The truth is we need more speculators. They would add cnsiderable liquidity, and make the price much more stable.
As soon as the price starts to rise to much too quickly they would sell, bringing it down. If the price falls too quickly by too much they buy, bringing it up.
We do need more speculators and liquidity....the problem then maybe that modern speculators tend to be trend following, day traders...they profit by buying into trends and then sell out as soon as that trend reverses or stalls, or sell at a certain percentage loss (usually 3 or 4%) if there entry was wrong...often this actually increases volatility as 1000s of day traders jump in and out of trends at roughly the same time.
I'm very much in 2 minds as to whether liquidity = stability.