Comment Text:
Math -> See attached file.
Oz/mTon 35273.9619
In 2009
World Production 21800 mTon
Consumption 5360 mTon
Remaining Production 16440 mTon
Total Oz 579,903,934 Oz
Contracts Held 20,000
Total Oz 100,000,000 Oz
Percentage controlled 17.2%
Oz/mTon 35273.9619
In 2009
World Production 21800 mTon
Consumption 5360 mTon
Remaining Production 16440 mTon
Total Oz 579,903,934 Oz
Contracts Held 1,250
Total Oz 6,250,000 Oz
Percentage controlled 1.1%
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 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.
Another way is to look at this is the trade deficit of the US and China, just two countries in the world and just the trade deficit. The US imports more than what we export. Less than 5% of that amount (US/China Trade deficit) could buy all the silver produced by all the countries in the entire world combined in a year. http://www.census.gov/foreign-trade/balance/c5700.html
Using the above math a trader with 20,000 contracts would effectively control over 15% of the marketable produced silver in a year for the world! A more fair way would be to limit this to 1,250 contracts which would be around 1% for world production – see math above.
All of us realize the importance of the ability to short for any all commodities. But large concentrated positions are the same as what the Hunt Brother’s attempted on the other side of the market. They were effectively band from ever trading again but the damage was evident.
Please institute a 1,250 contract or similar for position limit for silver effective as soon as possible.
Respectfully submitted,
John Coe
