We’ve spent most of our “ink” over the past three months detailing how the government’s giant “E-Z-Credit” program is pushing up the price of nearly every asset imaginable.
This makes life difficult for the contrarian trader, who looks for cheap, beaten-down assets to buy. One of the few ideas we can provide you is (still) check out natural gas.
Natural gas is a vital fuel that heats our homes and powers electrical plants. It also trades in a ratio to its energy cousin, crude oil. Sometimes oil gets cheap relative to gas. Sometimes gas gets cheap relative to oil. Last year, due to a big glut of new gas supply, this oil/gas ratio hit an extreme “boiling point” reading of 24:1. This is a super-cheap gas reading.
Today’s chart shows that, while the 24:1 reading has backed off the burner a bit, it’s still at 22:1. Sure… we know natural gas supplies are high right now. But we also know buying during a glut – when you can get assets on the cheap – is the only way to make big money in the commodity markets. “Natty” is still a buy.
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