Comment Text:
Gentlemen:
I have been a private precious metals investor since 1988. In the past few years, the large short positions in silver that several large entities have accumulated has a destabilizing effect on the precious metals market and prevents them from becoming a true "price discovery" system. This must not be allowed to continue. You can simply take my opinion to be the same as Mr. Ted Butler of Butler Research who has spoken to the CFTC many times on this subject:
"I urge you to approve the staff’s proposal on position limits, including limiting exemptions to bona fide hedgers. I would ask you, however, 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.
"Please institute a 1500 contract (7.5 million ounce) position limit for silver."
I have come to trust Mr. Butler's opinion in these matters, but even more important, it is clearly obvious to even an amateur investor like myself that extremely large short positions in precious metals as the type describe above may lead to serious events such as a default on delivery. This would cause a level of chaos in the financial world that the we are ill-equipped to handle at this time.
Thank you for your consideration.
Anthony J. Porzio
