second time this year. It looks like a 3rd 52-week low will be made in the next week, and if a 4th one is made, then this ETF is history. In spite of this, the volume is there and traders are still buying. Don Dion is signaling DUMP, DUMP, DUMP, as though Mr. Smarty Pants is doing us a favor. I won't be dumb enough to go out on a limb and predict how this is going to resolve itself. A NAV that is 10-12% below share price is not going to curry favor, but what's the big deal? At the gambling table, you pay a premium to play the game. UNG's long term fate could be as follows. CFTC tells all commodity etf's to limit the number of contracts they can hold. The LP redeems some shares at NAV and the longs take a short term hit. UNG rewrites its charter to trade in short and long term ng positions. That one move could remove the overhead and volatility of month-to-month rollovers. Bingo, that's the reason to stay in the fund. Wishful thinking? Yes. But most investing is based on a certain degree of faith.