gene arensberg doesn't think the cftc will impose position limits on silver. energy and grains, perhaps...but not silver:

Opinion and commentary

The CFTC is likely to announce new federal position limit proposals for public comment in the energy futures markets and possibly also the metals markets fairly soon.

Here at Got Gold Report we continue to doubt that the CFTC will adopt hard position limits for actors on the financial hedging side of the metals markets battlefield, but we wouldn’t mind being wrong about that.

When just two reporting entities are able to amass a net short position in silver of 38,000-plus contracts, over three times the 6,000-contract accountability limits (for two traders) imposed by the COMEX, division of NYMEX, that’s one reason many feel that the market is structured to give the hedgers and short sellers an advantage much of the time.

Earlier this year, during several days of hearings on the subject of the CFTC taking over the job of setting position limits in the energy futures markets, we often heard the phrase “excessive speculation” from the CFTC commissioners, but not once did we ever hear anything that sounded like the commission was at all worried about excessive hedging or short selling.

We took the view then and continue to believe this CFTC, under CFTC Chairman Gary Gensler, is more concerned with trying to manage energy prices lower by limiting the position limits for players on the long side while preserving the ability of large actors on the short side to ignore those same limits.

That is not exactly a level playing field. A level playing field would have the exact same position limits for all players no matter who they are or what side they are on.

Bullion banks are able to take such large, over-limit positioning in aggregated accounts for their clients in silver futures via “exemptions for bona fide hedgers” even though they neither mine nor produce silver. Some of the bullion bank’s positioning instead seeks to generate an income from an otherwise static asset (metal sitting in vaults) for themselves and their clients, by selling paper derivatives based on that metal located here and abroad. Since very little metal will actually ever be delivered to settle those derivatives, it’s safe to say that much of that positioning is purely financial hedging.

Even though Chairman Gensler mentioned in his July 7 opening comments for the hearings that the commission intends to take another look at how exemptions to position limits are implemented, all of the restrictions and restrictive actions the commission has taken thus far affected only those traders who aggregated positions on the long side, such as reneging on exemptions to grain traders and threatening to do the same with aggregators of exchange traded fund investors in oil and natural gas. (As reported in prior reports.)

Again, we’d love to be wrong on this one, but so far we’ve seen nothing that suggests that the CFTC intends to actually level the playing field when it comes to position limits in the metals markets.

Not that it actually makes any difference in the long run. No matter how concentrated the positioning on the COMEX gets and no matter how many contracts the banks decide to sell short, the metals markets are global and will inevitably seek their supply/demand/liquidity equilibrium over time.

As a practical matter position limits in one futures market might make a difference for very short periods of time (no pun intended), but over the long haul there’s nothing that can stop the metals from seeking a liquidity-driven market price in the real world.

http://www.stockhouse.com/Columnists/2009/Oct/15/Got-Gold-Report--Two-U-S--banks-still-hold-over-ha