The world’s most prominent natural gas ETF dropped 10% yesterday before a slight recovery.
Then it dropped again today.
Searching For Reasons
In our last blog post, we demonstrated how seemingly underpriced natural gas is right now, considering the possible calamity going on not just in Europe, but the entire northern hemisphere.
And the price just keeps on dropping. To disturbing levels. As it’s been all month!
I saw it yesterday morning as I was combing through stocks, and went right to social media for answers.
I didn’t find any. All that I saw were technical analysis people, who put something out every day regardless of price.
I even made some calls to the few people I knew who also stayed on top of things like this, and they came up blank.
It’s as if somebody doesn’t want us to see it.
Where We Are
UNG normally bottoms out right around $10 or so, and this is usually when there’s little demand for it.
But we’re not in that scenario now.
This also coming on the heels of a large cold snap in the US, which crushed the airline industry.
The US by the way has become a lot more dependent on NatGas over the years as well.
Whilst the US is still a net exporter of the stuff, there could very well be a Triffin Dilemma situation happening this winter, where if the US needs it more, it’s staying there.
And what do you think that does for demand?
I don’t think Russia is walking through that door anytime soon either. Would you if you were they?
Your bargaining power could very well be going through the roof here very soon.
One Possibility
Due to the almost flash-crash nature of what happened yesterday, coupled with the fact that we have yet to see the recovery part of said flash crash, and how we have no definitive answers so far….
My only reasonable conclusion is that it’s being done on purpose. So governments can buy up cheap now for what may be a rough first half of 2023.
A noble cause if you think about it. It’s total manipulation, but this time I’m okay with that.
But you bet your ass I bought more UNG.
— VP
Nothing you see here is financial advice. Do your own work, and understand your results are yours and yours alone.