Comment Text:
Dear Chairman Gensler and fellow Commissioners:
Thank you for accepting public comments regarding silver position limits during the ongoing review.
I am writing to ask that you approve your staff’s proposal for position limits in silver, including limits for bona-fide hedgers.
As you establish silver position limits and consider how large they should be, I believe you will agree that preventing manipulation should be your main objective. In light of this, it is crucial that the current formula be changed. This is because the current formula would lead to a maximum silver position of more than 5,000 contracts for any single speculator on an all-months-combined basis. At more than 25 million ounces, this is excessive and will not prevent manipulation. The reason relates to silver's underlying supply and demand fundamentals.
I have done some research and discovered information which I believe you are aware of as well. Specifically, out of the hundreds of silver mining company around the world, there are only three (3) who produce more than 25 million ounces per year. This is less than 1% of all miners. Similarly, only a tiny number of industrial users consume more than 25 million ounces per year. Consequently, when a single silver speculator is allowed to hold 5,000+ derivative contracts it enables manipulation through inordinate pricing power. No single entity should be permitted to continue controlling larger quantities of silver than 99%+ of the world’s producers and consumers make or use in a given year.
Given your desire to act in the public interest by preventing manipulation, I respectfully request that you institute a 1500 contract (7.5 million ounce) position limit for silver.
Sincerely,
John Sanders
Orange, Texas
