Goldman Sacks Extracting Wealth with Aluminum Hoarding

[boutons_deux]

A Shuffle of Aluminum, but to Banks, Pure Gold
http://graphics8.nytimes.com/images/2013/07/21/business/markets-pic1/markets-pic1-articleLarge.jpg


Hundreds of millions of times a day, thirsty Americans open a can of soda, beer or juice. And every time they do it, they pay a fraction of a penny more because of a shrewd maneuver by Goldman Sachs and other financial players that ultimately costs consumers billions of dollars.

The story of how this works begins in 27 industrial warehouses in the Detroit area where a Goldman subsidiary stores customers’ aluminum. Each day, a fleet of trucks shuffles 1,500-pound bars of the metal among the warehouses. Two or three times a day, sometimes more, the drivers make the same circuits. They load in one warehouse. They unload in another. And then they do it again.

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. The back-and-forth lengthens the storage time. And that adds many millions a year to the coffers of Goldman, which owns the warehouses and charges rent to store the metal. It also increases prices paid by manufacturers and consumers across the country.

Tyler Clay, a forklift driver who worked at the Goldman warehouses until early this year, called the process “a merry-go-round of metal.”

the efforts by Goldman and other financial players has cost American consumers more than $5 billion over the last three years,

The maneuvering in markets for oil, wheat, cotton, coffee and more have brought billions in profits to investment banks like Goldman, JPMorgan Chase and Morgan Stanley, while forcing consumers to pay more every time they fill up a gas tank, flick on a light switch, open a beer or buy a cellphone

Using special exemptions granted by the Federal Reserve Bank and relaxed regulations approved by Congress, the banks have bought huge swaths of infrastructure used to store commodities and deliver them to consumers — from pipelines and refineries in Oklahoma, Louisiana and Texas; to fleets of more than 100 double-hulled oil tankers at sea around the globe; to companies that control operations at major ports like Oakland, Calif., and Seattle.

Before Goldman bought Metro International three years ago, warehouse customers used to wait an average of six weeks for their purchases to be located, retrieved by forklift and delivered to factories. But now that Goldman owns the company, the wait has grown more than 20-fold — to more than 16 months, according to industry records.


Metro International holds nearly 1.5 million tons of aluminum in its Detroit facilities, but industry rules require that all that metal cannot simply sit in a warehouse forever. At least 3,000 tons of that metal must be moved out each day. But nearly all of the metal that Metro moves is not delivered to customers, according to the interviews. Instead, it is shuttled from one warehouse to another.

Because Metro International charges rent each day for the stored metal, the long queues caused by shifting aluminum among its facilities means larger profits for Goldman.

...

http://mobile.nytimes.com/2013/07/21/business/a-shuffle-of-aluminum-but-to-banks-pure-gold.html?from=homepage

[Wild Cobra]

Yawn

[angrydude]

Translation: they're trying to create De Beers diamond mine style monopolies over all commodities. That's gonna make everything more expensive.

[Wild Cobra]

The owner can store aluminum just about anywhere. I am suspect of the motives of the writer here. Hot GS.

[boutons_deux]

The owner can store aluminum just about anywhere. I am suspect of the motives of the writer here. Hot GS.

what do you suspect?

do you DENY the writer telling the truth about GS hoarding aluminum?

[Wild Cobra]

what do you suspect?

do you DENY the writer telling the truth about GS hoarding aluminum?

They supply the warehouses that the owners store it in.


The story of how this works begins in 27 industrial warehouses in the Detroit area where a Goldman subsidiary stores customers’ aluminum.

[boutons_deux]

GS owns the aluminum, and they prevent from being delivered to the market by moving it around from warehouse to warehouse.

They did the same with 5 tankers of oil in early 2008, parked them in the Caribbean, then bid the price of oil mid-year to $148, then sold oil the tankers.

[Wild Cobra]

Where's your evidence?

[boutons_deux]

Where's your evidence?

"Do Your Own Research"

--WC

[Wild Cobra]

If they are buying aluminum, it;'s because prices are low. The supply is in excess of demand right now. They aren't keeping any from being sold. get your facts strait. Right now, it's a great investment, especially since major aluminum producers announced they will cut production.

Any idea how many weeks it takes to resume production? Alcoa is cutting two cell lines to reduce production. Other producers are doing the same. It's not GS trying to manage the prices, it's the aluminum producers. GS is just smart enough to buy low, sell high. Aluminum isn't something you just ramp up or down in any quick manner.

[Wild Cobra]

"Do Your Own Research"

--WC

LOL...

You obviously haven't...

[FuzzyLumpkins]

WC apparently has no issue in sandbagging on essential commodities so multinational conglomerates and their top shareholders can rake in the big bucks.

This is precisely the abuse of market position that the anti-trust and similar laws were created to stop.

[boutons_deux]

LOL...

You obviously haven't...

I posted the original msg. you posted nothing but bullshit

[CosmicCowboy]

Where's your evidence?

I don't doubt it. I went 70 miles offshore in the Gulf of Mexico bill fishing a couple of years ago when oil/gas prices were spiking. There were at least 20 deep loaded tankers anchored 20-50 miles offshore that I saw in just that one section of the gulf. These were not tankers temporarily anchored waiting for a pilot to take them in from the whistling buoy...these were long term anchored waiting for orders to move. You really can't deny that there is some manipulation in the commodities market.

[CosmicCowboy]

If they are buying aluminum, it;'s because prices are low. The supply is in excess of demand right now. They aren't keeping any from being sold. get your facts strait. Right now, it's a great investment, especially since major aluminum producers announced they will cut production.

Any idea how many weeks it takes to resume production? Alcoa is cutting two cell lines to reduce production. Other producers are doing the same. It's not GS trying to manage the prices, it's the aluminum producers. GS is just smart enough to buy low, sell high. Aluminum isn't something you just ramp up or down in any quick manner.

I'm sitting on a couple of thousand pounds myself so I don't mind if I make money when they make money.

[CosmicCowboy]

Oh, and Boutons...you don't corner the oil marker with 5 tankers.

[Rogue]

bankers can extract wealth out of everywhere, most times at the expense of our money or the government's, and they're always shamelessly enjoying doing so.

[boutons_deux]

Oh, and Boutons...you don't corner the oil marker with 5 tankers.

straw man, thanks for knocking it down. nobody but you said that.

The G-S trader cleared over $200M on that deal, IIRC.

[Wild Cobra]

I don't doubt it. I went 70 miles offshore in the Gulf of Mexico bill fishing a couple of years ago when oil/gas prices were spiking. There were at least 20 deep loaded tankers anchored 20-50 miles offshore that I saw in just that one section of the gulf. These were not tankers temporarily anchored waiting for a pilot to take them in from the whistling buoy...these were long term anchored waiting for orders to move. You really can't deny that there is some manipulation in the commodities market.
This might be happening, but you have to really have a large stake to be able to control the market like that. Now in the case of aluminum, wec do have a verified excess of aluminum. Aluminum production isn't something you can just turn on and off at will. It takes several says or weeks to start or stop a cell in a cell line, and expense. Therefor, these companies have rather consistent production rates. Currently, an excess and they finally decided to turn off cell lines.

Now in the case of these GS warehouses. I'll, bet since inventory isn't moving, they have some kind of a issue with union workers. They probably want to cut hours or lay off people, but are likely prohibited from such things, by contract. I'll bet that what's happening is they are making "busywork" to keep the employees from sitting on their asses. Possibly trying to make some quit their union protected job.

[Wild Cobra]

One more thing I noticed.

The source no longer works for Goldman Sacks.

Was he fired, or did he quite?

Disgruntled maybe?

What is the truth of this matter. Who else has stepped up? Nobody that I've seen...

[boutons_deux]

:lol WC never misses a chance to defend the organization that's screwing Human-Americans, NEVER.

[Wild Cobra]

:lol WC never misses a chance to defend the organization that's screwing Human-Americans, NEVER.
It's not that.

I simply cannot stand propaganda being generated by ignorant shits.

What do you have past the allegations of a former employee?

[boutons_deux]

It's not that.

I simply cannot stand propaganda being generated by ignorant shits.

What do you have past the allegations of a former employee?

google "banks traders hoarding rigging oil aluminum copper commodities markets" and various other terms, plus remember the Hunt Bros, Dallas assholes, trying to corner the silver market.

"Do Your Own Research" -- WC

If the ex-employee is slandering, why isn't G-S's army of lawyer whores suing him?

[Wild Cobra]

They buy low, and hold it till the prices rise. That's what everyone tries to do with commodities.

[boutons_deux]

US commodities markekt is regulated by the captured USDA because it was originally meant to help non-corporate farmers minimize price swings. Now it's dominated, rigged by 100% speculators, "financial capitalism", adding $Ts to commodity prices, as another tactic to extract wealth from the 99%.

An oil exec testified before Congress that probably 30% of the price of oil was due to speculators, not supply/demand.

[boutons_deux]

MillerCoors Urges Federal Reserve Crackdown On Wall Street's Aluminum Dealings

The Federal Reserve should toughen oversight of big banks such as Goldman Sachs and JPMorgan Chase due to their negative influence over commodities, including the aluminum in beer cans, brewer MillerCoors will urge on Tuesday.

The maker of popular beers (http://www.millercoors.com/Our-Beers/Great-Beers.aspx) Coors Light and Miller High Life will tell the Senate Banking Committee that financial groups, through their ownership of warehouses, are distorting the aluminum market by controlling how much aluminum flows out of their storage facilities, leading to extra rent and other costs for industrial companies.

Tim Weiner, MillerCoors global risk manager of commodities and metals, said in prepared remarks (http://www.banking.senate.gov/public/index.cfm?FuseAction=Hearings.Testimony&Hearing_ID=cca72cb5-a8fd-427a-978a-a51140a75cb0&Witness_ID=2693f0d4-b114-498b-9fdc-bf5b118aeb14) that rules exploited by banks and other warehouse owners have cost his company tens of millions of dollars in recent years as a result of an "economic anomaly in the aluminum and other base metal markets."

The alleged gaming has cost aluminum purchasers overall an extra $3 billion, an expense that likely has been passed on to beer and soda drinkers.

The beverage company's statement comes as regulators at the Fed and the Commodity Futures Trading Commission weigh possible action against the banks for their commodities activities. The Fed is revisiting a landmark 2003 decision (http://www.huffingtonpost.com/2013/07/19/wall-street-commodities_n_3625750.html) that for the first time allowed banks to enter the physical commodities business, the central bank said Friday. The CFTC is probing the metals warehousing business, the source of MillerCoors's complaints, people familiar with the matter said.

The inquiries could lead to full-blown investigations by the CFTC or a Fed ban on certain activities by banks in markets for commodities such as aluminum and oil, curtailing a key source of profit.

Ten major global banks have generated nearly $50 billion in revenue off their commodities business over the last five years, according to Coalition, a financial data provider. JPMorgan, Goldman and Morgan Stanley last year were the top three global banks in commodities revenue, with the 10 leading institutions generating about $6 billion in revenue off commodities activities.

http://www.huffingtonpost.com/2013/07/22/millercoors-federal-reserve-aluminum_n_3636764.html?utm_source=DailyBrief&utm_campaign=072313&utm_medium=email&utm_content=FeatureTitle

[boutons_deux]

U.S. Weighs Inquiry Into Big Banks’ Storage of CommoditiesA tactic devised by Goldman Sachs and other financial players that has inflated the price of aluminum — and ultimately cost consumers billions of dollars — is coming under federal scrutiny.

The Commodity Futures Trading Commission has taken the first step in an examination of warehouse operations that are controlled by Goldman Sachs, Glencore Xstrata, the Noble Group and others and used to store vast amounts of aluminum. The operations were the subject of an article (http://www.nytimes.com/2013/07/21/business/a-shuffle-of-aluminum-but-to-banks-pure-gold.html?pagewanted=all) by The New York Times that was published on Sunday.

The commission has told the firms to retain internal documents and e-mails related to the businesses, according to people who reviewed the requests and spoke on the condition of anonymity because the notices had not been made public.
The call comes as a Senate committee prepares to open hearings on Tuesday on how Wall Street has extended its reach beyond banking and into global markets for essential commodities. The panel is expected to focus on how banks have taken advantage of loosened federal regulation to buy warehouses, pipelines, oil tankers and other infrastructure used to store basic goods and deliver them to consumers.

The overarching question is whether banks should control the storage and shipment of commodities, and whether such activities could pose a risk to the nation’s financial system.

But other crucial issues are expected to arise as well. Among them is how Wall Street’s push into these markets has affected the prices paid by manufacturers and ultimately consumers. Another is whether Goldman and Morgan Stanley have operated their storage facilities at arms’ length from their banking business, as required by regulators.

http://mobile.nytimes.com/2013/07/23/business/inquiry-possible-into-storage-of-commodities-by-big-banks.html?from=homepage

[boutons_deux]

Not Just Goldman Sachs: Koch Industries Hoards Commodities as a Trading Strategy

Worth noting: Koch Industries, a company often inaccurately described as simply an oil or manufacturing concern, is highly active in the commodity speculation (http://thinkprogress.org/report/koch-oil-speculation/) business akin to the big hedge funds and banks like Goldman Sachs.

As Fortune magazine reported (http://money.cnn.com/2008/11/26/news/economy/oil_speculation.fortune/), when oil prices dropped from a record high in July of 2008 to record lows in December of that year, Koch bought up the cheap oil to take it off of the market. Koch leased a number of giant oil tankers, including the 2-million-barrel-capacity Dubai Titan, to store the oil offshore. The decrease in supply increased the price for consumers that year, while Koch took advantage of selling the oil off later at higher prices.

Koch Industries’ executive David Chang later boasted (http://thinkprogress.org/economy/2011/04/13/153206/koch-industries-price-gouging/), “The drop in crude oil prices from more than US$145 per barrel in July 2008 to less than US$35 per barrel in December 2008 has presented opportunities for companies such as ours. In the physical business, purchases of crude oil from producers and storing offshore in tankers allow us to benefit from the contango market where crude prices are higher for future delivery than for prompt delivery.”

The company took advantage when the prices were low, but they also gained when the prices were high. A leaked document (http://thinkprogress.org/climate/2011/09/15/317330/leaked-cftc-oil-speculation-data/) I obtained shows Koch among the largest traders (including Goldman Sachs and Morgan Stanley) speculating on the price of oil in the summer of 2008.

http://www.thenation.com/blog/175387/not-just-goldman-sachs-koch-industries-hoards-commodities-trading-strategy?rel=emailNation#axzz2ZtyuFOUD

[mercos]

If the beer companies are against it, so am I. Fuck Goldman Sachs. The government needs to smite that place already.

[SnakeBoy]

I'm sitting on a couple of thousand pounds myself so I don't mind if I make money when they make money.

That must be one really big pile of Lone Star cans in your backyard.

[boutons_deux]

JPMorgan Chase stops selling physical commodities amid federal pressure

JPMorgan Chase & Co is exiting physical commodities trading, the bank said in a surprise statement on Friday, as Wall Street’s role in the trading of raw materials comes under unprecedented political and regulatory pressure.

After spending billions of dollars and five years building the banking world’s biggest commodity desk, JPMorgan said it would pursue “strategic alternatives” for its trading assets that stretch from Baltimore to Johor, and a global team dealing in everything from African crude oil to Chilean copper.

The firm will explore “a sale, spinoff or strategic partnership” of the physical business championed by commodities chief Blythe Masters, the architect of JPMorgan’s expansion in the sector and one of the most famous women on Wall Street. The bank said it will continue to trade in financial commodities such as derivatives and precious metals.

Pressured by tougher regulation and rising capital levels, JPMorgan joins other banks such as Barclays PLC and Deutsche Bank in a retreat that marks the end of an era in which investment banks across the world rushed to tap into volatile markets during a decade-long price boom.

http://www.rawstory.com/rs/2013/07/26/jpmorgan-chase-stops-selling-physical-commodities-amid-federal-pressure/

IBIWISI. There's too many $10Bs to be made in commodities speculation for JPMC to just walk away from it. They'll get their corrupt, predatory hands on it somehow, and secretively.

JPMC is doing nobody any favors, no good will towards anything but its own profits.

[scott]

lol Classic Cobra in this thread.

[scott]

http://stream.wsj.com/story/latest-headlines/SS-2-63399/SS-2-287744/

[ElNono]

oops, they found out, let's dump everything now :lol

[Winehole23]

happens with foodstuffs, too. monopolization can breed inefficiencies.

http://www.newrepublic.com/article/114577/commodities-trading-hedge-funds-spook-wall-st-banks

[Winehole23]

http://learn.uvm.edu/foodsystemsblog/2013/06/21/corporate-consolidation-and-power-in-the-food-system-an-interview-with-dr-mary-hendrickson/

[CosmicCowboy]

I just sold 800# @ 45 cents a pound.

Thanks, Goldman Sachs!

[Wild Cobra]

I just sold 800# @ 45 cents a pound.

Thanks, Goldman Sachs!

Isn't aluminum trading about $0.80/lb?

http://www.infomine.com/ChartsAndData/GraphEngine.ashx?z=f&gf=110569.USD.lb&dr=max (http://www.infomine.com/investment/metal-prices/aluminum/all/)


http://www.infomine.com/ChartsAndData/GraphEngine.ashx?z=f&gf=110569.USD.lb&dr=1w

[CosmicCowboy]

Isn't aluminum trading about $0.80/lb?

After being shredded, processed, and melted into ingots, yeah...

[m>s]

Dok get in here

[boutons_deux]

The Leveraged Buyout of America (http://ellenbrown.com/2013/08/26/the-leveraged-buyout-of-america/)

Giant bank holding companies now own airports, toll roads, and ports; control power plants; and store and hoard vast quantities of commodities of all sorts. They are systematically buying up or gaining control of the essential lifelines of the economy. How have they pulled this off, and where have they gotten the money?

In a letter (http://big.assets.huffingtonpost.com/LetterToFedGoldmanUranium.pdf) to Federal Reserve Chairman Ben Bernanke dated June 27, 2013, US Representative Alan Grayson and three co-signers expressed concern about the expansion of large banks into what have traditionally been non-financial commercial spheres. Specifically:

[W]e are concerned about how large banks have recently expanded their businesses into such fields as electric power production, oil refining and distribution, owning and operating of public assets such as ports and airports, and even uranium mining.


After listing some disturbing examples, they observed:

According to legal scholar Saule Omarova, over the past five years, there has been a “quiet transformation of U.S. financial holding companies.” These financial services companies have become global merchants that seek to extract rent from any commercial or financial business activity within their reach. They have used legal authority in Graham-Leach-Bliley to subvert the “foundational principle of separation of banking from commerce”. . . .
It seems like there is a significant macro-economic risk in having a massive entity like, say JP Morgan, both issuing credit cards and mortgages, managing municipal bond offerings, selling gasoline and electric power, running large oil tankers, trading derivatives, and owning and operating airports, in multiple countries.


A “macro” risk indeed – not just to our economy but to our democracy and our individual and national sovereignty. Giant banks are buying up our country’s infrastructure – the power and supply chains that are vital to the economy. Aren’t there rules against that? And where are the banks getting the money?


How Banks Launder Money Through the Repo Market

In an illuminating series of articles on Seeking Alpha titled “Repoed! (http://seekingalpha.com/article/1109701-repoed-how-the-fed-and-depositors-fund-banks-big-bets)”, Colin Lokey argues that the investment arms of large Wall Street banks are using their “excess” deposits – the excess of deposits over loans – as collateral for borrowing in the repo market. Repos, or “repurchase agreements,” are used to raise short-term capital. Securities are sold to investors overnight and repurchased the next day, usually day after day.

The deposit-to-loan gap for all US banks is now about $2 trillion, and nearly half of this gap is in Bank of America, JP Morgan Chase, and Wells Fargo alone.

It seems that the largest banks are using the majority of their deposits (along with the Federal Reserve’s quantitative easing dollars) not to back loans to individuals and businesses but to borrow for their own trading.

Acquiring a company or a portion of a company mostly with borrowed money is called a “leveraged buyout.” The banks are leveraging our money to buy up ports, airports, toll roads, power, and massive stores of commodities.

Using these excess deposits directly for their own speculative trading would be blatantly illegal, but the banks have been able to avoid the appearance of impropriety by borrowing from the repo market. (See my earlier article here (http://webofdebt.wordpress.com/2013/07/22/5835/).) The banks’ excess deposits are first used to purchase Treasury bonds, agency securities, and other highly liquid, “safe” securities. These liquid assets are then pledged as collateral in repo transactions, allowing the banks to get “clean” cash to invest as they please. They can channel this laundered money into risky assets such as derivatives, corporate bonds, and equities (stock).

http://ellenbrown.com/2013/08/26/the-leveraged-buyout-of-america/

aka, unregulated capitalists are increasing the status of the USA a rentier capitalism society, pure wealth accumulation and extraction. America now pays the banks to live.