Wednesday, May 19, 2010

Silvercorp Metals (NYSE:SVM) Falls on EU Debt, China Fears

Silvercorp Metals (NYSE:SVM) (TSE:SVM) got clobbered today, along with most precious metals companies, as the overall sector plunged, with traders taking profits and growing concerns on how the Europe debt crisis and inflation problems in China will have an effect on demand for raw materials.

China is especially a concern for Silvercorp Metals, which operates solely in the middle kingdom, and uncertainty as to how deeply China will take measures to battle inflation. They've already raised interest rates, and have introduced more regulation into the property markets.

The issue is demand and nothing else, and Europe and China are major markets to have both potentially decline in demand at the same time, which could very easily happen.

Silver producers like Silvercorp Metals can be hit hard because it's used in so many products, which if cut back, could decrease demand in a big way, along with earnings.

Silvercorp was down over 8 percent at the close, but has regained some of that in electronic trading.

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