Comment Text:
Dear Chairman Gensler and fellow Commissioners:
I would ask that you approve the staff’s proposal on position limits, including limiting exemptions to bona fide hedgers. My concern is the proposed formula for silver and I would ask you to readjust it. In my opinion, the current formula would result in a position limit in silver, of over 5,000 contracts for any single speculator, on an all-months-combined basis. Given the fact that 5,000 contracts is the equivalent of 25 million ounces of silver, I believe this sets the threshold too high in light of the realities of the world silver market.
As has been pointed out, 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.
In my estimation, a more accurate position limit in the area of silver would be between 1,000 contracts on the low end to no more than 1500 contracts on the high side. This would still allow the accumulation of between 5 and 7.5 million ounces for someone to hold as a position limit for silver.
Respectfully submitted,
Edwin K. Zimmer
