Comment Text:
March 25, 2011
Chairman Gary Gensler
C/o Secretary of the Commission, AND the
Commodity Futures Trading Commission at large
Three Lafayette Centre
1155 21st St. NW
Washington, D.C. 20581
Dear Chairman Gensler:
Thank you very much for taking the initiative here to invite citizens caring about the silver market to write to you and your fellow commission members regarding the immense importance and significance of this moment in time regarding this market. Since the invitation came through you in the official capacity of chairman of the commission, I continue to hope that honest and outspoken difference of opinion regarding public matters can and still will be not only tolerated but also accepted in our society. I hope history will indeed prove me correct on this most basic of issues, without which we have no basis for any type of free and democratic government and society at all.
In my opinion this is a very serious issue, dealing directly with the existence of a free market in silver, which I contend we have never had in our lifetimes, and with the future of freedom in general. In this brief paragraph I will come immediately to the point, and then substantiate my position throughout this letter, and then at the end urge you to implement the proposed changes. I urge you and the committee to immediately adopt a position limit for silver contracts to no more than 1,500 contracts per entity on the futures market, with NO exemption limits. If necessary, in order to avoid market shock, you may allow a phase in period of up to a year to have all parties abide by these limits. The fact that the market has been manipulated, in my opinion, and as argued below, demonstrably during the last 30-50 years to the downside, negates any possible legitimacy for "hedging" positions in the future. What we need is market transparency, which we have never had in the silver market.
This letter may be a little longer than some submitted, simply calling for a reduction in silver position limits and exemption reduction. As you will see, I go much farther. A thirty year manipulation is no light charge to make; understanding it and substantiating it requires just a little more concentration and explication than a walk in the park, especially as this is an issue with tremendous implications for economic freedom financial security for everyone in the world, going far beyond the concerns of mundane regular commodity policy. The relative ignorance regarding these issues, now rapidly coming to a public end, does not invalidate any of the historical evidence or present reality.
Let it never be said that citizens such as myself never took the time or the interest to “write to the proper authorities” regarding this issue! Let it never be said that claims of manipulation and distortion in the silver market were not painstakingly pointed out and thoroughly documented. Let it never be said that obvious proofs both from logical and objective analysis, observations of preferential one-sided market treatment on the part of past commission members and policy, and statistical patterns and aberrations taking place over decades were never courageously called to attention, both public and private. Therefore, accordingly, it is my request that this letter along with all others sent in become part of a verifiable and accessible public record, and that the commission notify the public as to exactly how these documents may be accessed and verified in the public domain preferably through the internet. This will undoubtedly involve some scanning and processing of documents which our government does as a matter of course in many other areas as well, and so it should not be unreasonable to request the same in this case. That will be far preferable to the notion of having these responses from the public be locked up in government file cabinets, perhaps never even to be read, either by officials directly involved in making policy, or people themselves interested to learn and study about the silver market and policy deliberations of the CFTC.
I myself have been a bona fide participant in the silver physical market for over thirty years, on a very small scale, and a small participant in the exchange commodity market for silver with respect to futures and options during the last decade. Therefore I can testify that I have experienced personal and financial losses due to the manipulations herein alleged and documented, which occurred under the lack of unbiased market surveillance by your predecessors on the commission and other related entities involving the exchange.
Several things need to be briefly yet forthrightly declared here at the outset. First and foremost, words are not powerful enough nor sufficient in themselves to render justice to the debt of gratitude that all silver market participants hoping to prosper from silver can express to men such as Mr. Ted Butler along with Charles Savoie who have consistently demonstrated courage and erudition in exploring and documenting the manipulations in the silver market for decades. Mr. Butler’s public record informing the public on these issues is able to be accessed through the free portion of his website, at www.butlerresearch.com Previous to creating his own site and private subscriptions service, which is no secret, his articles were meticulously archived on the previous site for which he was a retained commentator, www.investmentrarities.com In my opinion, no commentator on the market could or should declare anything without rendering tribute to this very courageous man who finally was called to testify privately with some members of your staff as noted below. Mr. Charles Savoie’s meticulous and painstakingly documented articles and archived materials are located on the website created by David Morgan, www.silver-investor.com Mr. Savoie has even documented at extraordinary length how underlying manipulations in this market have existed for over a century. Together, their courage, painstaking research, authoritative documentation, and consistent declaration of their unending desire for rectification of this market make the historical record of manipulation in the silver market an absolute and uncontestable one.
Secondly, I hereby invoke the legal argument of severability: if anything in this letter is later found to have any degree of incorrectness or inaccuracy, let is not detract from the remainder solidly rooted in correct fact, reality, and correct analysis and perception.
In the following paragraphs, at some length, I will contend the following in advance synopsis:
1) That the silver market has been manipulated to the downside for so many decades, and in so many indisputable ways, that all of the facts “speak for themselves”, as elucidated by the legal argument never yet presented by Mr. Butler or anyone else that I have read with respect to commentary in the silver field: the legal doctrine of “res ipsa loquitur”. Therefore, as will be explained in depth below, it is my contention that the burden is no longer placed upon the public to “prove” that the silver market has been manipulated, with policies consistently favoring those in the short selling position, but such burden of proof is placed rather upon anyone in the commission to prove the opposite, namely, that we have a free market in silver. The fact that the market is not free, as elucidated in obvious detail below, is so obvious that such a proof is indeed impossible.
2) In light of that consideration, the difficulty of the past members of the Commission antedating your arrival, Chairman Gensler, actually admitting past duplicity, error, possible collusion and/or conspiracy, and/or utter incompetence, which I believe the latter was not the case, but rather that everything was indeed done deliberately and according to plan, places the members of the commission in somewhat of a difficult position. Inasmuch as not only the actual substance but also the thrust and intent of commodity law has been consistently violated, the actual violations themselves over time could be the possible subject of legal prosecution and civil action for remedy and damages into the trillions of dollars. It is assumed that the members of the Commission in the past have most likely received assurances from the “network” that they will be personally protected from any and all liabilities. As such, a “ho hum” solution, involving language indicating the desirability and continuation of “market stability” will be presented and suggested in the final paragraphs of this letter, allowing policy correction without explicit or even implicit admission of guilt or wrongdoing. It will be the perfect linguistic solution for the Commission at this time!
3) That indeed failure to make corrective action at this time will place the Commission indeed greatly under immense future public scrutiny and blame, inasmuch as so much evidence and argumentation will have been presented in order to avoid market calamity, shortages, and disruption of deliveries of actual metal.
Chairman Gensler, Mr. Butler has publicly and openly lionized you and your past achievements, calling you already the “greatest chairman the commission has ever had”, with the receipt of some criticism towards himself for having done so. I too wish to acknowledge you for your past achievements but even more particularly for many of the new and courageous directions that you appear to be taking in your new government role.
Chairman Gensler, please allow me to implement historical insight as a metaphor. History will show that many of those who have been able to make the greatest impact upon society and history have been those who came from a formerly inside position and wanted to improve their society based upon their ideas of moral and ethical conscience, with their inner moral imperative compelling them to do so. Based upon your history, you are now placed at the crossroads of history as someone who can indeed make a beneficial and lasting impact. I truly believe that as the future of silver goes, so will go the nature of our economic and social freedoms, and indeed the future and essential nature of our democratic society.
Chairman Gensler, will you be the initiating Moses to a free or freer silver market, or will you simply be a continuation of the past history of CFTC bureaucrats during the past thirty years simply rubber-stamping policy directives of the Treasury Department, the shorting entities on the exchanges, and other policy directing entities? My understanding here is that there is no ground or place for waffling here – as Mr. Butler has pointed out, either a series of upward price adjustments will be made in an orderly manner through decreasing the controlling position limits as they currently are allowed to function, or, when a true market shortage develops and when chaos threatens the collapse of the exchange itself, then alternative market solutions to the currently operational exchange as we know it could or will develop in the vacuum. At that point, the United States would suffer a tremendous prestige loss in my opinion, and the operations and credibility of the exchange itself, along with all of those individuals and entities involved in its operation, would suffer perhaps irreparable damage, with subsequent international detrimental financial ramifications. That scenario could itself lead to situations that would develop that would be definitely against our larger national interests. Since at this time increasingly fewer and fewer people will continue to be mislead by false price indications against a backdrop of scarcity and relative scarcity of silver even in relationship to gold, if corrective and wise preemptive action is not taken, in the future it would be possible to envision a black market in silver itself, with citizens only releasing their silver (along with gold) at gunpoint coupled with government penalty and coercion. Is this what we want instead of a free market correcting what has been decades of price manipulation to the downside, manipulation which has benefited mostly a very, very, small circle of inside controllers?
In order to have a silver market more commensurate with the operational practices and standards applied to other commodities, I would encourage your commission to therefore endorse the standard proposed by Mr. Butler for this – namely, position limits in silver of 1,500 contracts per market participant. I will go farther than Mr. Butler in calling for the complete elimination of all “hedging” exemptions. To date, the process of deciding who is allowed “exemptions” has been so incontestably secret, so corrupt, and so one-sided as to prevent any credibility on the part of the public with respect to fairness and equity at this time. Certainly, after decades of predominantly market manipulation on the downside, there is absolutely no need for any actual producer to “hedge” on the short side – a sure recipe for disaster in a rapidly rising market – as was told by the history of several mining companies who did in fact hedge and sell short, back when silver was in the $5 -$10 range. Many of them suffered huge losses. As a matter of fact, having been a student of the silver market now for over thirty years, the only missing link in the puzzle in my opinion is the answer to the question of how indeed so many silver producers, throughout so many decades, could have in fact sold their silver at such ridiculously low prices, not only shorting the market, depressing prices, but also “shorting” all of their shareholders as well. Will we ever know what degree of “persuasion” using the soft hand, and/or outright collusion, conspiracy, threats, bribes, and/or heavy-handedness accompanied all of the demands of the short sellers and market commanders through the decades? Other than the possible desire to keep mines operating at all costs despite the depression of prices, what other factors can possibly explain the willingness of producers to sell physical silver so cheaply even now while it is in such relative scarcity, 1:3, specifically in relation to gold? (in terms of verifiable deliverable inventories, as Mr. Butler has consistently pointed out) Therefore, no economic reason would allow and/or justify any “hedgers” to go beyond the 1,500 contract limit for participants at this time.
With respect to the future longside, the same powerful entities who now sell and control the market through undue market concentration, would be the same ones who would like to manipulate the market in the future from the longside as well. At all costs that should be prevented in addition. Therefore, the best solution will be to eliminate all of the crooked “exemptions” for any type of “hedging” or other excuses, long or short. The limit of 1500 contracts per market participant will be sufficient for any legitimate player in the market. I would even call for contract limits on certain groups of entities, as have Mr. Butler and others, such as banks, brokerage houses, producers, technical trading funds, and hedge funds in particular.
The fact that there have now been three “investigations” regarding the silver market, without even the first two of them inviting Mr. Butler, who was the source during his twenty year battle to educate the community at large regarding these issues, to testify before the investigating committees indicates the true mockery and travesty of justice here, and reveals the stalling motivation and tactics to date in policy. It makes any notion of a free and fair investigation into this matter a standing and embarrassing joke. At least he was recently invited to privately present his findings and documentation prior to the latest public round. This ‘suppression of evidence by omission of evidence’ would be fully expected by the average American citizen as fully consonant with the policies of China and/or the former Soviet Union, but with citizens of this country here still imbued with a sense of ideals and hope concerning transparency in government, which is quickly becoming disillusioned, it would not have been expected by the average citizen on these shores. Is honestly and transparency now to be considered a relic of the past, only hoped for by the naïve?
Speaking of this sense of disillusionment, there is no doubt in my mind that if as many Americans understood the degree to which corruption and market influence has distorted the silver market, as those are who are becoming aware of other areas of corruption and malpractice around us, then this would too become adequate basis for the same degree of anger and disappointment fueling the “tea party” movement itself in this country at the present time. The common American, imbued with a sense of fair play and decency, would/will be extremely disappointed upon understanding the degree to which the silver market has been manipulated and controlled. The average person unfortunately may not have the understanding in place to grasp how the downside manipulation of any commodity market can be just as powerful, profitable, and subject to manipulation as an upward one. However, we may ask, have we permanently gone into the modality of government command economies, following the socialist and Communist doctrines of the former Nazi Germany, Russia, and China? Even China, as of late however, has allowed their citizens to purchase gold and silver for the first time in over fifty years. In fact, the detrimental effects of the demise and manipulation in silver prices have had very real repercussions for our country and economy: silver mines have been closed, tens of thousands unemployed, our national security compromised due to lack of strategic supply and reserve, and our refining capacity outsourced subjecting us to economic peril or worse. Failure on your part to correct the present market imbalances favoring the short side will only contribute to that sense of disenfranchisement, that sense of loss of the average person and citizen feeling powerless to affect the course of events, and to remedy economic injustice rendered by market controllers and manipulators.
Conversely, in time, I believe that if you take decisive action along with the committee to make corrective action now rather than when forced to by disaster, that you will be recognized for the courage and greatness which such action would require of you now. In my mind, the vast, vast, majority of Americans now and in the future would concur with me in that recognition. In my mind, the sole reason that even more people have not written in is not that so many of our fellow citizens would not appreciate the correctness of decisive action now limiting the power of the concentrated paper shorts, it’s just that additional thousands, tens of thousands, hundreds of thousands, or potentially even millions of those who might have the courage to join in with the small but hopefully significant numbers of those of us writing now simply don’t understand or are unaware of the deeper understanding of these issues at the present time.
Originally, it was my intent to write two separate letters, one to the commissioners predating you, Chairman Gensler, on the commission, and the other to you yourself. I have decided to combine them both in this submission lest any of the context be lost or confused. My original rephrased idea in the opening of the letter to the other commissioners was as follows:
“You can fool all of the people some of the time, and you can fool most of the people most of the time, but you can’t fool all of the people all of the time, and you can no longer fool some of the people ANY of the time.”
In reference to the first point mentioned above with respect to the burden of proof, such burden, which is indeed impossible to show, now clearly falls not upon the citizens of this country, but upon yourselves. The evidence for manipulation is simultaneously so vast, overwhelming, and obvious that the famous Latin phrase, “Res Ipsa Loquitur”, namely “the thing speaks for itself”, which has become a legal principle unto itself, duly applies here.
In my original letter to your commission several months ago, which I am not sure got included in your records, I included several articles from Wikipedia and from the website www.medicalmalpractice.com which I merely will reference here in order to save space in this letter.
Applying all of this very simply to the silver market, when you examine the record as described below in detail, one comes to conclusion that the events collectively that have transpired in market manipulation and one-sided partiality all taking place under the auspices of the CFTC could not have possibly happened and occurred without the negligence of oversight in insuring a free market that took place. Along with that, one can conclude that the vast majority of the losses suffered by innocent market participants, those investors primarily taking the “long” side, desiring to wisely invest in the necessary and vital commodity of silver, seeing its inherent value and industrial demand over decades of supply structural shortages, were not caused by actions of their own.
To make this case even more simple and clear, let us examine the silver market obvious distortions from three simple perspectives:
1) Obvious supply/demand aberrations and impossibilities:
Several notes of record will demonstrate this incontrovertibly,
First, let us examine the question which Ted Butler raised so eloquently raised several years ago:
“What can possibly explain the reality of low, giveaway prices – in fact, a 600 year historical low – for a crucial commodity vitally necessary for modern life, used in tens of thousands of applications, with demand growing daily, with supply in a critical shortage, the usage of which will continue no matter what price the metal explodes to, and which is absolutely going to remain in critical supply shortages for the next 5-7 years, if not permanently?”
Our question is more pointedly directed in the following way:
In a free market, where gold is priced as a precious metal at $1,428 /oz., as of noon. on March 25, 2011, how can silver, also a precious metal which is THREE TIMES RARER (in above ground supply), be priced at under $40/oz., specifically $37.22 oz., as of the same closing time, or just a little more than 1/38th of the price of gold?
ANSWER: IT CAN’T! Such a reality is absolutely impossible in a free market. Therefore, ipso facto, by that very fact itself, we DON’T have a free market!
Even a third grader would understand the following logic:
According to basic economics 101, if something is three times rarer shouldn’t it be reflected at a price three times MORE than the more plentiful commodity? Or at least equal in value at worst? How can this reality exist?
Again, our obvious answer is that such a condition, by definition, cannot exist in a free market of true supply and demand. In a free market for example where apples are three times rarer than oranges, they have to cost three times as much, especially if they are in even HIGHER DEMAND FOR CERTAIN INDUSTRIAL USES than comparative oranges. It is inconceivable, and utterly impossible that in a free market the apples would sell for 1/38th of the price of oranges. Yet such is the situation in silver.
THEREFORE, BY VIRTUE OF RES IPSA LOQUITUR, THE “FACT SPEAKING FOR ITSELF”, SILVER IS A MANIPULATED MARKET. IT IS SO OBVIOUS, THE FACTS SPEAK SO LOUDLY FOR THEMSELVES, THAT IT IS INCUMBENT UPON ANYONE WHO STATES THE CONTRARY TO ASSUME THE BURDEN OF PROOF IN ATTEMPTING TO BUILD THEIR CASE.
2. A long, outstanding history of regulatory partiality towards the downside, or “short” side of the market.
During the last thirty years, there has been a consistent history of CFTC partiality towards the short side of the market, consistently aiding and abetting the short sellers in their manipulation and distortion of the market to their profitability in outright violation of both the spirit and letter of commodity law.
In this respect, I’m going to go a little farther and more directly to the heart of the issue than Mr. Butler has been able to do. Going back to 1979-80, for example, when silver was on the increase in price, and the Hunt brothers were staking out their position, the commission came in and heavy-handedly first increased margin requirements as prices were escalating to squeeze profits out of those going long, and then limited the market to such an extent finally that only those transactions involving selling were allowed; even taking a “long” position was prohibited. At the end of the day, the public was in essence given the simplistic message: “Oh, bad, bad, bad Hunt brothers…greedy people trying to drive up the price…they must be punished by the government wanting “fair” markets!” However, as Mr. Butler has pointed out, the levels of concentration for the recent short sides of the market far outsized the relative position on the long side of the market that the Hunt brothers had.
Now, bringing this scenario up to the recent decade, the CFTC, during times of when the market got “hot”, that is, profitable for a change (temporarily only) for those buying long and investing for price increases, went back to the old tricks of increasing margin requirements as prices were escalating, ostensibly in order to “protect all market participants”. In essence, the commission has employed these tactics in order to allow the manipulation of the market by the concentrated few players on the short side of the market. So, in 2004, 2006, and in 2008, huge, fast, and precipitous declines were all seen, often with changing margin requirements immediately preceding them. When, during the last thirty year history, has the commission ever imposed increasing margin requirements to squeeze the short side, as prices were RISING? Never, to my knowledge. Touchee…Q.E.D…. Case made. This is actually so obvious when looked at from this perspective that one can only say “DUH”, of course the record shows partial and biased treatment favoring the shortsellers. Unfortunately, now, at this time, since the largest short seller is the bank J.P. Morgan Chase themselves, the original creators of the Federal Reserve, our created and privately favored and government sponsored financial cartel, in essence creating the money themselves out of thin air and loaning it to the United States with annual interest payments from the government back to the Federal Reserve, even the imposition of unfavorable margin requirements on the downside to them would have no consequence since they have unlimited access to money and money creation! This again becomes very obvious. The only solution therefore as is proposed will be to drastically reduce the position limit they are allowed to hold, and to eliminate completely any exemptions from those limits on either side of the market for them in the future. As Mr. Butler has suggested, let them go elsewhere and play their game…which from my viewpoint they will most assuredly continue to do, as in their virtual control of other markets beyond the subject of this letter.
3. The current skewed concentration levels on the shortside leading to market control and manipulation with predictable patterns of market deterioration
As has been continuously and assiduously documented by Mr. Butler, the market has been dominated by the patterns of selling silver short on paper in immense quantities, and then, at whim and desire, of withholding bids to buy until there have been huge market drops. This can only be accomplished by those who hold predominant controlling positions of great strength in the market, that is, an overwhelming ability to write as much paper silver as is needed, without essential limits in relation to all other commodities, in order to “break” any upward market patterns that may evolve. Specifically, Mr. Butler and the public have never been given an adequate answer to the question he asked: “Why are one or two US banks allowed to hold a short position equal to 25% of world mine production, and 85% of the entire COMEX commercial short position?” In his interview with your commission, he stated: “On every rational basis of comparison, including world annual production and world inventory levels, the Comex silver accountability limit registers as an aberration compared to all other commodities.” As he has noted, even in relationship to gold, where the open interest level of the gold market is 4.35 times that of silver, where the gold daily volume is four to five times that of silver, where the deliverable inventory of gold is 4.3 times that of silver, and where even the current notional value of gold in relationship to silver is 5.5 times that of silver, these two separate commodities have in reality under your auspices the same position accountability limits. And then you grant short sellers “exemptions”. Commissioners, speaking apart now from newly arrived Chairman Gensler, you’ve been NEGLECTING to oversee fairness, openness, transparency, and compliance with the letter and spirit of United States commodity law for decades due to your combination of negligence at best and outright adherence to “marching orders” and collusion, aiding and abetting of short-selling profiteers at worst, for DECADES now. It’s time for change, as someone of note recently had proclaimed!
Admittedly, as indicated above, there has been one key factor in the equation probably not directly under your control, which is likely to remain an unsolved mystery for decades from now if not for eternity. That factor concerns, in my opinion, a true and accurate explanation as to why the silver producers, contrary to the short and long-term interests of their shareholders, contrary to our combined short and long-term national economic and security interests as a country, and contrary to the ultimate conservation of silver itself as an irreplenishable and irreplaceable natural commodity and resource, have been willing to sell their rare and desirable product so cheaply on the marketplace. The extent, if any, to which secret deals or communications on the golf course or other locations were made regarding timing of market events in particular, and/or other factors of profitability in general, is, and is likely to remain, unknown to us. Other than the desire to keep some production operations at least open if not in great profit situations, I am currently unable to come up with any other possible or remotely conceivable explanation for this willingness to sell at such uneconomic prices for so long. The relative scarcity of known silver supplies to gold, 1:3, (namely, that silver is, on the face of the earth as you know in terms of available supply, three times rarer), combined with the silver production deficit so accurately documented by Mr. Butler over decades, were factors that definitely were or should have been so certainly known by those involved on the inside tracks of the industry itself.
Those facts do not change the reality of the situation at hand, namely that through the market concentration of the short side in silver, that the price on the exchange has been able to be systematically manipulated like a yo-yo: allowing the price to expand through paper sales of silver which are far greater than the available known deliverable supply, and then recalled and pulled back at will and at unpredictable and erratic times due to the power of the large few market sellers. There are no other possible explanations of how huge $2-$10 price drops in silver could have been manipulated during the last several years irrespective of true market conditions, especially when the underlying physical market availability both on the retail and wholesale levels has been so tight. Any other explanation is impossible, and defies any operable laws of economics. The fact that these market drops have happened cannot be refuted: after all, “what has happened has happened”. However, it does prove the contention of a total partiality to the shortside in this market, contrary to the both the letter and spirit of existing commodity law duly enacted into statute, and therefore demonstrating total lack of enforcement of those laws by and through the auspices of the CFTC, COMEX, and other elements of the exchange for decades.
THE SOLUTION:
Relating to the second major point of an actual proposed solution as outlined at the beginning of this letter, we should be interested I would submit in immediately correcting the market irregularities that exist presently, and setting the stage for a silver market freer from outright manipulation. Therefore at this time I present my simple RECOMMENDED POLICY SOLUTION FOR THE COMMISSION very simply to be formulated as follows:
“IN ORDER TO MAINTAIN A CONTINUED EQUITABLE STABILITY IN THE SILVER MARKET, WE HAVE DECIDED AT THIS TIME TO LIMIT CONTRACTS TO A MAXIMUM OF 1,500 CONTRACTS PER PARTICIPANT, WITH THE LIMIT OF 750 CONTRACTS IN PLACE FOR THE SPOT MONTH. IN ADDITION, WE HAVE DECIDED TO ELIMINATE ALL HEDGING AND OTHER EXEMPTIONS TO THE ABOVE RULE IN THE INTEREST OF MARKET FAIRNESS AND EQUITY AT THIS TIME.”
The exact formulation of limits on categories of participants may be just a little more detailed, so I resubmit the concept and idea and encourage you to place reasonable category limits on group-types of participants such as those listed above: banks, brokerage houses, technical funds, hedge funds, and even producers.
Chairman Gensler, regarding my third point outlined at the beginning of this letter with respect to the future: a great and defining potential moment of greatness stands before you: the initial discussions on position limits in energy and other areas were good for setting the stage and figuratively as callisthenic warm-ups. However, as surely you know as Chairman and from the documentation provided in Mr. Butler’s articles, silver is the most convoluted, out-of-kilter, and most highly manipulated commodity (due to concentration beyond question, and continually demonstrated as such, of any commodity on the exchange market, especially in terms of any of the crucial variables such as the size of the net commercial position of the largest participant, the four largest participants, along with the largest eight participants in relation to number of open interest contracts, daily volume, deliverable inventory, and notional value and other key variables that Mr. Butler has consistently and thoroughly and meticulously documented, especially in his recent record of testimony before you, which does not need to be copied in full here. Therefore, silver is and will be the defining market of challenge and opportunity for rectification. I would like to conclude with, and creatively modify, the motivational words of none other than President Abraham Lincoln from the ending of the Gettysburg Address which perhaps you, like so many others, have memorized in whole or in part, and which echo throughout time as inspiration for those called upon to fulfill their role in history:
“The world will little note, nor long remember, what we say here, but it can never forget what we do here.” As I noted in the beginning of this letter, it is my sincere, heartfelt strongly held conviction that freedom in the silver market will indicate and be tied to economic and other freedoms as a whole; therefore, Lincoln’s conclusion is just as appropriate in my view to the silver market today as when he declared these concluding words, without specifically referring to economy, which I have placed in parentheses, on Nov. 19, 1863: “…that from these honored dead we take increased devotion to that cause for which they gave the last full measure of devotion—that we here highly resolve that these dead shall not have died in vain—that this nation, under God, shall have a new birth of (economic) freedom—and that government of the people, by the people, for the people shall not perish from the earth.”
Therefore, Chairman Gensler, in that spirit I call upon you to lead the commission in enacting the recommended changes listed above, specifically, in LIMITING ALL PARTICIPANTS IN THE SILVER FUTURES MARKET TO 1,500 CONTRACTS AS A MAXIMUM, WITH THE LIMIT OF 750 CONTRACTS IN PLACE FOR THE SPOT MONTH, AND COMPLETELY ELIMINATING ANY "HEDGING" EXEMPTIONS TO THOSE LIMITS. SUCH CHANGES COULD BE PHASED IN OVER THE COURSE OF A CALENDAR YEAR IN ORDER TO AVOID MARKET SHOCK.
Thanking you and the entire commission in advance for your attention in this matter, and for calling upon the input of public opinion which many informed others like myself hope will be heeded,
Sincerely,
David Barnett
