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Archive for May, 2012

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23
May
2012

Three reasons to invest in the Shutterstock IPO

by Fred Marion

While you might not be familiar with Shutterstock, you’ve probably seen their wares on the internet, book covers or posters hundreds of times. Shutterstock operates a stock photo site which lets subscribers download pictures to print or post online next to news articles, and/or as part of a Web site’s design. All told, Shutterstock has some 19 million photographs and graphics available to license for online and print use.

While the company may not be the most glamorous tech company vying for investor dollars, but I still think buying shares makes sense. Here are three reasons why:

1) The subscription model. Unlike some of its competitors, Shutterstock really pushes its subscription model. That means customers keep ponying up as much as $250 a month to use the service. Not only does a subscription model breed long-term business relationships, it’s a more reliable revenue stream than the advertising dollars that most websites compete for. The proof is in the pudding. For the year ended 2011, Shutterstock earned 21.8 million on a revenue of $120.2 million (per the company’s S1 filing).

2) Powerful growth. Revenue at Shutterstock grew 44.5 percent in 2011 – not just in the U.S. but around the world:

And the company is in an industry that’s experiencing tremendous growth. BCC Research estimated the online image marketplaces would grow 51 percent a year between 2008 and 2013 to a total of $2.0 billion in 2013. With more than 32 percent of U.S. businesses still without a web site (and millions of potential customers in countries like China), Shutterstock should be able to sustain double-digit growth for years to come.

3) Consolidation, anyone? While Getty Images dominates the stock photo industry thanks to its strong ties to newspapers, Shutterstock could give the company a run for its money by acquiring some of its competitors. Indeed, that could be exactly what Shutterstock execs have in mind.

“We may use all or a portion of the net (IPO) proceeds to acquire or invest in complementary companies, products or technologies, although we currently do not have any acquisitions or investments planned,” Shutterstock writes in its S1 filing. If it can acquire one or two key competitors, the company will be able to quickly ramp up profits – and look to establish itself as a long-term player in the stock photo business. I’d be nervous if I were Getty.

ESCAPE THE CUBICLE, BEFORE YOU’VE GOTTEN THERE


How to earn $100,000 at age 15
TWO SILVER ETFS, TWO DIFFERENT APPROACHES


PSLV vs. SLV: Battle of the silver ETFs
“AN EASY DOUBLE?”

Groupon stock forecasts for 2012: Deal or no deal?
A JOLT TO THE SYSTEM


Five reasons Ben Bernanke hates the gold standard
THE NUMBER 1 RETAILER IN THE WORLD?


How high can Amazon’s stock go?
A NEW WAY TO SEE THE DOCTOR


A ZocDoc IPO? Could it be the next big thing in tech?

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Posted in Internet stocks, IPOs, NASDAQ, tech stocks | No Comments »

22
May
2012

Three reasons to invest in the Alibaba IPO

by Fred Marion

Now that Yahoo Inc.’s (NASDAQ:YHOO) freeing up 20 percent of Alibaba’s shares, the Chinese tech giant Alibaba can begin preparing for its IPO. Expect a lot of fireworks as Alibaba’s one of the most exciting tech companies behind the Great Firewall. Here are three reasons to consider investing in the Alibaba IPO:

1) Fingers in a lot of pots. Summing up Alibaba’s internet operations is a bit like trying to describe Microsoft’s software offerings. They both do a hell of a lot. Alibaba’s most promising properties, though, are Alibaba.com (a business-to-business commerce site), Taobao.com (an eBay-like auction and Buy It Now site), eTao.com (a shopping search engine similar to Google Products), a cloud computing division, and Alipay (a PayPal-like payment processor for online transactions in China).

2) Rapid growth. One of the easiest ways to see how fast Alibaba’s growing is to look at Yahoo’s returns. In 2005, Yahoo invested $1 billion for a 40 percent stake in Alibaba. Now, they’re selling half that stake for $7.1 billion. Their full stake is worth some $14 billion, and that means they’ve made 14 times their money in seven short years.

3) The fat part of the curve. For most Westerners, buying and selling products online is second nature. That’s not the case in China. The country’s still in the fat part of the growth curve for e-commerce. Indeed, China’s online shopping industry is expected to grow by 42 percent this year (per Bloomberg). Contrast that with the U.S. where Q1 2012 e-commerce growth stood at 17 percent (per comScore). As China’s largest e-commerce provider, Alibaba stands to rake in a big part of that 42 percent growth.

Already, Alibaba’s pulling in substantial profits. The company generated $2.3 billion in the year ended Sept. 30 ($1 billion more than the previous year) and posted a profit of $268 million.

While we don’t know Alibaba’s IPO date yet, it is expected to come by the end of 2015 at the latest.

ESCAPE THE CUBICLE, BEFORE YOU’VE GOTTEN THERE


How to earn $100,000 at age 15
TWO SILVER ETFS, TWO DIFFERENT APPROACHES


PSLV vs. SLV: Battle of the silver ETFs
“AN EASY DOUBLE?”

Groupon stock forecasts for 2012: Deal or no deal?
A JOLT TO THE SYSTEM


Five reasons Ben Bernanke hates the gold standard
THE NUMBER 1 RETAILER IN THE WORLD?


How high can Amazon’s stock go?
A NEW WAY TO SEE THE DOCTOR


A ZocDoc IPO? Could it be the next big thing in tech?

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Posted in Chinese stocks, NASDAQ, retail stocks | No Comments »

22
May
2012

How to pick gold stock takeover targets in 2012

by Fred Marion

“The gold miners are cheaper today versus the price of gold than at any time in this 12-year bull market,” Fred Hickey of the Barron’s Roundtable said recently (per IBT). Indeed, gold stocks are hovering near two-years low, and the mining sector is looking ripe for consolidation. Here are three tips for identifying potential gold mining takeover targets:

1) Follow the pros. One of my favorite tactics for identifying strong junior mining companies is by looking at the companies professionals are investing in. A great starting place is the Market Vectors Junior Gold Miners ETF (NYSE:GDXJ). This ETF invests in a basket of junior gold mining stocks, and the fund regularly updates its holdings. As of right now, GDXJ holds shares in 82 companies (download the excel file here), and it reads like a who’s who in the industry – particularly when you’re looking at the miners towards the top of the list.

Right now, GDXJ likes Perseus Mining (TSE:PRU), Silvercorp Metal (NYSE:SVM), Medusa Mining (ASX:MML), Rubicon Minerals (AMEX:RBY), Endeavour Silver (NYSE:EXK), Evolution Mining (ASX:CAH) and Aurizon Mines (AMEX:AZK) among others.

2) Look at past acquisitions. Perhaps the best way to see which gold mining stocks are worthy of acquiring is by looking at past acquisitions for clues. In March, for example, Pan American Silver Corp. (NASDAQ:PAAS) completed its acquisition of gold and silver mining company Minefinders Corp. Ltd. Let’s take a look at what made Minefinders a tantalizing takeover target:

  • A producing gold and silver mine at the multi-million ounce Dolores project in Northern Mexico.
  • 2.34 million ounces of proven and probable gold (as of 2010) as well as 119 million ounces of proven and probable silver.
  • Low cash costs of $450-$500 per gold ounce equivalent.
  • A small debt load and more than $200 million in cash before the acquisition

Find a company with similar prospects and you’ve probably identified a takeover target.

3) Positive cashflow. It seems obvious, but a lot of beginning gold and silver investors like the idea of getting in on a junior mining stock before they hit the mother lode during exploratory drilling. In my mind, that’s a lot like gambling, and I encourage investors to look instead at junior gold miners that are already pulling ore out of the ground.

The majors want to acquire companies that have made it through the often arduous permitting process, have proven reserves and are already generating cashflow. At that point, the major just needs to bring in its deep pockets and mining expertise to join in the reaping of rewards.

So, while it’s definitely tempting to try to guess which junior mining company is going to uncover the next Brucejack project, you’re a lot safer buying shares in a miner that’s already making money. It’s not as glamorous, but trust me – it’s probably more profitable.

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21
May
2012

Have silver prices finally hit the turning point?

by Fred Marion

Since topping out around $35.50 an ounce late in February, the price of silver has done little except fall. Sentiment in the precious metals market seems to be hovering at multi-year lows with investors shunning the metal for riskier assets. That is until late last week.

The pop in silver prices on Thursday felt different to me, and I went long silver for the first time in months (buying shares in ProShares Ultra Silver ETF – NYSE:AGQ). Why? Here are four reasons why I think silver prices could be due for a sharp upturn:

1) QE3. We thought Operation Twist buried our chance to see further monetary easing out of the Federal Reserve. Don’t give up hope just yet. The metals bounced hard on Thursday after meeting minutes from the latest Federal Open Market Committee gathering held hints that further quantitative easing is still a potential option if the U.S. economy remains sluggish. Another round of QE would likely ignite a surge in commodities across the board.

2) Too far, too fast. Silver prices have crumbled more than 11 percent in the past three weeks. The drop last Wednesday was extreme with the metal shedding $1 an ounce in a single day of trading. A plunge that large feels like concession selling. And we all know when we see concession selling: right before the start of a recovery.

3) The bull market in precious metals is still intact. While we don’t always like to admit it, silver prices generally follow gold’s lead. Sometimes, it can feel like it’s the other way around since the silver market is so much smaller than the gold market, but we’d be kidding ourselves to say that silver prices aren’t extremely dependent on what the price of gold is doing.

And gold’s been flirting with important psychological levels lately. For one thing: last week’s lows (hit on Wednesday) coincided with a 20 percent drop from last year’s highs (per Forbes). That key technical level seemed to awaken a lot of the sleeping bulls who promptly piled back into the metal. After all, a 20 percent drop is considered the cut-off for the transition from a bull market to a bear market. Had gold continued dropping (and particularly if it would have fallen below $1,500 an ounce), you could have taken it as a sign to sell your metals and head for the hills. Until we get that confirmation, though, I’m leaning to the bullish side for gold (and therefore silver, too).

4) The Grecian plot thickens. The primary reason I think last week’s low in silver prices was a turning point is this: fears that Greece would leave or get booted from the Eurozone were still at a fever pitch. For the past month or so, problems in Greece have been amplifying, and I think that’s a big reason the price of precious metals have fallen.

Investors didn’t want a “safe haven”, they wanted cold, hard, highly-liquid cash. Indeed, some €700 billion reportedly left Greek banks in a single day last week. Last Thursday and Friday marked the first two days gold and silver prices have climbed in the face of the fears of a default in Greece. That could be a sign investors are betting the EU will announce new stimulus or that they’ve accepted the fact that a collapse in Greece is unavoidable. Either way, the rise in precious metals – despite the bad news out of Greece – was enough to turn me bullish on precious metals (at least for now).

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12
May
2012

PSLV vs. SLV: Battle of the silver ETFs

by Fred Marion

While they’re both silver ETFs, the iShares Silver Trust ETF (NYSE:SLV) and the Sprott Physical Silver Trust ETV (NYSE:PSLV) operate very differently. Here’s how they work:

The iShares Silver Trust ETF: The fund buys and sells silver in an attempt to have it’s share price match the value of its bullion holdings. If the value of the fund’s shares rise, iShares buys more silver. In theory, the fund’s market cap should equate to the fund’s silver holdings (less fees and liabilities).

Sprott Physical Silver Trust ETV: The Sprott trust operates much like the iShares ETF with one major exception, shareholders have the ability to exchange their Sprott shares for physical silver bullion on a monthly basis.

Although they operate similarly, the two ETFs have been on divergent paths year-to-date with the PSLV down 10 percent and the SLV up 4.8 percent. During the same time, the price of spot silver is up 2.54 percent on the year. It’s clear then that while the ETFs are designed to track an underlying commodity, they definitely come with margins of error.

And that’s actually making PSLV look quite attractive. In the past, the fund has traded at a premium of up to 35 percent above the price of spot silver (apparently investors like the fact that their holdings could be exchanged for physical silver). Today, PSLV’s trading at a premium of just 4.95 percent to the silver spot price.

There are benefits to both the ETFs approaches, though. First, the arguments for PSLV:

1) Redemption. Obviously, investors can choose to exchange their shares for physical silver – something that could come in handy if we do experience a currency crisis in the West.

2) Tax perks. If you plan to hold your silver ETF shares for more than a year, you can claim any appreciation as a long-term capital gain. That’s good for a 15 percent tax rate. Profits from SLV will set you back 28 percent under the current tax code.

3) Safety. The Royal Canadian Mint stores bullion for the Sprott trust. As Sprott writes on its web site, “The Mint is a Canadian Crown corporation, which acts as an agent of the Canadian Government, and its obligations generally constitute unconditional obligations of the Canadian Government.” SLV’s bullion is stored and managed by a private company (JP Morgan Chase: NYSE:JPM) with no government backing (unless, of course, you count the tacit promise of a bailout when times get tough).

Now the arguments for the SLV:

1) Low or no premiums. Since SLV doesn’t have to manage the costs associated with fulfilling delivery, the fund’s holdings trade at a much smaller premium to the price of silver. That’s important as premiums are subject to the whims of potential investors. As I wrote above, PSLV has traded with a premium as high as 35 percent above the price of silver in the past. You may as well go buy and store your own bullion at those prices.

2) Higher volume. A lot of silver ETF investors have no intention (or at least they don’t foresee the desire) to redeem their stock holdings for physical silver. For them, buying and selling shares is simply a vehicle to make money. SLV wins out if that’s your goal as the fund is much more liquid than PSLV. On an average day, more than 1.7 million shares of SLV trade hands compared with less than 100,000 shares of PSLV. This makes going both long or short the SLV much easier.

SLV Vs. PSLV: Which one’s better?

Both funds accomplish the same goal: exposure to the spot price of silver without actually buying silver. In the end, then, it comes down to two factors: security and taxes. If you know you’re going to hold your shares for more than a year (which entitles you to tax benefits) and you value the security of knowing your ETF shares can be redeemed for actual silver, buy PSLV. For all other traders, the SLV is perfect.

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11
May
2012

Three reasons $6,000 gold makes sense

by Fred Marion

Despite accusations that it’s a worthless chunk of metal, gold prices have risen for the past 12 years. That’s more than a decade of net buying, and those buyers must have a good reason to keep pushing up gold’s price.

In general, I break gold buyers into two camps: defensive buyers and offensive buyers. Defensive buyers are temporarily trying to protect their wealth from effects of inflation. Offensive buyers are the so-called “gold bugs” – the investors who believe that we’re in the midst of a financial crisis that can only be resolved in one way: a string of sovereign defaults. Those offensive buyers don’t plan on selling until we have some new, multi-national gold-backed monetary system.

If we look at gold from the perspective of an offensive buyer, their predictions of $6,000 gold start to make some sense. Here are three reasons why $6,000 gold just might come about:

1) A solid track record. $6,000 sounds like an awful lot of money, but that’s actually just 4 times higher than gold’s current price around $1,590 an ounce. During the 1970s, gold went up 24 times. If we look at gold’s starting point 12 years ago around $250 an ounce and multiply that by 24, we end up at $6,000 an ounce. Gold went up that radically in the past, so it can surely happen in the future.

2) The Dow/gold ratio. Historically, the Dow/gold ratio tends to revert to 2:1. At the time of this writing, the Dow Jones Industrial Average stands at 12,835 and gold’s selling for $1,591. That’s a Dow/gold ratio north of 8. If the Dow were to stay at its current levels (floundering sideways in the years to come), and the Dow/gold ratio were to return to historical means, we’d be looking at gold at $6,000 an ounce.

3) Sovereign defaults seem imminent. It’s hard to believe there are countries with debt that rivals our own, but Greece is under the magnifying glass. The Eurozone “is on a path that leads to eventual dismantling,” Peter Tchir of TF Market Advisors wrote in a note to clients on Monday (per IB Times), and Greece looks like it’s poised to be the first domino that falls. Sunday’s election in the country is still yet to yield a coalition government. That’s prompted warnings from the EU “that Greece would get no more payments from the $170 billion deal approved in March if it did not enact roughly $15 billion in cuts by June” (per USAToday).

If Greece stops getting bailout cash, the country would slide into default within weeks. That might not happen in June, but it seems imminent, and it would certainly raise doubts about the future of the Euro.

If people start doubting the future of a currency, gold will get a shot of adrenaline that’ll push it up rapidly. Throw a few currency defaults into the mix and there are few places besides gold to stash your cash. Viewed in that light, $6,000 gold seems more and more likely.

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09
May
2012

Groupon stock forecasts for 2012: Deal or no deal?

by Fred Marion

One of the best ways to make money off “hot” tech IPOs is by ignoring them for a year or so. By then, the market will have devoured all those overly-hyped novices who eagerly bought shares during the first week of trading, then sold them when they saw the value of their holdings crumble. That’s what appears to be happening to Groupon Inc. (NASDAQ:GRPN) right now.

And it’s a pattern that gets repeated a lot. I like to use one of the stocks I lost a lot of money on as an example: E-Commerce China Dangdang Inc. (NYSE:DANG) – the so-called “Amazon of China” (even though Amazon operates in China, too). The stock had its IPO on Dec. 10, 2010. It debuted around $32 an ounce. A year later, shares were bloodied. They plunged more than 80 percent to less than $5 a share.

If you would have bought at the start of 2011, though, you’d be quite happy with your returns. Since then, DangDang has shot up nearly 70 percent from $4.40 to $7.45. I think we’re on the verge of something similar happening with Groupon.

Shares in the daily deals site are in the long, painful process of shaking out the weak hands. The question is, when will the real institutional buyers start moving in? I would argue that the tipping point could be coming soon – particularly as a number of investment firms have started moving to upgrade the stock. Here are just a handful of the Groupon stock forecasts for 2012 that we’ve seen over the past month or so:

B. Riley & Co.: Upgrade from sell to neutral. Price target of $10.60 (per Barrons).

Evercore Partners: Upgrade from to equal weight to overweight. Price target of $15 (per Forbes).

FactSet Research: Seven buy ratings and 12 hold ratings. An aggregate price target of $21.44 (per the Wall Street Journal).

Reuters: The average price target of 25 analysts covering Groupon stands at $22.53 (per Seeking Alpha).

Even after an accounting error forced Groupon to revise revenue down $14 million last quarter, it’s hard to ignore the company’s growth profile – and the stock’s subsequently low valuation.

Indeed, Groupon’s valued at “roughly half the multiple that was reportedly offered by Google in which time Groupon tripled its quarterly revenue,” writes Ken Sena, an analyst with Evercore Partners, wrote in a recent research report. It doesn’t make sense then that the company’s more than twice the size it was at the time of offer but somehow worth just half the price.

That’s got me looking for the right time to start accumulating Groupon shares. In the words of hedge fund manager James Altucher, Groupon’s an “easy double” (per Seeking Alpha). I’d like to be there when that double happens.

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09
May
2012

Three signs silver prices have further to fall

by Fred Marion

A month ago, an ounce of silver was worth $33. Today, that same ounce is worth $29.50 – a drop of more than 10 percent. While we’re certain the 12-year bull market in precious metals isn’t over, we do think there could be more pain for silver investors in the near-term. Here’s why:

1) The Gold/Silver Ratio. The gold:silver ratio has been trending up since early March, and that trend probably won’t stop until the ratio re-tests January’s highs around 57:1. Why? Because swing and momentum traders themselves help cause the fluctuations in the gold:silver ratio. So long as the ratio is showing a clearly defined trend, and it’s not nearing any key resistance levels (or psychological barriers), those swing traders are going to short silver. Check out the steady upward climb in the gold:silver ratio:

[Source: Seeking Alpha]

2) Long live the dollar. The greenback can’t seem to do anything wrong. That’s despite explosive growth in True Money Supply (or the sum total of all the cash, deposits and notes that are floating about in our economy). Just check out this chart from Mises.org:

During ordinary economic times, you could expect the yields on U.S. bonds to spike in the face of such aggressive monetary easing. Instead, the dollar looks stable compared to the financial situation across the pond.

The Eurozone “is on a path that leads to eventual dismantling,” Peter Tchir of TF Market Advisors wrote in a note to clients on Monday (per IB Times). “Greece restructured debt, made different rules for different holders, and yet, the new bonds trade at 20% of par.”

Investors are telling the Eurozone countries that they no longer believe there’s a way out. That threat of a Eurozone breakup has bought the dollar some street cred that it probably shouldn’t have – and that’s bad for silver prices.

3) Even die-hard silver bulls are losing some of their excitement over the white metal. “While I do remain very bullish on silver, I must also admit that for the first time I can envision a scenario in which silver does not reach $100,” writes Simit Patel at Seeking Alpha. His reasoning? Gold will likely outperform everything (silver and stocks) if the equity markets remain soft.

Of course, all of the arguments above have me thinking that now might be the perfect time to buy silver. I’m not alone either. Check out my recent post Why Eric Sprott believes silver prices will triple to $100 an ounce in 2012. Just remember that if you do buy, though, you need to be able to hold onto the metal in the face of near-term weakness. Prices may be higher in three months, but what happens between now and then might not be pretty.

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08
May
2012

How to invest in thoroughbred horses and other racehorses

by Fred Mason

Investing in racehorses requires a level of commitment that chases away most amateurs. But, no matter what your level of interest, there are ways to get involved in the Sport of Kings. Here are a handful:

1) Bet at the track or online. The simplest way is to head to the nearest racetrack, buy a race card and place your bets in person. Typically, you’ll be able to bet on live minor league races that take place at your local track, or you can bet on national races (which are shown on TVs at the track) via simulcast. It’s also legal to bet on horses online in more than a dozen states including California. Some of the leading online horse betting sites include TVG.com, Twin Spires and The Racing Channel.

2) Invest in horse racing-related stocks. There are lot of companies that promise exposure to horse racing – namely through the companies that operate horse racing tracks. One of my favorites is Churchill Downs, Inc. (NASDAQ:CHDN), which runs the Kentucky Derby and recently reported record revenue on the strength on surging growth in its online betting service (at TwinSpires.com). Other horse racing-related stocks include Penn National Gaming, Inc (NASDAQ:PENN) and MTR Gaming Group, Inc. (NASDAQ:MNTG).

3) Buy a horse. Thoroughbreds are bred to do one thing: race. To even buy one, you need to register and be approved as a thoroughbred owner in your state. Once you’re approved, you’ll need to pay annual dues to your state thoroughbred owners association. In exchange, you’ll get the opportunity to bid on thoroughbreds at auction. Once you have one, you can expect to pay about $1000 per month in food and maintenance. On top of that, training costs will start around $2,000 a month on the low end (per Stanley Barton at Seeking Alpha). Investing in quarterhorses is cheaper but the payout is smaller and so is the number of tracks that host quarterhorse racing.

4) “Claim” a horse. One of the ways horse tracks try to ensure that races are fair is by forcing owners to set a “claim” price for their horses. About half of all horse races have a “claim price” a horse owner must agree to before entering his or her horse in a race. If the claim price is, say, $20,000, that means the owner of that horse is legally obligated to sell the horse to any buyer for $20,000 before the start of the race.

“About half of all races at North American tracks are claiming races,” Barton writes. “The claiming price can range from as low as $2,000 to hundreds of thousands, although the majority are between $5,000 and $50,000.”

Interestingly, you must “claim” a horse before the race. If the horse wins, the proceeds go to the current owner, then you get to take the horse home for what you hope will be a bright future full of more racing.

5) Enter a thoroughbred partnerships. Horse ownership partnerships provide a unique way of distributing the high cost of owning and racing a horse. Team Valor is one company among many that offers investors an opportunity to buy an ownership stake in a horse. Team Valor also produced the 2011 Kentucky Derby winner Animal Kingdom. According to the site’s Q&As, the average cost to go in on a horse goes “from a low of $6,000, with a median of $12,500 and as high as $75,000 to $100,000.” Should the horse win a purse, you’ll split the winnings between the six and 12 other investors in the horse.

Horse racing is called the Sport of Kings because it’s anything but cheap. If you genuinely have a love for the sport, though, it’s rewarding even without the prospect of financial gain. Every dollar you earn after that is icing on the cake – and, if you find the right horse – it might make for a lot of icing.

One of the most famous racehorses of all time, Secretariat, brought in more than $145 million in winnings and stud fees starting in 1973. Seattle Slew is estimated to have made north of $200 million at stud after being sold at auction for a mere $17,500, according to Barton. That’s the stuff of legend, and it’s part of what makes investing in horses so tantalizing. Just remember that whether you wind up with a winner or loser, the costs to get your horse to the track are very real.

Horse photo by Danagouws.

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08
May
2012

Will mushrooming supply crush gold and silver prices in the years to come?

by Fred Marion

One of the most common arguments bears levy against gold and silver is the fact that record prices mean more gold and silver mines. With those mines, they argue, comes a glut of supply that could crush the precious metals markets.

One of the leading voices in this debate is Dr. Paul Walker of precious metals consultancy GFMS Thomson Reuters. At a conference last week in Dubai, Dr. Walker pointed out that it takes some $120-$150 billion of investment demand every year just to keep gold prices flat – not to mention see prices climb higher (per Resource Investor).

That a lot of cash to maintain a baseline, and I would argue that bodes well for silver prices.

“The amount of silver that’s available for investment each year is 450 million ounces and the amount of gold that’s available for purchase is about 70 million ounces, which means you have a ratio of about six-and-a-half to one is amount of silver you can buy versus gold,” Eric Sprott said in a recent interview (per ETFDailyNews).

At current prices, that means investment demand needs to grow by $13.5 billion to keep silver prices where they are. That’s far less than the $120 billion gold prices will need to stay afloat.

Still, silver prices tend to follow gold prices as both metals act as stores of value during periods of inflation. The main indicator for whether or not gold and silver prices can keep up with supply then is the expectation of inflation, and expectations are a fickle thing.

As Dr. Walker pointed out last week, it’s probably not supply that gold and silver investors should be concerned about, but rather the possibility that the Federal Reserve might raise interest rates in an attempt to begin strengthening the dollar. That, he argues, could be the true “Black Swan” event we’ve all been worried about.

We’re not there yet, though. In fact, we just might see all-time record high gold and silver prices again before we ever see the interest rates rise. Check out our posts Silver prices setting up for 30-year high? and Why Eric Sprott believes silver prices will triple to $100 an ounce in 2012 for more.

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Top 10 best gold and silver ETF funds

Here’s a look at the Top 10 best gold and silver ETFs that trade on major U.S. exchanges. We’ve ranked them by volume, as some of the niche ETFs in the precious metals market are so... Read on.

3 reasons NOT to invest in Groupon’s IPO

An IPO date hasn’t been set, but here are three big warning signs you might want to consider before investing in Groupon’s stock... Read on.

From start-up to titan: The unofficial tech IPO calendar for 2012

From Facebook to Twitter to Groupon, the planned tech IPOs in 2012 could be among the most exciting string of new public companies... Read on.

How to invest in water stocks

Often overlooked as a commodity, water supplies could become increasingly critical as emerging economies around the world improve their diets and demand more agricultural resources for the production of meat... Read on.

World’s largest economies in 2050 will look very different

India’s rapid ascent to economic supremacy will be driven by a surging working age population, which will grow more than 40 percent between now and 2050... Read on.

How to invest in cotton stocks

If you’d like exposure to cotton markets without delving into futures and options contracts, a handful of cotton ETNs and cotton-related stocks are available... Read on.

How to buy Chinese Yuan

The Chinese yuan or renminbi has risen about 5 percent a year over the past five years, and some investors argue that China’s currency is still undervalued by 40 percent. If the dollar suffers ... Read on.

Five cheap franchises to start with less than $10,000

Franchises are so ubiquitous we often don’t realize we’re shopping at one. From McDonald’s to Hampton Inns and doggie day cares to campgrounds, they’re literally everywhere. All told, franchises account for 10.5 percent of all businesses in the U.S, and they... Read on.

Why invest in silver?

Ask 10 people why you should invest in gold and silver, and you’ll probably get 10 different answers – many of which will be accompanied by a shrug. Most investors don’t understand the motivation for holding gold or silver bullion. Nonetheless, it’s been difficult to ignore... Read on.

How to Invest in Copper

Copper isn’t as glitzy or glamorous as gold or silver, but in many ways it feels safer. Since copper is regularly used in electronics, it’s consumption per person (particularly in the developed world) has been on the rise for decades. So how does one invest in copper? Read on.