Comment Text:
Dear Chairman Gensler and fellow Commissioners:
I urge you to approve the staff’s proposal on position limits, including limiting exemptions to bona fide hedgers. I would suggest, however, that you 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. It’s too high because it gives speculators too much dominance over real world producers and consumers. 5,000 contracts is the equivalent of 25 million ounces of silver. There are only three mining companies in the world who produce more than 25 million ounces of silver a year. In addition, there are only a handful of silver consumers in the world who consume more than 25 million ounces a year. There are hundreds of important miners and consumers who produce or consume less than 25 million ounces of silver a year. Therefore, it makes no sense to empower any speculator who comes along with the ability to hold, long or short, more than the amounts most of the important world producers and consumers make or use in a year. Allowing any entity to control this much of a concentrated short or long position will allow this entity to manipulate the price up or down and I believe it is the function of your commission to protect the citizenry from this sort of illegal activity.
Please reconsider the position limit for silver as I believe there is a unique situation with Silver. The formula you are considering, while it may allow proper regulation for other commodities, does not seem stringent enough for silver. The proper level for position limits in silver would be approximately 1500 contracts or 7.5 million ounces. That amount is still larger than what the vast majority of the world’s silver producers and consumers make or use in a year, and would allow opportunity for legimate speculators, but would limit the obscene concentrated short position that is occuring under the current rules.
Thank you for considering my input.
