The Commodity Futures Trading Commission (The Cartel) on Tuesday approved a much-debated, long-delayed rule designed to curb bets on oil, gold, sugar and in particular silver.
CFTC Chairman Gary Gensler said the limits will protect the markets. The 3-2 vote—cast along party lines—illustrates how divided regulators remain over the role of government in the markets. The debate leading up to the vote also shows how even some CFTC commissioners supporting the rule think it may not have the desired effect.
Opposed by Wall Street and in particular JP Morgan Bank the rule aimed at capping the positions firms can take in certain commodity contracts in order to curb sharp price increases. The rule gained traction in Congress during a silver price spike in 2011, which some attributed to excessive speculation by short-term traders. Along with a number of other rules, it was mandated by the Dodd-Frank financial-regulatory overhaul.
So finally position limits in silver will be enforced. Will there be delays? Of course and you can bet your bottom dollar that the Cartel will be out in force with their lawyers challenging the ruling. However, there is a very high probability that on a beautiful day in 2012, JPM, et al will finally be feed of its shackles and the price of silver will move dramatically higher.
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