Comment Text:
Dear Chairman Gensler and fellow Commissioners:
I have been watching the actions of the CFTC and taking great interest in the discussion over the silver market position limits. It appears quite certain that the position limits on silver are substantially higher and out of proportion when compared to position limits on any other commodity. There appears to be no justifiable reason why that should be the case.
I support the CFTC's staff proposal on position limits, including limiting exemptions to bona fide hedgers. But based upon the out of whack position of silver vis-a-vis other commodities, I would ask you to readjust 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.
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.
On top of this completely logical rationale, I would also add to the equation, that with substantial political turmoil occurring around the world right now, the potential for resulting silver mine shutdown due to such activity is at an elevated level. Should such a completely foreseeable event such as this take place, the unexplainably high current position limit recommendation for silver and silver only, would place the marketplace in an avoidably higher risk position for a failure to deliver in this critical commodity.
Please institute a 1500 contract (7.5 million ounce) position limit for silver. This figure seems to be widely echoed as a balanced number, that is proportionately within other established position limits for other commodities. In an increasingly risky world, I believe the CFTC, as the watchdogs of the marketplace, should take steps to mitigate these risks for the public. It is your duty, and I applaude you in advance for taking such steps to protect the consumers.
Respectfully submitted,
Jon Nimtz
