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| Natty Gas ETF;s--via GSWire:.......with the current "well supplied" state of the gas market, the natural gas funds' strategy ensures they lose money by buying an expensive futures contract, then turning around and selling a cheaper futures contract. Precious-metal funds can buy gold or silver bullion and store it in a warehouse. But the natural gas market isn't as globalized and orderly as the gold market. And the storage costs are higher.
Rather than storing natural gas, the fund administrators try to replicate the spot price by using a series of futures trades.
In theory, this method can work. But for the past year, the natural gas market has been in a situation called "contango."
This kind of setup occurs when a commodity market is well supplied. Since there's plenty of near-term supply, the near-term price is lower than the price of a contract for delivery at a date farther down the calendar.
Until these funds make a major change to their methodology | |
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Verge of Serious Ankle Grabbing
