July 17, 2009
Don't Overestimate Gensler & "Position Limits" on Gold and Silver
Sad to say, I think the uptick in hopes for Mr. CFTC Gensler to do the right thing in imposing "position limits" on commodities including gold and silver is misplaced. You have to understand the criminal conspiratorial mind. Position limits will probably be imposed, but their purpose is much different than currently suggested.
Mr. Gensler feels the need to impose position limits because he's worried that the Chinese or the Russkies might swoop in to the Crimex metal pits, buy a lot of contracts, and request actual physical delivery. This would ruin the game for Gensler's Wall Street buddies. (The darn Asians might even object to the hokey ETF physical delivery and do something unkind like sue for specific performance.) So Da Boyz have to move out in front of this problem and change the rules pre-emptively.
There will be position limits imposed - against commodity funds and other amateurs trying to play in the Crimex sandbox…but there will of course be exemptions for "qualifying financial institutions" or some such, like JPM and HSBC. I mean, come on, the whole Crimex barnyard game is for insiders to make a lot of money while helping out Big Uncle Brother Sam. Let's not let little things like ethics or honesty or lack of precious metals in the vault take the fun out of it. Call it rule making for the rubes. Roll printing presses, roll. Yeeeehaaa…
Filed under Commodities, Gold and Monetary Metals, Silver, The Fed, Wall Street by Financial Foghorn
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