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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: RWS who wrote (123752)	8/28/2009 4:47:11 PM
From: profile_14	1 Recommendation Respond to of 206223

UNG does not track gas prices. It tracks a rolling front month contract and the curve is steep right now. Plus it is trading at over 20% premium to NAV. It has never done that. Prices can rise and the premium can disappear and the underlying UNG will may not move. Prices can rise and the curve can flatten and UNG can stay flat. The best way to play NG IMO is to find a source of cheap reserves in either a royalty trust or E&P, but they are all very expensive right now on a cash flow basis and even pricing in reserve replacement. The flip side is that the new SEC rules will likely cause companies to increase proven reserves because seismic technology can be used in the estimation of reserves (see DVN 10-Q for example on the discussion of how they expect their reserves to increase). Personally, I would stay clear until the dust settles.