Comment Text:
Dear Sirs,
The two largest primary silver mining companies in the United States are Couer D'Alene and Hecla Mining.
In 2009 Coeur D'Alene mined 17.7 million ounces of silver and Hecla mined 10.9 million ounces of silver. One doesn't need a calculator to work out that America's two largest silver miners mined a combined total of 28.6 million ounces of silver.
A 5000 contract position limit is equivalent to 25 million ounces of silver. Ergo, a 5000 contract position limit would give a single speculator the ability to control a roughly equivalent amount of paper silver ounces to the amount of physical silver mined by the USA's two largest silver companies combined.
That is outrageous.
It is outrageous to insult the public by suggesting that speculators would be reined in by a position limit which allows a speculator to sell short silver equivalent to the entirety of Hecla and Couer D'Alene's annual production.
One has to wonder just how subservient to vested interests the CFTC's commissioners are if they are prepared to insult the public by suggesting that a 5000 contract position limit is effective to prevent manipulation in the market.
Imagine if Hecla and Coeur D'Alene could marshall the entirety of their combined annual production to flood the market with supply at the touch of a button at price sensitive times of low volume?
Today's vested interests are tomorrow's fallen powerbrokers. The people who run the entity carrying out the illegal manipulation of the silver market will be little able to provide political cover to the CFTC commissioners once they are in jail. The CFTC commissioners should focus their minds not on taking action that is palatable to their vested-interest masters at the present time, but from the point of view of their own self-interest to focus on taking action that will be objectively defensible in hindsight.
The silver manipulation has caused a number of egregious distortions: firstly, it has breached commodity law and stolen wealth from innumerable private citizens, and secondly it has distorted the supply-demand equilibrium in the silver market for many years. Increased industrial demand and shrinking supply should have caused the silver price to rise, stimulated more mining and increased the impetus to look for silver substitutes. Instead, because large illegal manipulators were able to pile on 5000 short contracts, price was artificially suppressed, new supply was retarded, industry became overreliant on a vanishing rare commodity, and year after year stockpiles were diminished.
The illegal manipulators are now on borrowed time due to a shortage of physical silver that their own greed and malfeasance has engineered. All that their continued manipulation is now accomplishing is to trick American investors and miners into putting the little remaining silver on sale to Asian buyers. The game is up for them, and the CFTC commissioners must choose whether to go down with the sinking ship by confirming themselves as ineffectual, weak, corrupt pawns of the manipulators, or by taking objectively correct, effective action that will assure them of a fair judgment by those who come to look at this debacle in the future.
A 1000-1500 contract position limit should be the absolute maximum that the CFTC commissioners authorise.
Yours faithfully,
Richard David
