With a heading like 'Resources mania or mining supercycle?', a small piece in issue 197/Apr 06 was always likely to polarise opinion, and sure enough we've received a number of emails disagreeing with the point of view we expressed (which leaned heavily towards the 'resources mania' side of the fence).

We have no difficulty with that, because it's different opinions that make a market and we're not afraid to voice our own. Subscribe to The Intelligent Investor for long enough and you're bound to disagree with us on something or other. But we'll do our best to explain our thinking, and a contrary viewpoint often helps to test one's own opinion.

It's also bound to be the case that the analysts at The Intelligent Investor don't agree on everything, and this is one of those areas. So, in the interests of balance, we thought it would be worth airing some other sides to the debate.

Crucial distinction
Firstly, let's get two very important definitions straight. We'll use the term 'commodity supercycle' to describe a large, sustained increase in the price of underlying raw commodities: crude oil, gold bullion, silver, iron ore, uranium etc. While commodities also include agricultural produce such as wheat, sugar, pork bellies and frozen orange juice, we'll just limit the discussion to something we collectively know more about: mineral commodities.

And we'll use the term 'resources stock supercycle' to refer to a situation where the BHP Billitons, Rio Tintos and Kicking Rocks NLs of the world experience large, sustained (perhaps decade-long) increases in the price of their shares. The difference between the two terms may seem so obvious as not to warrant a mention, but we frequently see the two being confused, and that might prove to be a costly mistake.

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