The nation's biggest silver market raised the ante for speculating in silver yesterday to $50,000 in the latest move to prevent possible manipulation of silver prices.
Commodities Exchange Inc. in New York took the action after the Chicago Board of Trade on Thursday set limits on the amount of silver that speculators could hold.
Both steps were meant to discourage speculation in silver, whose price has tripled in recent months.
"our initial reaction to the exchanges' initiatives is positive," said James Stone, chairman of the Commodity Futures Trading Commision.
CFTC officials have monitored silver futures trading closely for several weeks and will continue to do so, a spokesman said.
Until the Commodities Exchange -- known as the Comex -- raised the ante yesterday, speculators could buy a futures contract to purchase 5,000 ounces of silver by making a $20,000 margin payment. At current prices of about $17.75 an ounce 5,000 ounces of silver is worth more than $85,000.
And until the Chicago Board set a 600-contract limit on Thursday, speculators could buy an unlimited number of contracts. No new positions of more than 600 contracts can be established under the CBOT order, and speculators who hold more than 600 contracts must reduce their holdings to the limit by Feb. 1.
The two actions were taken after officials of the exchanges and the CFTC discovered that a small group of investors controled nearly 75 percent of the more than 250,000 outstanding silver futures contracts.
Reported to be among the biggest investors in the silver market are Nelson Bunker Hunt and H.Herbert Hunt, sons of the late Texas oil billionaire, H. L. Hunt. A third member of the Hunt family is also active in the market, industry sources say.
In the past, the Hunts have been accused of trying to force up the price of silver and other commodities by buying massive amounts. In 1973 Hunt family members bought 35 million ounces of silver. As a result of the continuing influx of orders to buy, silver prices doubled. Industry sources say there is no evidence the Hunts have disposed of their 1973 hoards, and now they are buying more.
Two years ago, the CFTC accused several Hunt family members of violating limits on the number of soybean futures contracts that can be held by a single investor.
The Hunts contended their purchase were not illegal because each family member was acting independently. The CFTC took the issue to the federal courts, which ruled a few months ago that the family holdings could be considered as one.
There are limits on the number of futures contracts one investor can own in soybeans and other agricultural commodities; there are no government limits on metals futures investments.
The Silver Users Association, a Washington-based trade group, has been pressuring the CFTC to set limits on silver positions, and the agency reportedly encouraged the Chicago Board to restrict holdings on its own.