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Goldman Sachs Offers to Release Aluminum Amid Accusations of Stockpiling

  +Follow August 1, 2013 6:46AM
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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
Richard benson
21 Sep 14 23:11:03
RT @Bidnessetc: Banks usually do not get much in underwriting fees, even if it is the biggest IPO in US history http://t.co/HwvD0Fga1k $BAB…
chartguy89
21 Sep 14 23:00:31
GS 186.20 Stock Charts $GS Goldman Sachs Group Inc. (NYSE) Last Updated: 09/22/2014 01:00:46 GS Stock Chart - http://t.co/ZnhmkhephB
Kevin
21 Sep 14 22:52:53
#Buy $DNAX #DNA #Energy #Drinks #New #CEO #Real #Experience > $FNMA $HEMP $PMCM $PHOT $PLPL $CBIS $JPM $GS $MS $TSLA $FB $TWTR $GOOG $MSFT
chartguy89
21 Sep 14 22:22:58
GS 186.20 Stock Charts $GS Goldman Sachs Group Inc. (NYSE) Last Updated: 09/22/2014 00:23:13 GS Stock Chart - http://t.co/uGHobSFh0u
Stock_Tracker
21 Sep 14 22:18:16
Goldman Sachs Group (GS) 186.20 $GS Can This Advertising Innovation at "The New York Times" Save Sinking Ad Re http://t.co/lcoDw09rAD
Brandon Mistero
21 Sep 14 22:05:58
@zacharypotter16 I am looking to put trades on in: $GOOGl, $AAPL, $PANW, $GS so far.Will probably by $ZAZA on a red day haha
4-traders.com
21 Sep 14 21:55:02
Alibaba IPO ranks as world's biggest after additional shares sold http://t.co/Udj4jQlZDk $9984 $YHOO $601288 $GS $CSGN $MS $C
Norman Michaels
21 Sep 14 20:49:02
@1nvestor totally opposite of what $GS analyst Judy Hong said would happen on downgrade based on expected poor Beer sales on March 17. Cont.
PennyStock Zone
21 Sep 14 20:44:58
Best day trading DVD by Fous Alerts check it out! http://t.co/HJ6WDp65fM #stocks #trading #nasdaq #nyse $XRS $MCHP $GS $BURL $VOD $IRF
Future Tech Investor
21 Sep 14 20:24:30
$BA chart $LMT $GE $SPR $NOC $TXT $TSLA $YHOO $BABA $F $GM $S $A $X $T $GS $GPRO $MSFT $MU $JPM $BAC $GTAT $Z $V $PFE http://t.co/7ZpXMAcFKf
nobullshytrader
21 Sep 14 20:00:27
shortwatch 4 monday $AMGN $BIDU $GS $BBRY $MU $WLP $TRN $NKE $KMX $BIG $MNK $PANW $TPX $FFIV $MDVN $JNJ $INTC $MNST $RDN $UTHR $NVTL $ULTA
Hedge AccordingLy
21 Sep 14 19:19:04
From Jan, 24 2013 "Goldman COO Gary Cohn Bullish on global equities" $SPY http://t.co/49uKfHNM1d *nice call by $GS http://t.co/Yi9c8JOVVe
Stockaholics
21 Sep 14 19:14:19
$ELRA closed up 288.89% on over 315 MILLION Volume! Get our new penny stock picks: http://t.co/qloC4OFNEn $GS $ZION $ISRA
PennyStock Zone
21 Sep 14 19:00:02
Replicate multimillionaire strategy easy to copy! Subscription is cheap at twice the price! http://t.co/Ho9ydXHTWl $C $GS $YHOO $AOL $GTAT
Oz
21 Sep 14 18:37:06
RT @aznboi27: $GS RSI 71.45.. wow.. watch that 185.50 then 182.50 possible
lvgs
21 Sep 14 18:34:16
RT @aznboi27: $GS RSI 71.45.. wow.. watch that 185.50 then 182.50 possible
aznboi27
21 Sep 14 18:23:33
$GS RSI 71.45.. wow.. watch that 185.50 then 182.50 possible
aznboi27
21 Sep 14 18:22:31
$GS short same.. banks just went up too much too fast.. congrats to those that caught the run, but it can settle a little here
aznboi27
21 Sep 14 18:15:18
Futures looking a little weak.. Coming into the week with some $BAC $GS short.. haven’t placed my tech longs at this time
Howard Eisen
21 Sep 14 17:33:34
Exclusive: Goldman Sachs fights back against Libya over Gadaffi-era rip-off claims $GS http://t.co/LjgAWQdWKD
Tweeter!
21 Sep 14 16:28:30
Global Leading Indicator Plunges To Economic "Slowdown", #Goldman Warns http://t.co/RZnDxrTWvu $GS
Carolyn B Miciano
21 Sep 14 16:21:11
The most advanced options strategies http://t.co/LWfH9pz2fJ $GS $COST $FDX
valuetakes
21 Sep 14 15:45:40
This proves that $GS has known tech since 1905: http://t.co/ElZ93gXM2O
Eternity101
21 Sep 14 15:41:12
FED Reserve NEEDS CATALYST &/or EXCUSE 2 CRASH the markets & what BETTER WAY then USE $BABA #ACCOUNTINGFRAUD :) $SPX $NDX $DJIA $YHOO $GS
Carolyn B Miciano
21 Sep 14 15:13:16
What are Ratio spreads in Options http://t.co/0a90XBmekt $GS $COST $FDX
Stockaholics
21 Sep 14 15:05:49
$ELRA closed up 288.89% on over 315 MILLION Volume! Get our new penny stock picks: http://t.co/qloC4OFNEn $GS $ZION $ISRA
Keith Gulliver
21 Sep 14 14:49:57
RT @GoldmanSachs: What is the #InternetOfThings? $GS analysts break down how it works & why it matters: http://t.co/bx2CHUq29S #IoT http://…
Keith Gulliver
21 Sep 14 14:49:41
RT @GoldmanSachs: $GS analysts break down the #InternetOfThings & predict its impact. http://t.co/uBZh8FomeT #IoT http://t.co/7yNEN0y0iW
Carolyn B Miciano
21 Sep 14 13:47:53
What are Ratio spreads in Options http://t.co/0a90XBmekt $GS $COST $FDX
rachanglen
21 Sep 14 13:44:17
#Buy $DNAX #DNA #Energy #Drinks #New #CEO #Real #Experience > $FNMA $HEMP $PMCM $PHOT $PLPL $CBIS $JPM $GS $MS $TSLA $FB $TWTR $GOOG $MSFT
TheStreetOption
21 Sep 14 13:14:38
$GS (09/21/2014) http://t.co/0sDIIUTYEq
Carolyn B Miciano
21 Sep 14 12:58:45
How to use Standard deviation in trading http://t.co/4KprMOXcMf $GS $COST $FDX
NX1
21 Sep 14 12:56:22
watch list for week of 09/22 $TWTR $EBAY $GOOGL $AAPL $BRK.B $BABA $S $AMZN $PBR $X $MSFT $C $BAC $GS $JPM $WFC
CoachNina
21 Sep 14 12:20:54
RT @stock_coach: #Financial #stock #trades $AXP $AIG $BAC $C $GS $MS $STI $JPM $MA $MTB $PNC $SNV $V $WFC at http://t.co/ID7UtQQT2F #theco…
Carolyn B Miciano
21 Sep 14 12:05:30
What the VIX levels tell you about the markets http://t.co/4CxfazTiEK $GS $COST $FDX
WinningStockCoach
21 Sep 14 12:00:00
#Financial #stock #trades $AXP $AIG $BAC $C $GS $MS $STI $JPM $MA $MTB $PNC $SNV $V $WFC at http://t.co/ID7UtQQT2F #thecoachsroster
PriceTrader
21 Sep 14 11:53:16
but i still like $ibm and decided to share it, price action is ok, nothing too fantastic tho(vs $gs for example, $gs $dd nice moves this wk)
Carolyn B Miciano
21 Sep 14 10:13:21
How to put a continuous Iron condor trade http://t.co/4m0kR1b4v1 $GS $COST $FDX
PennyStock Zone
21 Sep 14 09:37:31
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Scott R
21 Sep 14 09:23:59
RT @SharkAnalytics: Weekly Market Outlook http://t.co/8hdII03pEQ via @wordpressdotcom #ES_F #TF_F $GS $AMZN $GPRO
chartguy89
21 Sep 14 09:20:09
GS Stock Chart $GS $NE $TZA $KINS http://t.co/ICDd8hSI62 http://t.co/fcTrADqwzl
lookn4wins
21 Sep 14 09:11:15
$A Current Price $A Most recent stock chart and technical analysis. $GS $FCX $SIMO $QQEW $UUP $SLW http://stoc http://t.co/hDzMfcdtvr
iHangout
21 Sep 14 09:01:42
http://t.co/vVojvVrNNL chartguy89: Stock Charts: EPI Stock Chart $EPI $PLI.TO $IFON $GS http://t.co/HcMIOGSViT
chartguy89
21 Sep 14 08:59:54
EPI Stock Chart $EPI $PLI.TO $IFON $GS http://t.co/3vUo3KjSy9 http://t.co/IlxmnHTHWu
Landshark Analytics
21 Sep 14 08:26:35
Weekly Market Outlook http://t.co/8hdII03pEQ via @wordpressdotcom #ES_F #TF_F $GS $AMZN $GPRO
gordon gekko is god
21 Sep 14 08:15:46
Morgan Stanley: A Top Brokerage Getting Back Into Commodities http://t.co/0staohTIXJ $MS, $GS
Carolyn B Miciano
21 Sep 14 08:09:00
Practical guide to selling Call options http://t.co/HtiLcRQ93k $GS $COST $FDX
Alpha Maven
21 Sep 14 08:02:22
RT @SeekingAlpha: Morgan Stanley: A Top Brokerage Getting Back Into Commodities http://t.co/MaZ2yEEXf2 $GS $MS
leahanne
21 Sep 14 07:59:44
$OAS Oasis Petroleum Inc (OAS) 43.08 -0.88 (-2.00%) $GS $IWM $NXPI http://t.co/JhR4OPo1Rn
chartguy89
21 Sep 14 07:27:39
GS Stock Chart $GS $GG $TLT $UNG http://t.co/8QnNTkP640 http://t.co/MRvaBpHSAE
				
				
  +Follow August 1, 2013 6:46AM
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