Comment Text:
Dear Chairman Gensler and fellow Commissioners:
I am taking valuable time out of my schedule today to contact you in an effort to urge both you and your colleagues to approve the staff’s proposal on position limits, including limiting exemptions to bona fide hedgers. I would ask you, and this is critical, to make a much needed adjustment to the proposed formula in silver. The current formula would result in a position limit of over 5,000 contracts for any single speculator, on an all-months-combined basis. 5,000 contracts is the equivalent of 25 million ounces of silver. This is too high of a threshold in light of the realities of the world silver market.
To put this in perspective, a position limit of 5,000 contracts would be the equivalent of me being in charge of public roadway safety and yet setting the speed limit at somewhere between 116 mph (5,000 contracts) and 175 mph (7,500 contracts) instead of 35 mph. I think all of us can reasonably agree that anything over even 50 mph of vehicles traveling on city streets would be extremely dangerous.
To wit, there are only three mining companies in the world who produce more than 25 million ounces of silver per year and only a similar number of industrial consumers using more than that amount. Any speculator holding an amount of silver derivatives greater than what 99% of the world’s silver producers and consumers make or use in a year would have inordinate pricing power. The purpose of speculative position limits is to prevent such a circumstance, and I believe that this is one of the core responsibilities of the CFTC.
Position limits in silver not only need to be instituted and enforced, but position limits in silver need to be brought into line with regards to world output and the size of the precious metals market. With this in mind please institute a 1500 contract (7.5 million ounce) position limit for silver. I firmly believe that any position limit in excess of 1500 contracts in silver will immediately prove to be not only ineffective but wholly useless.
Thank you for your time, respectfully yours,
Harry Morgan
