Thursday

Marc Faber Bullish on Natural Gas

Post a Comment September 3, 2009 – 6:12 pm |   | Permalink |  Print This Post |

The November price remains in a significant contango: October contracts are trading 7.2% down for the day at 2.50 whilst November Natural Gas contracts are 3.70. (This is an equivalent in oil terms = $50 vs $74). We saw from last month that this contango need not correct on expiry so we will not be jumping into a contango trade unless the gap widens further.

We are cheering for gas to drop further. Many are calling for $2 - we are not far off that mark. Let it go down to sub $2. Fantastic. 6.3% down in a day - could this be capitulation? Let’s hope for another flush down. These low gas prices are attracting big investors. This is Marc Faber’s latest video:

We are also aware of the extreme bearishness on the USD - this by itself is a bullish sign, and is in line with a significant drop in equities. In the last few years, there has been significant inverse correlation between the USD and equities (ie drop in equities = rise in USD). We are bearish on the Euro, maintaining that the European banks have not written off their bad debts. This is possibly the Forex Crisis that Jim Rogers is expecting this year. The Euro/USD has been trading in a narrow range - many see this as consolidation before a spike up. We will take a contrarion approach and have a small short on the Euro/USD at 1.4250 mini contract ($1/pip).