The CFTC rules!

As expected, the Commodities Futures Trading Commission under the direction of chairman Gary Gensler (formerly of Goldman Sachs), disappointed a number of elected officials who were seeking more stringent trading curbs on commodities futures markets in the wake of $147 crude oil eighteen months ago.

As proposed, the regulations "erred on the high side" according to CFTC Commissioner Bart Chilton in allowing a trader to control positions as large as 98 million barrels of oil, more than one day of global demand or five times the current Nymex limit.

The proposal will now undergo a 90-day review and, in March, the commission will look into position limits for the trading of metals. Of particular interest will be the silver futures market where, for years, one large trader with the initials JP and the last name Morgan has been responsible for a disproportionate share of futures contracts, many of them short positions.

The CFTC no doubt has many file folders brimming with letters from silver investors who have objected to this high concentration of holdings and they may have to buy an extra file cabinet or two to hold the correspondence that arrive over the next two months.