Comment Text:
10-005
COMMENT
CL-00938
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Sent:
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Cc:
Subject:
John Coffey
Sunday, April 11, 2010 1:35 PM
Metals Hearing
John Coffey
Position limits on Silver and Gold from John Coffey
Dear Sir;
Thank you for the opportunity to comment on the issue of position limits for precious metals.
I believe that the lack of effective position limits on silver particularly, has very serious
national security implications. Due to the extremely low price of silver, world inventories of
silver bullion have deteriorated to historic lows. Further, even by USGS estimates, there is
only 10 years of silver known left underground for mining, given current annual demand. This
metal is essential to over 2000 industries worldwide. A user shortage of this material is a very
definite probability. The US Strategic reserve of this metal, is non-existent, having been
exhausted in 2001. National security applications for this metal are enormous, particularly in
hi-tech weaponry, computers, aerospace, etc. What happens when the current supply runs
out? NOT in 10 years, that hasn't been mined yet, but current inventories to 2000 major
industries worldwide? A user panic will ensue, with some companies grabbing the lion's share
to build up inventories. Mines take 3-5 years to begin producing, leaving our nation
vulnerable in the meantime. Such a panic rush today is a possibility, given that industries
worldwide have yet to realize the severity of the issue. If they wake up to find that the steady
supply of silver isn't there, they will rush to gather all the supplies they can. Currently there is
less than 3 weeks inventory for total worldwide demand in the COMEX available for sale.
Industry will likely demand a I year supply. That's 900,000,000 oz. The COMEX only has
approximately 50,000,000 oz available. And that's just for industry. Investor demand will be
ignited at the same time. The general public of all nations will be bidding the price up to get
the real physical metal. What will be left for our national security may be precious little.
Please establish a speculative position limit in COMEX silver of no more than 1500 contracts. Please
restrict any hedging exemptions from those limits to legitimate hedgers. Please stop the levels of
concentration in COMEX silver futures that have been experienced over the past few years on the short
side of the market.
Sincerely,
John Coffey
Alexandria VA 22304
