The next commodity bull market just kicked off
From Matt Badiali, Editor, Stansberry Research Resource Report:
The bear market in resource stocks crushed some of the world’s largest mining companies.
From June 2011 through January of this year, shares of Vale (VALE), BHP Billiton (BHP), and Rio Tinto (RIO) got obliterated…
During that period, these three companies lost more than $440 billion in combined market value.
But since bottoming in January, these companies have staged a modest rally.
So… is it time to buy?
Take a look at how these three mining giants have performed since their January bottoms…
As you can see, all three companies have enjoyed big bounces this year. In the grand scheme of things, these companies have a long way to go to recover from their pre-bear market levels.
However, it’s a huge move higher for all of them, considering what we’ve seen over the past five years… And it could be the signal that a new bull market is beginning.
What’s causing these companies’ share prices to rise so quickly?
Iron ore. It’s in everything, from concrete to new cars. Combined, Vale, BHP, and Rio Tinto produce about half of the world’s iron-ore exports.
Iron-ore prices fell from $150 per ton in 2013 to a recent low of $41 last December – a 73% fall. Since the bottom in December, iron-ore prices are up 61% to more than $66 per ton. That’s a huge rally in a short time.
And as we discussed with coal, this is a great sign.
The story in iron ore mirrored coal over the past few years. Companies were going bankrupt, massively cutting costs, and selling off their assets for a fraction of what they were once worth. At least a half a dozen iron-ore companies went belly up around the world. The few that managed to survive were barely surviving by the beginning of 2016.
As you saw in the table above, these companies have been on a tear this year. And while I don’t expect them to keep that pace up going forward, all three offer solid, double-digit upside over the next year or two as iron-ore prices continue higher.
If you don’t own exposure yet, consider taking a stake in one of the big three iron-ore miners above.