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Goldman Sachs Offers to Release Aluminum Amid Accusations of Stockpiling

  +Follow August 1, 2013 6:46AM
Tickers Mentioned:

Facing worldwide shortages, Goldman Sachs Group Inc (GS) has indicated that they might run loose some of their massive stores of aluminum. The financial giant has come under intense scrutiny following reports that they were deliberately mismanaging aluminum shipping to cause worldwide shortages and ultimately profit off of a manipulation of the commodities market.

The New York Time alleged that the bank choreographed an “industrial dance” that artificially raised the price of the metal, thus gouging consumers out of billions of dollars. Aluminum is used widely the world over to make soda, juice, and beer cans. The United States alone goes through 90 billion cans of aluminum a year.

Analyst Tim Wiener of beer manufacturer MillerCoors LLC testified to the U.S. Senate that increased warehousing times for aluminum had inflated aluminum prices $3 billion in 2012.

Banks involvement in the commodities market has long been historically prohibited by American regulation. The first indications banks would be able to get into commodity trading began with the gradual dissolution of the Glass-Steagall Act in 1999, which prohibited commercial and investment banks from engaging in the same activities.  In 2003 the Federal Reserve officially began allowing investment banks to trade physical commodities.

If Goldman has been manipulating the commodities market (and evidence is mounting that they did create artificial aluminum scarcity to drive up prices) it raise the question of whether investment banks should be allowed in the commodity market at all. Since the investment banks are now allowed to own warehouses and shipping ventures, they are made privy to knowledge concerning commodity storage and shipping that oftentimes would be considered insider trading. But simultaneously owning commodites and trading their futures is entirely legal, thanks to the 2003 decision.

But possibly not for long.  A proposed new regulatory bill, dubbed the “21st Century Glass-Steagall,” currently enjoys bi-partisan support. And on July 20 the Federal Reserve elected to review that decision, which could force the banks out entirely.

Other investment houses are voluntarily divesting from physical commodities trading, as threat of legal action increases. JP Morgan Chase & Co. (JPM) is fleeing the commodities market altogether, and is putting their entire trading desk up for sale. On July 29, JP Morgan was forced to pay out a settlement of $410 million for engaging in price manipulation of the power market.

But for the time being, Goldman, while releasing a large chunk of their stored metals, have no intention of leaving commodities altogether. Goldman CEO Gary D. Cohn has already said, “Commodity hedging is a core competency and one of the most important things we do in the firm, and our clients really need us to be in that business. We are staying in.”

Goldman’s stock was up .99 percent to close the day at $164.03. The stock is up 23.37 percent on the year.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.

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Results for gs
Young Bob Dole
20 Oct 14 18:51:42
RT @valuewalk: Goldman Sachs On The “Moneyball” of Stock Selection http://t.co/CgoC7rfBme $GS $AMGN $MJN $ISRG $MSFT http://t.co/DjJG5s8OUk
20 Oct 14 18:46:06
$GS maybe the masters of trading... http://t.co/J9Bcqpd4SL
Stock Forums
20 Oct 14 18:33:40
$AA News Click Here: http://t.co/eyesCmKy9Y Also See: $CENX $GS $WFC $XLP ~
20 Oct 14 18:11:00
Priceless material for continual profit in the #stock #market http://t.co/VHF6GbCTvC $SPX $DJI $RUT $NDX $AAPL $FB $TWTR $LNKD $TSLA $GS $V
$hane Obata
20 Oct 14 18:04:22
"overseas demand - (not a weaker yen) - is the key determinant of Japan's real exports" - $GS via ZH http://t.co/xxgxskrsBZ
$hane Obata
20 Oct 14 18:03:16
"unstable correlation between export prices and real exports in past yen depreciation phases" - $GS via ZH http://t.co/iUZjr9xk3O
$hane Obata
20 Oct 14 18:00:50
"production and export functions in Japan mainly handle high-value-added production" - $GS via ZH http://t.co/1NMjkjy0bn
$hane Obata
20 Oct 14 17:57:42
"export prices have not fallen any more than in past phases of yen depreciation" - $GS via ZH http://t.co/3CsOlIveEu
$hane Obata
20 Oct 14 17:56:47
#Abenomics? or nah?*** "export prices do not fluctuate as much as forex" - $GS via ZH http://t.co/RMHkDOvvqj
Stock Moo
20 Oct 14 17:53:07
$gs: [$$] Goldman Sachs, J.P. Morgan Lower Views on Year-End Treasury Yields http://t.co/kJD8hNp0uY
$hane Obata
20 Oct 14 17:50:47
#busted "a weaker yen does not necessarily result in lower export prices" - $GS via ZH http://t.co/YG9pzQU1Yy
20 Oct 14 17:50:06
Goldman Sachs : IN BRIEF (Page 8) http://t.co/1vMk1Bhiia $GS
Who wants to know?
20 Oct 14 17:32:37
RT @StockSignaling: Movers and Shakers: Recently Upgraded: $ETFC $STI $AIG $BK $CA $XLNX $QLGC $GOOGL $PTEN $GS $HLT $UNH $AMD $NBR $FITB h…
Stock Signaling
20 Oct 14 17:31:43
Movers and Shakers: Recently Upgraded: $ETFC $STI $AIG $BK $CA $XLNX $QLGC $GOOGL $PTEN $GS $HLT $UNH $AMD $NBR $FITB http://t.co/Vtx6dLy0Nw
20 Oct 14 17:25:34
Nightly scan - $CMG $LNKD $BIDU $MCK $GS $BA $SSYS $PCYC $CELG $FDO http://t.co/BI1UFGRjBf
20 Oct 14 17:18:19
Bullish watchlist $CMG, $LNKD, $GS, $BA, $BBBY, $FIVE, $YHOO rest of the list is here http://t.co/QTFuCu4OMi
20 Oct 14 17:09:29
Our Penny Stock Picks Gained 371% In 2 Weeks! Get Our Next Pick Early: http://t.co/z2noBUWrEP $GS $ZION $ISRA
Alisa Strategy®
20 Oct 14 16:05:58
Gordon Gekko
20 Oct 14 15:57:22
$GS Q3 2014 Earnings http://t.co/wBLa8J4lQR
Bret Kenwell
20 Oct 14 15:39:44
Leon Cooperman Says Stocks Still Better Than Bonds, There's No Recession http://t.co/MoL3Ys5w3o via @TheStreet $SPY $TLT $DIA $QQQ $GOOG $GS
20 Oct 14 15:26:54
According to $GS, repurchase of company stock at prices above intrinsic value @ YrEnd will drive market higher #ValueDriver #TradingRevenue
Kelly Herron Albert
20 Oct 14 15:25:44
#Buy $DNAX #DNA #Energy #Drinks #New #CEO #Real #Experience > $FNMA $HEMP $PMCM $PHOT $PLPL $CBIS $JPM $GS $MS $TSLA $FB $TWTR $GOOG $MSFT
20 Oct 14 13:40:29
“@WSJ: Goldman Sachs posts stronger results http://t.co/e4srCqXUWj $GS”
20 Oct 14 13:40:17
RT @GS10KWomen: $GS' Dina Powell @GayleKing @NOIweala @TinaBrownLM & more share best advice for women #entrepreneurs: http://t.co/0fmkICkls1
Mark Newton
20 Oct 14 13:34:13
$T, $CAT, $CSCO, $DD, $GE, $GS, $INTC, $IBM, $MRK, $MSFT, $PFE, $PG, $VZ, $WMT all made All-time Highs BEFORE 2014
gordon gekko is god
20 Oct 14 13:28:00
Update: Goldman Sachs 3Q14 Earnings http://t.co/nc9ww8kBW9 $GS
20 Oct 14 13:14:43
RT @InvestorWisdom: $LOCO chart isnt overheated as $CMG. Earnings xplosion coming $JACK $MCD $PNRA $FB $JS $WB $HPQ $NXPI $AAL $C $KNDI $LA…
Future Tech Investor
20 Oct 14 13:13:22
$LOCO chart isnt overheated as $CMG. Earnings xplosion coming $JACK $MCD $PNRA $FB $JS $WB $HPQ $NXPI $AAL $C $KNDI $LAKE $MOBI $GS $BA $MU
20 Oct 14 13:04:15
+3.30 AAPL 100 RT @blackmarkt: Also picked up some of these $AAPL $GPRO $GS near the bottom http://t.co/6kHhwOcTBC
Nicole Augenti, Esq.
20 Oct 14 13:02:10
In spite of the moronic fake $GS shorts last ditch gift move - not very volatile, low volume, nice ending. Handled it well. $MNKD
20 Oct 14 13:00:01
Worst sentiment for SP1500 stocks at market close: $GS,$CCL,$INTC,$TRN,$PCTI (2014/10/20) #sentiment #stock #alexandria
Quantpost Financial
20 Oct 14 12:59:39
$GS News: "Update: Goldman Sachs 3Q14 Earnings $GS …" http://t.co/lfdcykAutS Board view: https://t.co/EBGrPPzJ2k
Seeking Alpha
20 Oct 14 12:59:38
Update: Goldman Sachs 3Q14 Earnings http://t.co/7qix8BlMrz $GS
20 Oct 14 12:53:35
RT @SJosephBurns: $GS ANALYSIS http://t.co/rVW8Xqu1Z2
20 Oct 14 12:50:07
Treasury Bond Prices Rises; Goldman Abandons 3% Yield Forecast http://t.co/qI4UBaqVCL $GS $MOVE $S3258 $6753
Nicole Augenti, Esq.
20 Oct 14 12:48:42
By tomorrow that shit will be forgotten. $GS #ScamArtists
Nicole Augenti, Esq.
20 Oct 14 12:48:04
Who paid $GS for the bone to the shorts? Such transparent manipulation. $MNKD
20 Oct 14 12:39:32
After Massive Gains On Penny Stock Picks, another New Pick Is Coming! Check it out: http://t.co/lWd4jUXeCy $GS $ZION $ISRA
20 Oct 14 12:28:04
$GS - Prospectus Filed Pursuant to Rule 424(b)(2) (424b2) http://t.co/TFEDXxLzPI
Zubeyr Kamil Açıksar
20 Oct 14 12:25:33
RT @EricBalchunas: Liq alt ETFs are tough sell, can $GS help? -> Goldman Explores Its (Liquid) Alternatives in ETF World http://t.co/TKcpnZ…
Jacob Schroth
20 Oct 14 12:23:25
RT @GoldmanSachs: 52 offices, 900 #nonprofits & over 25,000 $GS people, family & friends. See the impact of #CommunityTeamWorks: http://t.c…
Eric Balchunas
20 Oct 14 12:23:01
Liq alt ETFs are tough sell, can $GS help? -> Goldman Explores Its (Liquid) Alternatives in ETF World http://t.co/TKcpnZ4crd @BloombergNews
Rosner Stocks
20 Oct 14 12:22:09
$JPM Stock Forum Click Here: http://t.co/bkuI7L7MxJ Also See: $GS $REGN $GLOG $EWG ~
20 Oct 14 12:05:11
Goldman Sachs : not to join UK Banking Standards Review Council http://t.co/owp03ZZjvS $GS
Doctor Daniel Crosby
20 Oct 14 11:59:50
RT @valuewalk: Goldman Sachs On The “Moneyball” of Stock Selection http://t.co/CgoC7rfBme $GS $AMGN $MJN $ISRG $MSFT http://t.co/DjJG5s8OUk
20 Oct 14 11:18:16
RT @GillianTan: Spreadsheet mistake costs Tibco shareholders $100 million http://t.co/236C1PMkUa $TIBX $GS http://t.co/cFoiTOvAIl
20 Oct 14 11:13:15
RT @GoldmanSachs: 52 offices, 900 #nonprofits & over 25,000 $GS people, family & friends. See the impact of #CommunityTeamWorks: http://t.c…
20 Oct 14 11:12:55
RT @GoldmanSachs: 52 offices, 900 #nonprofits & over 25,000 $GS people, family & friends. See the impact of #CommunityTeamWorks: http://t.c…
Investors Hangout
20 Oct 14 11:11:23
danrocks: $LNG Buzz $GS $JDST $NFLX $QLD $XOP http://t.co/xFEGu6Po11
Investors Hangout
20 Oct 14 11:11:21
danrocks: $LNG Buzz $GS $JDST $NFLX $QLD $XOP http://t.co/BNDFOlDl9h
  +Follow August 1, 2013 6:46AM



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