After a stellar 2016 with notably strong gains, the resources sector has been a bit of a disappointment for investors this year.
However, by choosing carefully I believe there are gains to be found in the sector. Could one of these be a good pick in June?
The Fortescue Metals Group Limited (ASX: FMG) share price has fallen almost 20% year-to-date following a sharp drop in the iron ore price. Whilst it shares are arguably dirt cheap right now, I would only invest in the low-cost iron ore producer if I felt confident that iron ore prices would improve. Unfortunately with stockpiles at Chinese ports at extremely high levels and supply expected to increase, I'm not convinced we'll see improved prices any times soon.
The Galaxy Resources Limited (ASX: GXY) share price is down approximately 6% year-to-date. I believe this could make it an opportune time to snap up shares in the lithium miner. With demand for the metal expected to increase considerably over the next decade thanks to the growth of electric vehicles and energy storage, I expect Galaxy to benefit from high prices for some time to come.
Although the Newcrest Mining Limited (ASX: NCM) share price is up by 5% this year, it is down close to 16% from its April high. If you are bullish on the gold price moving forward this could be a great time to invest in this high quality gold miner. With an all-in sustaining cost of US$713 an ounce and the spot gold price at US$1,266 an ounce, Newcrest is incredibly profitable at the moment. But as I'm quite bearish on the gold price due to my expectation that interest rates will rise quickly in the United States, I won't be investing in Newcrest at this point in time.
