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(CNBC)   Goldman Sachs exploits recently-loosened regulations by moving aluminum around Detroit warehouses every day, increasing the prices paid for producers and consumers. Good thing those regulations were loosened -- look at all the jobs they're creatin'   (cnbc.com ) divider line
    More: Asinine, bank holding companies, Commodities market, Goldman Sachs, barrel of oil, bottlenecks, Commodity Futures, spot markets, Blackstone Group  
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3380 clicks; posted to Business » on 21 Jul 2013 at 3:18 AM (2 years ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2013-07-20 10:54:37 PM  
Who contracts for a commodity without a fulfillment date?
 
2013-07-20 11:07:21 PM  
What the financial markets do every day.

/makin' money from movin' money
//nothing new to see here...move along
 
2013-07-20 11:13:21 PM  
Someone tell the Invisible Hand to quit jacking off.
 
2013-07-21 12:33:50 AM  
This is our economy.
 
2013-07-21 01:18:14 AM  
Milo Minderbinder approves.
 
2013-07-21 03:22:10 AM  
This sounds like something so incredibly dumb that it would make an excellent Superman movie plot
 
2013-07-21 03:43:47 AM  

simplicimus: Who contracts for a commodity without a fulfillment date?


Would it surprise you to find out that 98% of all futures contracts do not involve physical delivery?
In this particular instance, deregulation of the commodities market has allowed Goldman Sachs to corner the US market for aluminum by shuffling it around.
 
2013-07-21 03:50:08 AM  
Wonder what the value of one of those trucks they move the metal with is worth?
 
2013-07-21 03:53:48 AM  

Mentat: This is our economy.


That's not accurate.

It's not really ours anymore.
This economy has no need for us to be involved at all.
 
2013-07-21 04:05:08 AM  
4 tent pegs, some rope, honey, hot sun and an ant hill or two.

Naw.  still too good for them.

/ain't unbridled capitalism grand?
//Extreme sarcasm alert
 
2013-07-21 04:22:18 AM  
It is aluminium, you savages.
 
2013-07-21 04:27:08 AM  
these kind of shenanigans should be illegal.    when people complain there are too many regulations and this is why we need so many.
 
2013-07-21 04:41:18 AM  
Is this Aluminum storage bullshiat different from their oil storage bullshiat?

i.imgur.com

If Obama wanted to do something to help the US economy, he would purge the White House of anyone with ties to Goldman, and demand Congress to the same in Congress and in the Federal Reserve.

Goldman should be treated like pariahs, and their building salted.
 
2013-07-21 04:58:54 AM  
I know I'm missing something, but if the aluminum stored at those particular Goldman Sachs-owned warehouses takes 16 months to process and deliver, why does anyone store their aluminum there?  If it is widely known what Goldman is doing here, surely there are other places to process and store aluminum.  You'd think over time (and a short time at that) that their customers would realize they are getting bent over a barrel and violated with a baseball bat and pull all their business away from those warehouses, and they'd end up empty.
 
2013-07-21 05:36:09 AM  

majestykelf: I know I'm missing something, but if the aluminum stored at those particular Goldman Sachs-owned warehouses takes 16 months to process and deliver, why does anyone store their aluminum there?  If it is widely known what Goldman is doing here, surely there are other places to process and store aluminum.  You'd think over time (and a short time at that) that their customers would realize they are getting bent over a barrel and violated with a baseball bat and pull all their business away from those warehouses, and they'd end up empty.


i.imgur.com
I think the non-financial owners, Coca-Cola, etc., are being taken for a ride by the traders who have control of the market. This was the complaint about the oil storage scam. IIRC, Paul Krugman did a 180 on that saying it couldn't possibly be the case, and then determining it was.
 
2013-07-21 05:58:32 AM  
I do something similar, only I move mine from the living room to the back yard when I run out of room.
img.ksl.com

partydamage.com
 
2013-07-21 06:55:01 AM  
They are creating jobs, someone has to move the aluminum
 
2013-07-21 07:06:47 AM  
Yeah... I don't get it. If Goldman controlled aluminum is having its costs inflated, why wouldnt you just purchase from a different source (which the article says is exactly what people like Coca-Cola do).

Sounds more like they're illegally storing the aluminum to speculate on. The strategy is only profitable if you already know the value of aluminum is going to go up in a hurry. Sooner or later market forces will find a ceiling, and they'll be sitting on an over supply.

Of course, in natural Goldman fashion I'm sure someone else is holding the actual notes to the aluminum, so their hands will be free of the loss, while they still get their storage fees.

Is it shifty? Yes. I think they're making a bigger deal out of this than it is though.
 
2013-07-21 07:25:33 AM  

Alonjar: Yeah... I don't get it. If Goldman controlled aluminum is having its costs inflated, why wouldnt you just purchase from a different source (which the article says is exactly what people like Coca-Cola do).

Sounds more like they're illegally storing the aluminum to speculate on. The strategy is only profitable if you already know the value of aluminum is going to go up in a hurry. Sooner or later market forces will find a ceiling, and they'll be sitting on an over supply.

Of course, in natural Goldman fashion I'm sure someone else is holding the actual notes to the aluminum, so their hands will be free of the loss, while they still get their storage fees.

Is it shifty? Yes. I think they're making a bigger deal out of this than it is though.


I have a few guesses (and these are pure guesses):  Big companies like Coca-Cola are large enough to find another vendor and probably have the infrastructure to move it where it needs it.  For example: Goldman Sachs sells and stores aluminum in Michigan near Cokes bottling plant (or canning).  Coke finds a vendor in California and the cost to ship from CA with its own trucks is cheaper than buying from GS in Michigan.  Smaller companies may not have that option.

Guess #2: Companies may not know it is buying from a GS sub-company.  I am thinking the umbrella, conglomerate setup of large companies.  Example:  Mike's Aluminum Storage Company is actually owned buy MidWest Logistics company which is owned by C&A incorportated, which is owned by GS.
 
2013-07-21 07:40:37 AM  
 
2013-07-21 07:57:27 AM  
Alonjar: Yeah... I don't get it. If Goldman controlled aluminum is having its costs inflated, why wouldnt you just purchase from a different source (which the article says is exactly what people like Coca-Cola do).


Well, if everyone like Coca-Cola refused to buy from the GS company, that means demand for the non-GS company material goes up and, therefore, these non-GS companies can/do charge more.

The GS company holds a significant portion of the inventory, so trying to cut them out of the market means that supply of aluminum is greatly reduced.
 
2013-07-21 07:59:50 AM  

ReapTheChaos: I do something similar, only I move mine from the living room to the back yard when I run out of room.
[img.ksl.com image 321x430]

[partydamage.com image 500x318]


Coors Light? Molson's and Pepsi? What the farking hell is wrong with you?
 
2013-07-21 08:22:57 AM  
And, as usual, at the core are farked-up incentives set up by the government:

This industrial dance has been choreographed by Goldman to exploit pricing regulations set up by an overseas commodities exchange, an investigation byThe New York Times has found.
 
2013-07-21 08:32:00 AM  

EvilEgg: They are creating jobs, someone has to move the aluminum


Fair point.
 
2013-07-21 08:39:11 AM  
But the Republicans told me that deregulation was good.
 
2013-07-21 08:40:54 AM  

Nabb1: EvilEgg: They are creating jobs, someone has to move the aluminum

Fair point.


Do you know what else creates jobs?  Paying a fair price for a product and having more money left over for another product or investing/savings.
 
2013-07-21 08:42:00 AM  

RedPhoenix122: Milo Minderbinder approves.


And everyone gets a share!
 
2013-07-21 08:42:03 AM  

YixilTesiphon: And, as usual, at the core are farked-up incentives set up by the government:

This industrial dance has been choreographed by Goldman to exploit pricing regulations set up by an overseas commodities exchange, an investigation by The New York Times has found.


RTFA, moran.

Firstly, the regulation is not set up by the government, but by the the London Metal Exchange, i.e. a privately own company.

Secondly the regulation in question (that you have a certain amount of metal has to leave the warehouse) is designed to prevent hoarding. GS are circumventing the regulation by moving the metal from one warehouse to an other. If the regulation were not in place, then GS would continue to manipulate the market, they just wouldn't have to shuffle their inventory to do it.
 
2013-07-21 08:46:11 AM  
An easy fix, just round up all of the meth junkies in a 1,000 mile radius, and then give them the addresses. It will be gone in a day
 
2013-07-21 08:54:00 AM  
What's perhaps more alarming is that Goldman, JPMorgan and BlackRock were granted approval by the SEC to buy up 80 percent of the copper available on the market so that they can play the same game.
 
2013-07-21 09:29:17 AM  
Banks are the true leeches of society. The amount of money they "legally" scam from consumers and the government is astounding.
 
2013-07-21 09:35:57 AM  
Humans should be heavily regulated, especially women...
BUT NOT BUSINESSES.

/Republican logic
 
2013-07-21 09:37:19 AM  

demaL-demaL-yeH: simplicimus: Who contracts for a commodity without a fulfillment date?

Would it surprise you to find out that 98% of all futures contracts do not involve physical delivery?
In this particular instance, deregulation of the commodities market has allowed Goldman Sachs to corner the US market for aluminum by shuffling it around.


Not surprised at all. When I worked in the Oil/Nat Gas business, the traders would do 20 year futures contracts (like anybody could know what a barrel of oil would trade for in 2 months, much less 20 years), and options to cover. But a contract to deliver X on Y date should be enforceable.
 
2013-07-21 09:49:45 AM  

The wonderful travels of a turd: It is aluminium, you savages.


Much cheaper than platinium, and more important to the market than molybdenium.
 
2013-07-21 09:53:11 AM  
   The trickle down economy at it's finest. The more money that the banks make, the bigger the bonuses.  That translates to more cars and yachts being bought.  A third or fourth home provides jobs for the construction workers who will no doubt support the local restaurants.
  The people  with the expertise  to write the regulations are the same people benefiting from it or are people  hoping to get a better paying job from said company.  USA USA.
 
2013-07-21 09:54:46 AM  
I can't think of any Solution that will exterminate economic parasites like Goldman-Sachs in this country, but I'm someone will...someday...
 
2013-07-21 10:02:17 AM  
Mt. Clemens is a greasy little town.
 
2013-07-21 10:18:02 AM  

simplicimus: demaL-demaL-yeH: simplicimus: Who contracts for a commodity without a fulfillment date?

Would it surprise you to find out that 98% of all futures contracts do not involve physical delivery?
In this particular instance, deregulation of the commodities market has allowed Goldman Sachs to corner the US market for aluminum by shuffling it around.

Not surprised at all. When I worked in the Oil/Nat Gas business, the traders would do 20 year futures contracts (like anybody could know what a barrel of oil would trade for in 2 months, much less 20 years), and options to cover. But a contract to deliver X on Y date should be enforceable.


Reminds me of a story here on Fark (maybe someone can find it, I have been unable to) where a firm switched coding languages, which resulted in trades where the value for 'Receive_item=True' instead of false, and resulted in a tanker full of oil showing up in the nearest port asking where they should unload.
 
2013-07-21 10:33:35 AM  

arcas: What's perhaps more alarming is that Goldman, JPMorgan and BlackRock were granted approval by the SEC to buy up 80 percent of the copper available on the market so that they can play the same game.


I have never understood how they can keep a straight face when filing joint requests that include the "we did THIS together, but we super promise that once you grant us this approval we won't collude to fix pricing".
 
2013-07-21 10:47:38 AM  

Kittypie070: The Federal Reserve, facing lawmakers' criticism of Wall Street's trading in physical commodities,
said it's reexamining a decade-old policy governing the firms' activities.

[si0.twimg.com image 417x303]

Time to unwrap and release the cop car pewping hipsters again?


Just remember the timeframe on such "loosening" of regulations. Bush was quite happy to reward so many folks for buying him the Presidency.
 
2013-07-21 10:57:47 AM  
cdn.static.ovimg.com
 
2013-07-21 11:00:32 AM  

demaL-demaL-yeH: ...deregulation of the commodities market has allowed Goldman Sachs to corner the US market for aluminum by shuffling it around.


Remember how those guys tried that with silver? Then it came to public light and the whole house of cards collapsed. Good times!
 
2013-07-21 11:01:39 AM  

grimlock1972: these kind of shenanigans should be illegal.    when people complain there are too many regulations and this is why we need so many.


Actually, the regulations that aluminum can't just be stored forces them to move it. If TFA is to be believed, the movement between warehouses, and any cost in moving, is forced by regulation.

The article sucks ass. Isn't the "premium" for rent/storage transportation factored into a buyers farking decision?

At first glance, it seems the problems are with unnecessary regulation, not with Goldman Sachs.

But if the regulations are in place to prevent hoarding of commodities, and Goldman is driving up the price by defacto hoarding through shuffling between warehouses, then that is something else. But TFA doesn't explain it for shiat.
 
2013-07-21 11:02:06 AM  
They're squatting on stored aluminum hoping for spot prices to increase.

Coca-Cola buys from Ball. Ball buys CAC and raw from Alcoa. The fact Goldman is squatting the market would produce a false signal if there were normal producers that would boom and bust the market, but Alcoa sees there's a commodity squatter and won't budge any more than they were going to earlier. Alcoa is a freak company, with massive capital investments and a near monopoly on primary production and a philosophy of making their product as cheap as possible.
 
2013-07-21 11:05:37 AM  
This situation demonstrates why government oversight is required for financial entities. The Goldman Sachs abuse of the aluminum storage market can only be described as a scam.
 
2013-07-21 11:41:08 AM  

Alonjar: Yeah... I don't get it. If Goldman controlled aluminum is having its costs inflated, why wouldnt you just purchase from a different source (which the article says is exactly what people like Coca-Cola do).

Sounds more like they're illegally storing the aluminum to speculate on. The strategy is only profitable if you already know the value of aluminum is going to go up in a hurry. Sooner or later market forces will find a ceiling, and they'll be sitting on an over supply.

Of course, in natural Goldman fashion I'm sure someone else is holding the actual notes to the aluminum, so their hands will be free of the loss, while they still get their storage fees.

Is it shifty? Yes. I think they're making a bigger deal out of this than it is though.


goverment contracts like Austel.the goverment doesn't care wat something costs
 
2013-07-21 11:43:02 AM  
Coca~Cola did change to a different supplier.
Article also states that didn't help Coke because the aluminum fire drill they were doing
Influenced the Total price of aluminum for the entire market
 
2013-07-21 12:27:41 PM  

Alphakronik: Wonder what the value of one of those trucks they move the metal with is worth?


a good question, lets assume from an average shipping container, that its volume is 1360 cubic feet. 167 lbs per square feet. current prices are $0.80/lb. $181,696 per container. would make a pretty juicy target, and the banks have been asking for some robbin hood justice for quite some time.
 
2013-07-21 12:35:39 PM  

Hyjamon: simplicimus: demaL-demaL-yeH: simplicimus: Who contracts for a commodity without a fulfillment date?

Would it surprise you to find out that 98% of all futures contracts do not involve physical delivery?
In this particular instance, deregulation of the commodities market has allowed Goldman Sachs to corner the US market for aluminum by shuffling it around.

Not surprised at all. When I worked in the Oil/Nat Gas business, the traders would do 20 year futures contracts (like anybody could know what a barrel of oil would trade for in 2 months, much less 20 years), and options to cover. But a contract to deliver X on Y date should be enforceable.

Reminds me of a story here on Fark (maybe someone can find it, I have been unable to) where a firm switched coding languages, which resulted in trades where the value for 'Receive_item=True' instead of false, and resulted in a tanker full of oil showing up in the nearest port asking where they should unload.


This story?
 
2013-07-21 12:36:58 PM  

GF named my left testicle thundercles: Alphakronik: Wonder what the value of one of those trucks they move the metal with is worth?

a good question, lets assume from an average shipping container, that its volume is 1360 cubic feet. 167 lbs per square feet. current prices are $0.80/lb. $181,696 per container. would make a pretty juicy target, and the banks have been asking for some robbin hood justice for quite some time.


but they probably dont use containers, they prolly just put the bare metal on a huge flatbed.
 
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