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Fabrice Taylor is a chartered financial analyst. He can be reached at ftaylor@globeandmail.com

Sometimes, such as on days like yesterday, I think my stock portfolio hates me. If I turn my back on it, I can hear it laughing with contempt. Know the feeling? Anyway, let's not be glum. Investing should be dispassionate. As we lick our wounds, let's think in terms of promising themes. Let's take the micro out of the equation and think about building a core portfolio based on the bigger picture.

This space has been positive on natural gas for a little while, and that idea has so far been successful. We're sticking with it. The future for natural gas demand, our thesis goes, is bright. You can't green the planet without it. After spending $30-billion (U.S.) or so on solar and wind energy, the two combined make up a fraction of 1 per cent of U.S. energy supply. And spare us all this talk about other technologies. If you want baseload power, you need fossil fuels or uranium, and the latter is expensive and takes too long to build. If governments are serious, gas will win market share.

There are natural gas exchange-traded funds that supposedly track gas prices. Avoid them. The trouble with these ETFs is that they suffer what's technically known as "negative roll," which means that they can effectively be self-liquidating.

These ETFs buy futures contracts. Picture futures rolling toward you on a conveyor belt. The distance between you and the contracts is equivalent to time. When gas prices are in contango - i.e. the futures prices get higher the further out into time they go - as the furthest contract comes toward you, it moves closer to spot.

For example, a six-month contract today will be a three-month contract three months from today. Under certain circumstances, which are fairly common these days, that contract gets cheaper because it becomes more "immediate." (Remember that the price curve moves down as you move from the future to the present.)

As these funds have to "roll" their contracts, they are effectively forced to buy high and sell lower. Sure, the share prices rally when prices go up, but the funds can and do lose a few pennies on all or most trades. They liquidate themselves.

A better option is producers. The First Trust ISE-Revere Natural Gas Index Fund buys producers that are heavily gas-weighted. It's a U.S. fund but there's no Canadian equivalent to my knowledge (the iShares energy fund is too oil weighted).

The next theme is precious metals. This one is pretty simple: Currencies are in trouble with sovereign debts soaring and weak economies. Wanted: physical currencies such as silver.

Why silver? Because it seems cheap, at least relatively. As noted here three months ago, the ratio of gold to silver prices has averaged about 70 to 1 lately. It's 60 to 1 now. The long-term average is 32:1. In other words, if you think the relationship will revert to the mean, silver should do better than gold, although both might do well. Our pick here is the Central Fund of Canada's Silver Bullion Trust for reputation and low fees, although there are other comparable options.

The last theme is water, as it relates to agriculture and the environment. The idea is pretty clear: Usable water is crucial but becoming scarce. The vehicle for this theme is the Claymore S&P Global Water ETF. The top holding is Veolia Environment, the French services firm. Other holdings include Kurita Water Industries, which specializes in purifying water and soil remediation, and Nalco Holdings, another services concern.

The ETF is flat year over year, after staging a sharp comeback. It's down since inception. Like a lot of ETFs, it was launched when there was too much enthusiasm for the theme, which is a good reason not to buy an ETF when first launched. But that's another story.

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Three ETFs that show promise

First Trust ISE-Revere

Natural Gas Index Fund (FCG-N)

Price: $15.89 (U.S.)

NAV: $16.59

MER: 0.6%

Why buy it?: This is the only way to play natural gas via the producers rather than owning the commodity directly.

Central Fund Silver Bullion (SBT.UN-T)

Price: $11.75

NAV: $11.56

MER: 0.4% to 0.9%

Why buy it?: Silver and gold have historically traded a lot closer together than they are now; a return to normal would mean more profit if you own this ETF.

Claymore S&P Global Water ETF (CGW-N)

Price: $17.38

NAV: $17.75

MER: 0.7%

Why buy it?: Usable water continues to become an increasingly scarce commodity and this ETF option lets you cover the whole sector and the entire world.

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