Comment Text:
Re: Position Limits for Commodities of Finite Supply
Gentlemen:
This constitutes my comments regarding your establishment of position limits for silver contracts, pursuant to the new Financial Regulatory Reform statutes.
First, I do not believe that there is any rational reason to treat silver any differently than copper and gold. Abuse has proliferated for decades, and manipulation by a few major players is a given. But for the unreasonably high existing levels, such manipulation would be much more difficult.
Silver is in the middle of the price spectrum for the three metals.
The COMEX gold contract has an accountability level of 6,000 contracts, or 600,000 ounces. This represents 0.75% of annual world production of 80 million ounces. In copper, the current accountability level is equal to about 0.4% of annual world copper production.
By middling an accountability level for silver contracts, my comment is that the level should be established at 0.5785% of annual world silver production of about 700 million ounces.
The 0.5785 number rounds up to 4.05 million annual ounces; this would enable an accountability level for silver contracts of 810 contracts, or 4,050,000 ounces. That is my comment and recommendation.
Yours truly,
John P. Nash
