Comment Text:
February 28, 2011
Dear Chairman Gensler and Fellow Commissioners:
It is my understanding that the CFTC will soon have the opportunity to decide on position limits, including limiting exemptions to bona fide hedgers. I urge you to approve the staff’s proposal on position limits with one very important caveat: readjust the proposed formula for silver. The current formula would result in a position limit of over five thousand (5,000) contracts for any single speculator, on an all-months-combined basis. Five thousand (5,000) contracts is the equivalent of 25 million ounces of silver.
This is simply too high a threshold given the realities of the world silver market:
1. There are only three mining companies in the world who produce more than 25 million ounces of silver per year;
2. There are only three industrial consumers who use more than that amount; and
3. Any speculator could hold greater than what 99% of the world’s silver producers and consumers make or use in a year.
The result could be that any speculator, holding contracts for 25,000 ounces of silver derivatives, would have inordinate pricing power. The purpose of speculative position limits is to prevent such a circumstance.
Please institute a 1,500 contract (7.5 million ounce) position limit for silver.
Respectfully submitted,
Richard Conrad
