Thursday, July 9, 2009

What is Natural Gas Telling US?

Natural Gas has not been acting right at all or has it? The persistent weakness in this commodity should be a clear sign of the deflationary pressures I have been speaking about.

It can only really be telling us one of two things.

One: Every asset class out there when looked at in terms of Nat Gas are completely overvalued.

Two: Nat Gas is the buy of the century.

Given analysis of other factors in the economy I would be inclined to go with option number 1. I will say I believe Nat Gas has indeed run too far too fast to the downside, but buying Natural Gas would only be a good idea if you where hedged correctly across the entire commodity complex and other asset classes as well. However I think it would be dangerous, as it has been, to attempt to bottom fish this commodity on pure price speculation.

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