4 Top Commodity Stocks To Buy For 2017

Even as the Trump-fueled rally goes from strength to strength, commodities are well placed to hold on to their highest gains since 2010. Leading the gainers for the category are industrials, which have staged a complete turnaround after the losses they suffered last year. For instance, some of 2015’s largest losers, iron, zinc and natural gas have scripted strong performances this year.

Moreover, the sector is likely to have a strong 2017 as well, riding on a better supply demand equation, congenial government policy and higher investment demand. With the New Year around the corner, this may be a good time to pick up select commodities stocks.

2015’s Losers Stage Strong Rebound

In conclusive evidence of the commodities recovery, The S&P Goldman Sachs Commodity Index is up nearly 25% year to date. The best yearly gains in seven years have come on the back of some of last year’s biggest losers. These commodities have regained lost ground this year and moved even higher. Several market watchers and experts believe that this is a fundamental recovery.

Additionally, it is widely believed that demand-supply equilibrium will be reached by the commodities sector only at the end of next year. A majority of commodities had been trading below their marginal cost of production for a long period. This is has caused producers across the world to reduce output levels. Meanwhile, stable long-term global demand is also contributing toward the rebound in commodity prices.

Industrials at the Forefront of Gains

Leading the commodities rally this year have been industrial stocks. Prices of iron ore had nearly doubled as of Dec 14, recovering in spectacular fashion from last year’s decline of 46%. Copper has gained around 22% year-to-date after losing 24% last year. Gold and silver have gained 8% and a remarkable 22% respectively, after losing 10.5% and nearly 12% last year.

Iron ore has led the pack and its fortunes are intrinsically tied to those of China’s steelmakers. China has produced around 810 million metric tons of steel this year, outpacing predictions that it would produce less than 800 million tons. Meanwhile, gold may soon register its first yearly gains since 2012. On the other hand, silver will notch up its highest gain in percentage terms in six years.

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