Newsletter writer talks biggest bull argument in the room.

On the first day of the Prospectors & Developers Association of Canada (PDAC) conference in Toronto, I had the pleasure of sitting in on the afternoon session at the Investors Forum. Bold-speaking newsletter writers – most, if not all, well known by Stockhouse readers – took to the stage to regale listeners with various interpretations, histories and forecasts of and for the macro-economy.

Resource guru Lawrence Roulston of the famed Resource Opportunities newsletter spoke with great conviction on the current state of the commodity markets. In his view, it really IS different this time. Dangerous words to be sure, but Roulston is convinced. Why?

Roulston believes that there is a lot of “misinformation about the base metal markets.” Our skewed North American perspective is obscuring, for many, the fact that “most of the rest of the world is booming,” and that “infrastructure growth in China is nothing short of extraordinary.” If anyone out there believes that the U.S. economy has decoupled from the Asian markets in a real way it’s Roulston, who went so far as to say that the U.S. economic slowdown will have “no impact whatsoever” on international base metals demand, which is instead “going to accelerate.”

Without getting into detail about the macro-economic picture, Roulston noted that “there is a great diversity of opinion about what’s going on in the economy right now,” and investors are losing sight of the big picture. No matter which way you slice it, in Roulston’s view of the base metal markets there is one simple fact that ought to underpin the investment strategy of everyone: “This is a secular bull market.”

Roulston cited two waves of demand and assured the audience that while wave two is just now beginning, it doesn’t mean the end of wave one – wave one will continue to rage. Wave one is made up of base metals demand for infrastructure projects, and it has provided the underpinning for the most recent leg of the bull run. Now wave two is hitting, which is the wave based on consumer demand for “stuff.” All this stuff – from cars to refrigerators to TVs to houses – requires base metals. And if you think by consumer demand Roulston is referring to North American buyers, think again.

Combined with these two waves of demand, you have the compounding problem of shrinking supply: “The low hanging fruit is gone,” says Roulston. It’s no mystery what happens to prices when increased demand is met with decreasing supply.

If you’re not convinced that the base metals commodity bull is here to stay, Lawrence Roulston would have no problem setting you straight.