Comment Text:
10-005
COMMENT
CL-01904
From:
Sent:
To:
Subject:
Kevin
Thursday, April 8, 2010 11:26 PM
Metals Hearing
Prevent manipulative short concentrations in Gold and Silver
Hello,
Thank you for holding the March 25 meeting to solicit input on position
limits in the precious metals markets.
As you have heard repeatedly by now, there is substantial evidence that
a handful of banks are holding enormous short positions in precious
metals. It is likely that these are naked shorts, not legitimate hedges.
It is also clear that these huge positions provide the opportunity for
market manipulation, even if such manipulation is not actually
occurring.
As Ed Steer reported recently: "in silver, the '8 or less' bullion banks
are short 134% of the Commercial net short position." Also: "In
percentage terms, the '4 or less' traders hold around 53% of the entire
Comex short position in silver." And as we know, the "4 or less" is
really primarily 2, and mostly one single bank. Even if those
concentrations were "legitimate hedges" (and we are almost certain they
are not), then they would still be unfair and manipulative, and should
be highly regulated, if not eliminated.
Please take whatever steps are necessary to eliminate these unfair
positions. If position limits will solve the problem, create them. If
lower limits will help, lower them. If eliminating bogus exceptions to
the limits, or tightening the definition of a legitimate hedge, will
restore fairness, do that. If the rules are already on the books to
prevent this activity, then enforce those rules.
You will get plenty of suggestions for specific actions, and as experts
in the markets yourselves, I'm sure you have your own ideas. Just don't
lose sight of the goal: Preventing fraudulent behavior and manipulation
by a few big entities. Whatever changes you make, please be sure those
changes will actually solve this problem.
Thanks,
Kevin Smith
Small investor in silver and gold
Green Cove Springs, Florida
