Comment Text:
Regarding the proposed rules forwarded by the CFTC 17 CFR Parts 1, 150 and 151 Position Limits for Derivatives I ask that you consider the following.
The CFTC is mandated to reform position limits in precious metals so that a small number of large players present cannot continue to dominate trading to their own advantage. One year ago the CFTC sought written submissions into concentrations of precious metals futures in the American markets. Many wrote expressing a desire that the commission put an end to market manipulation brought about by the breathtaking concentration of one or two large players dominating the precious metals market especially in silver futures. Of the 2889 written submissions to the March 25th 2010 hearing into precious metals futures, 2827 written submissions were in the affirmative for position limit reform. Of those a clear majority were in favor of position limits between 1000 and 1500 contracts. Analysts such as Ted Butler, Adrian Douglas, Harvey Organ, Nick Laird and Gene Arensberg have been able to expose the bizarre concentration of silver futures held by one or two large banks. Please find attached a chart indicating that the largest number of short positions held by the fewest of traders relative to world daily production of any commodity occurs in silver.
Despite large concentrations of futures held by a limited number of participants the Commissions previous investigations into silver futures trading has been unable to prove that fraudulent manipulation is taking place. Since no findings have been released we also presume that the current 30 month long investigation into silver has been unable to prove without doubt that fraud is taking place on the silver futures market. Since this is the case despite massive trading concentration, the only way the commission can prevent the possibility of fraud by concentration of futures ownership is by the introduction of strict position limits.
The limits currently proposed by the commission are too high and will do nothing to remove the possibility of manipulation. Please limit the concentration held by one futures investor to an equivalent no more than 1 days world production. In silver this equates to 1.8 million ounces equivalent or 1500 contracts. In gold this equates to 360,000 ounces equivalent or 3600 contracts.
