NEW YORK (TheStreet) -- The Wall Street Journal misunderstood the nature of some currency ETFs in a story last week that compared the WisdomTree Dreyfus Chinese Yuan Fund(CYB) with U.S. Natural Gas(UNG).
The article concluded that a buyer of CYB may not realize the gain in the Chinese yuan because speculators have already bid up the price of yuan forward contracts.
When UNG rolled its contracts this summer, it paid a steep premium between the contract it was holding and the near-month contract it wanted to buy. Each time UNG sold, it depressed the price of the contract it was selling and increased the price of the contract it bought. Other factors contributed to a situation whereby the spot price of natural gas was much lower than the contract prices for futures further out in time. ...
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