Natural gas ETF trading strategyHow to invest into this commodity ETF ?Natural Gas ETF is one way how to participate on huge price swings in commodities. There is special commodity ETF with symbol UNG.I personally do not think that commodities are good asset class for long term investment. I recommend to invest into commodity ETF stocks more actively and use rising or declining trends to generate profits. I recommend to my clients and also when I discuss with longer term investors to be more active self directed investor then pure buy and hold investors especially when we speak about using commodity ETF. Natural gas ETF with symbol UNG is constructed in a way that sells first futures contract and buys into second contract each month in order to keep its exposure to natural gas. Contango is a negative difference in price between first and second futures contract. By definition, rolling contango means losing money for UNG each month. such, contango is a result of overcapacity where producers are selling into a well supplied market. As stocks of natural gas are very high, the cost of storage is not negligible. Picture with Natural Gas storage data analysis: 
Sellers have little pricing power in the front contracts as the market is aware of a glut. Contango reflects a perception of low risk getting needed gas in the spot market in the future. Today (2011) we (Richard and my advisory team) see little threat of supply shocks as producers can ramp up drilling very quickly. On-shore natural gas drilling is quite flexible. Contango should therefore prevail. The biggest sole risk could be posed by changes is environmental regulations or any environmental events causing sudden stop in drilling. Therefore my opinion was that this commodity ETF with symbol UNG is a very good short, even it is not so perfect hedge. I have prepared Global Macro investment strategy how to invest into natural gas im my portfolio of position trades. I have published it in my simple-stock-trading-ideas blog too. You can read and download it for free. Please do not hesitate to contact me if you will need more details about this particular strategy or generally about your investments.
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