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Why this could be the year of the commodities comeback

Commodities were not exactly the place to be in 2013. While the rose nearly 30 percent, the S&P GSCI Commodity Index dropped 3.5 percent. But in 2014, some investors are playing for that trade to turn around.

"I do think there are some reasons why you could be somewhat optimistic about the possibilities for commodities in 2014," said James Paulsen, of Wells Capital Management, who expects the asset class to outperform stocks and bonds in 2014.

"First of all, they got crushed over the last year and a half, and we kind of revalued the commodity market. So I think there's good value here for the first time."

On Tuesday's episode of "Futures Now," Paulsen said that his positive expectations for economic growth undergird his bullish commodity stance.

"The biggest problem commodities have had over the past year and a half or so is that there's been spotty growth in the world—contraction in Europe and Japan, a slowdown in the emerging world, a slug here in the United States at 2 percent," Paulsen said.

"You look now and that's a very different environment. We have the most synchronized global growth outlook here going into 2014 that we've ever had. There's positive and accelerating growth nearly everywhere. I can't help but think that's good for commodity demand."

What makes Paulsen's thesis so interesting is that his take on the global economy is fairly the opposite view of that held by many commodity bulls.

Trucks working the open pit mine at the Rio Tinto operated Oyu Tolgoi gold and copper mine in the Gobi desert, southern Mongolia.Mark Ralston | AFP | Getty Images

"We had a year where commodities have fallen, and stocks have gone up. And now we think there's going to be a reversal of that," said Anuraag Shah, the chief investment officer of Tusker Capital, a commodities hedge fund.

"But we're not saying that commodities will rally—just that stocks and commodities will equalize more, because we're bearish on stocks."

For Shah, who has likened quantitative easing to the "curse of the albatross" (an allusion to Samuel Taylor Coleridge's classic poem "The Rime of the Ancient Mariner") the Federal Reserve's removal of the program is "going to have a huge effect on the market."

"In the past, when we've seen a withdrawal of QE, the market has dropped 20 to 30 percent—and this time is no different," Shah told "It hasn't happened yet, but it's going to happen."

To brace for this scenario, Shah recommends owning gold, which (between futures and bets on gold miners) makes up his biggest position. But because he is skeptical about economic growth, his bullishness on gold is paired with bearishness on copper and crude oil.

On the other hand, Paulsen's favorite set of commodities are the industrials, because "the thing that's tied the most closely to greater global growth is the industrial commodity spectrum." He is also bullish on agriculture, but is "least interested in the precious metals complex, because there's a bit of a safe haven premium that might come out further."

"I would say specific commodities are certainly oversold—there's a huge disparity between elevated, all-time-high stock prices and the crushed commodity space," commented Jeff Kilburg of KKM Financial. "But you have to be very careful and selective about what commodities are going to bounce back."

And as Shah's and Paulsen's disparate selections illustrate, even if commodities as a whole do outperform stocks in 2014, the global growth picture will likely determine which specific commodities will lead the pack.

—By CNBC's Alex Rosenberg. Follow him on Twitter: @CNBCAlex.


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