Roughly a month ago, meteorologists began warning that the Eastern United States was headed for another brutally cold winter. It was the kind of story that many saw as “click-bait,” enticing people to watch online videos before getting a good weather scare.

#-ad_banner-#Where I live, in New York’s Hudson Valley, temperatures were quite balmy as I kept hearing about the coming “Polar Vortex.” I made a mental note to check back in on the topic in early November, when we would have a much clearer read on the issue. Well, the facts are in and the pundits were right, it’s going to be another bleak winter. And last winter’s natural gas spike appears set for an encore.

The Siberian Connection

Roughly a year ago, I noted an uncanny correlation between the amount of autumnal snow pack in Siberia and winter temperatures in the Eastern United States. As I wrote then, nine of the 10 coldest winters in the eastern portion of the country were the result of this weather anomaly. Last winter’s subsequent deep freeze makes it 10 for 11. Sadly, the just-released numbers portend a coming winter that will again be quite frigid.

For a bit of context, the 21,000 kilometers of snowpack in October 2013 was the eighth-highest reading since records started being kept in 1949. This year’s reading of 22,786 KM is the third-highest since the records have been kept.

As if on cue, AccuWeather just took note of the nation’s first frigid blast of the season noting that “freezing temperatures are possible along the upper Gulf Coast from northeast of Houston to northern Florida late next week.” That is not the kind of thing you expect to read about in November.

Of course, the prospect of an especially cold winter leads investors to again to think about the impact on natural gas prices. When I looked at this issue a year ago, I mistakenly expected stock prices of natural gas producers to be clear beneficiaries. As it turns out, gas prices did spike sharply, but underlying share prices did not.

When I re-visited the topic in late December, I noted that a basket of stocks I recommended rose about 10% over the prior two months, badly lagging the 30% move in natural gas prices. Instead, natural gas-focused ETFs would have been the wiser investing choice. The long-oriented ETFs rose from 25%-to-94% over those two months. Those ETFs kept rising as gas prices pierced new highs in January and February.

Although natural gas prices were pushed lower in October in tandem with oil prices, the two fuel sources have decoupled and natural gas spot prices are now reflecting an expectation that the Polar Vortex may be set up for an encore.

It’s quite a change from a month ago, when many suspected that surging natural gas production would replenish storage depots before winter really kicked in. Yet the Energy Information Administration notes that gas in storage in the Eastern United States remains roughly 5% below the five-year average. You want to check back with the EIA every week to see how inventory levels are trending. (The next release is November 14). If the coming cold weather spike leads to a faster-than-expected inventory drawdown, then natural gas prices can make a quick move to $5 or even $5.50 per thousand cubic feet.

I am not usually a fan of leveraged ETFs, though in this investment opening, they appear to be the best fit. These include: The ProShares Ultra Bloomberg Natural Gas ETF (Nasdaq: BOIL) and the VelocityShares 3x Long Natural Gas ETN (Nasdaq: UGAZ)

These leveraged ETFs are quite volatile and should be seen as more of a trade than an investment, which means they should comprise just a few percentage points of your whole portfolio.

Risks To Consider: The biggest investor risk regarding cold weather is the impact on the economy. The U.S. economy shrank 2% sequentially in the first quarter of 2014, giving investors a deep scare. The economic impact was not long-lasting, as economic growth resumed in the spring.

Action to Take –> Though gas prices have begun to rebound, they still remain far below levels seen at the start of 2014. This is a seasonal trade that appears to be picking up steam, and it’s not too late to provide your exposure to the coming winter weather. But if you do, keep a close eye on the Siberian snow pack, gas storage levels and mid-term weather forecasts. All three factors need to be supportive for the Polar Vortex trade to remain in place.

If oil, natural resources or commodities are what interests you, look no further than StreetAuthority’s Scarcity & Real Wealth. Our resident natural resources expert Dave Forest has more than a decade’s experience as a trained geologist and analyst. His industry insight allows him to read the markets and provide the most timely, potentially lucrative advice for everything from oil and gold to molybdenum. To gain access to Dave’s latest research, click here.