Comment Text:
Dear Chairman Gensler and fellow CFTC Commissioners,
As you well know, hedging commodity prices via the futures markets is a crucial risk-mitigation tool for major commodity producers and end users alike that adds an otherwise unattainable degree of stability to what can often be a volatile and unforgiving sector of the global economy. I urge you to approve the staff’s proposal on position limits, including limiting exemptions to bona fide hedgers. Reasonable position limits and regulations will provide for a more transparent, better functioning futures marketplace that will limit the impact of "hot money" speculators and ruinous manipulative practices distorting the pricing for some of our world's most critical resources.
This is particularly pertinent for silver, a metal that has a wide and increasing variety of industrial uses and whose supply is currently relatively limited against demand from multiple sources. 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, as has arguably (and quite probably) been done by banks including JP Morgan for years, and conversely by the Hunt brothers in 1979 and 1980 when they attempted to corner the market. The purpose of speculative position limits is to prevent such a circumstance.
Please institute a 1,250 contract (5 million ounce) position limit for silver. It is but one extremely important example of the desperate need for futures position limits across all commodities and the beneficial effect they will have if enacted, as well as the detrimental circumstances surrounding their ongoing absence.
Very truly yours,
Adam Cooperstock
