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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.

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Results for gs
Breaking News Now
30 Aug 15 10:02:02
$GS: China’s Next Problem: Paying for Its Stock-Market Bailout: http://t.co/VotqaUy7xj
Lucky Jimmy
30 Aug 15 09:50:17
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30 Aug 15 09:49:05
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30 Aug 15 09:46:06
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Lucky Jimmy
30 Aug 15 09:45:07
RIG Transocean, Inc. Ask http://t.co/cRxJAcDqnF $RIG $GS $CRGP $VLTC #RIG #pennystocks #investing
Investors Hangout
30 Aug 15 09:43:10
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30 Aug 15 09:39:55
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IH News Desk
30 Aug 15 09:39:38
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IH News Desk
30 Aug 15 09:39:06
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30 Aug 15 09:32:22
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Leave the Franc
30 Aug 15 09:20:47
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30 Aug 15 09:20:44
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Envestor First
30 Aug 15 09:15:26
Watch: Goldman Predicts Oil Prices Could Be Stuck At $50 by 2020 - Can't Say I agree, you? $GS $UWTI $DWTI $LINE $XOM http://t.co/aEzUCcZRQH
30 Aug 15 08:49:08
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30 Aug 15 08:47:07
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30 Aug 15 08:38:44
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30 Aug 15 08:32:38
$GS $V $ERX $XIV $F The Week Ahead Webinar : August 30th, 2015 http://t.co/sdtCOWihHp
30 Aug 15 08:23:55
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IH News Desk
30 Aug 15 08:15:44
$SLV Reviews Updated Sunday, August 30, 2015 11:10:47 AM $SLV $UPRO $GS $XLI http://t.co/REpPtCXln1
30 Aug 15 07:39:34
GS Goldman Sachs Group, Inc. Bid http://t.co/XmMbUJLhsn $GS $FV $AA $UHS #GS #investing #nasdaq
Samer Kamal
30 Aug 15 07:39:18
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30 Aug 15 07:32:09
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30 Aug 15 07:24:25
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Ron Everett
30 Aug 15 07:23:08
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IH News Desk
30 Aug 15 07:14:19
$GS Company Info Updated Sunday, August 30, 2015 09:10:44 AM $QID $UNG $MO $CLF http://t.co/obsCXNQ5nM
30 Aug 15 07:13:46
RT @RichardAngwin: Don't let Wall Street buy The White House too. Elect Bernie Sanders!! #FeelTheBern #tcot #1u $GS http://t.co/g1fejKSOVw
30 Aug 15 07:11:04
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Jeff Wentworth
30 Aug 15 07:07:59
RT @GoldmanSachs: #TBT: $GS #Japan president Masa Mochida celebrates 30 years at the firm as $GS celebrates over 40 years in the region htt…
FinSentS SP500
30 Aug 15 07:07:29
$GS:US Qiwi PLC (QIWI) Scheduled to Post Quarterly Earnings on Tuesday #GOLDMAN SACHS GROUP INC http://t.co/8dpG4YjHFx #SP500
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30 Aug 15 07:05:52
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Rosner Stocks
30 Aug 15 06:51:08
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XIV VelocityShares Daily Inverse VIX Short Term ETN Volume http://t.co/9gprALwPtR $XIV $COP $FIVE $GS #XIV #stock #invest
30 Aug 15 06:49:26
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Investors Hangout
30 Aug 15 06:47:36
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Rosner Stocks
30 Aug 15 06:47:13
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30 Aug 15 06:46:39
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30 Aug 15 06:46:37
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30 Aug 15 06:45:58
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30 Aug 15 06:43:28
IBM International Business Machines Summary http://t.co/2Lt204gO0L $IBM $GS $USO $UNP #IBM #tradeideas #invest
IH News Desk
30 Aug 15 06:43:26
INTC Intel Corp. Last Trade http://t.co/3kJ243vd5J $INTC $GS $STRZA $STRM #INTC #share #invest
30 Aug 15 06:41:38
GS Goldman Sachs Group, Inc. Ask http://t.co/G7qgj8gavN $GS $NTI $FXI $TLT #GS #stocks #invest
Investors Hangout
30 Aug 15 06:41:37
GS Goldman Sachs Group, Inc. Company Info http://t.co/KedKdRUkb0 $GS $S $VZ $FCX #GS #tradeideas #pennystocks
  +Follow August 1, 2013 6:46AM



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