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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
Stocks Underground
24 Oct 14 02:23:40
$NQ's Vice President of Capital Markets, Matthew Mathison, only works for legit companies. He was at Goldman $GS and a hedge fund prior.
Edward Dowd
24 Oct 14 01:41:19
Note to Goldman $GS and Blackstone.Pitch forks are coming your way soon.You guys are absolute PR morons. No sympathy. http://t.co/Qioc8zaok8
24 Oct 14 01:29:39
RT @GoldmanSachs: VIDEO: $GS' Peter Oppenheimer talks w/ @CNBC on #Europe growth outlook, pricing & opportunities in #equities http://t.co/…
24 Oct 14 01:28:49
RT @WSJ: Goldman Sachs posts stronger results http://t.co/2OXyT2jiyT $GS
24 Oct 14 01:28:32
RT @ForTraders: Goldman Sachs : 16 Oct 2014 Goldman Sachs Reports 2014 Third Quarter Earnings Per Common Share of $4.57 and... http://t.co/…
24 Oct 14 01:28:27
RT @StockTwits: Goldman Sachs is paying their bankers 18% more than they were this time last year -> http://t.co/dYato5RLeY $GS
Stock Moo
24 Oct 14 00:55:46
$gs: Special Report: Why Madrid's poor fear Goldman Sachs and Blackstone http://t.co/v9xzjwssjj
Chasing Stars
24 Oct 14 00:38:07
$SWRF 52Wk Low Click Here: http://t.co/vpbfWCG5xo Also See: $JPM $SVXY $USO $GS ~
Mr. Spacely
23 Oct 14 22:24:49
RT @MaisaCorp: $RGLS can someone slap $RGLS with a $100M offering @ < $12/sh please! $BAC? $JMP? $GS? anyone?
23 Oct 14 22:17:14
During this #Ebola outbreak, $GS investors will also want to buy $SMED. They handle medical and hazardous waste http://t.co/vTV3wPBONo
23 Oct 14 21:17:35
RT @GoldmanSachs: PHOTO: $GS delighted to host 26 senior sponsors from member firms for annual #City Mental Health Alliance event http://t.…
Jordan Pugmire
23 Oct 14 20:58:27
$GS poppin today
23 Oct 14 20:08:00
@ESPN_Colin Hawks owner hires $GS to broker "forced" sale of team after self-reporting racist email & Clips sell for $2B. #businessman
23 Oct 14 20:01:51
$TIBX $GS $JPM Fed’s Loan Scrutiny Leaves Banks Passing on Buyout Deals - Bloomberg via @BloombergNews http://t.co/MohdMMNFfZ
Chasing Stars
23 Oct 14 19:50:19
$HALB Current Price Click Here: http://t.co/YEk9T59L8s Also See: $GS $F $PFE $TBT ~
23 Oct 14 19:42:10
TradersRule 25/7
23 Oct 14 19:32:39
$GS retakes the "continued Strength" divide 180.04 just under the 20E 1.5/1 Sellers. http://t.co/066bcRfTpz
Brian Haskin
23 Oct 14 19:26:02
Goldman Sachs Looking to Move Aggressively Into the #ETF Space http://t.co/61SZaoRDhc $GS #LiquidAlts
23 Oct 14 19:02:23
Goldman Sachs Group $GS scheduled third quarter earnings release: Goldman Sachs Group one of the leading com... http://t.co/bqrq4UekRA
23 Oct 14 18:31:28
Goldman Sachs Looking to Move Aggressively Into the #ETF Space http://t.co/YuxAbG7kwQ $GS #LiquidAlts
23 Oct 14 18:12:08
Fed details 2015 stress test details http://t.co/Z86TCQOKLX $DB $BAC $C $GS
23 Oct 14 18:11:00
Priceless material for continual profit in the #stock #market http://t.co/yNJXyeGQ8u $SPX $DJI $RUT $NDX $AAPL $FB $TWTR $LNKD $TSLA $GS $V
Steve Mahoney
23 Oct 14 18:06:08
RT @herbgreenberg: Whoa, for-profit $EDMC to voluntarily delist from Nasdaq. $GS is one of its biggest holders.
Investors Hangout
23 Oct 14 17:57:52
$DSCR Dividend Click Here: http://t.co/9Cdia6CGLX Also See: $PBR $XLY $GS $ELTP ~
23 Oct 14 17:36:52
$RGLS can someone slap $RGLS with a $100M offering @ < $12/sh please! $BAC? $JMP? $GS? anyone?
Sleuth Stock
23 Oct 14 17:36:39
What a crook $gs @sm_sears @barronsonline
Sleuth Stock
23 Oct 14 17:35:05
$gs slays muppets in cohorts with @barronsonline $amzn http://t.co/ja6DUBa9Gw @barronstechblog @JeffCNYC @DowdEdward @zerohedge @CapCube
Jody Kaminsky
23 Oct 14 17:11:55
#Buy $DNAX #DNA #Energy #Drinks #New #CEO #Real #Experience > $FNMA $HEMP $PMCM $PHOT $PLPL $CBIS $JPM $GS $MS $TSLA $FB $TWTR $GOOG $MSFT
23 Oct 14 17:00:03
Carolyn B Miciano
23 Oct 14 16:32:07
Learn Call options with a practical course http://t.co/K6RaH3G5Le $GS $COST $FDX
Juan Munoz
23 Oct 14 16:24:30
RT @herbgreenberg: Whoa, for-profit $EDMC to voluntarily delist from Nasdaq. $GS is one of its biggest holders.
Langan Stocks
23 Oct 14 16:18:37
$ISIS P/E Ratio Click Here: http://t.co/HHEGaiSlVg Also See: $GILD $IYT $BAC $GS ~
Carolyn B Miciano
23 Oct 14 15:58:48
The complete courseware for Options beginners http://t.co/ZMckaAN5Jl $GS $COST $FDX
Nicole Augenti, Esq.
23 Oct 14 15:29:17
*I was offline/no cable a few days - didn't Cramer also rip $MNKD LAST week when it rallyed? Why again? Its an illness shorts have. $GS too.
23 Oct 14 14:58:35
Published $GS estimate on Estimize: +0.19 EPS and +130.17M Revs compared to Wall Street's consensus. http://t.co/awQlbVC0tr
Carolyn B Miciano
23 Oct 14 14:33:53
Simplify your Options quotes screens http://t.co/7M7lonzyO3 $GS $COST $FDX
I'm Ron Burgundy?
23 Oct 14 14:33:29
RT @quikjl: @Dan_Opines @SKITHEG @ConfirmedCash @Marshall0702 @TheTradingNinja but i agree-- even big boards FULL of dirty shit. $GS and th…
23 Oct 14 14:32:55
@Dan_Opines @SKITHEG @ConfirmedCash @Marshall0702 @TheTradingNinja but i agree-- even big boards FULL of dirty shit. $GS and them all do it.
Carolyn B Miciano
23 Oct 14 14:21:33
Impact of Theta on Options positions http://t.co/RHx80Rp6au $GS $COST $FDX
Jon Vince
23 Oct 14 14:20:49
RT @herbgreenberg: Whoa, for-profit $EDMC to voluntarily delist from Nasdaq. $GS is one of its biggest holders.
23 Oct 14 14:19:23
RT @herbgreenberg: Whoa, for-profit $EDMC to voluntarily delist from Nasdaq. $GS is one of its biggest holders.
23 Oct 14 14:19:21
RT @herbgreenberg: Whoa, for-profit $EDMC to voluntarily delist from Nasdaq. $GS is one of its biggest holders.
Herb Greenberg
23 Oct 14 14:18:47
Whoa, for-profit $EDMC to voluntarily delist from Nasdaq. $GS is one of its biggest holders.
23 Oct 14 14:16:25
Why isn't anyone mentioning the fact that $AMZN was a top pick by $GS?
IH News Desk
23 Oct 14 14:08:55
$GS Stock Forum Click Here: http://t.co/xgY6J2nFEP Also See: $MBLY $HD $SLW $SPXU ~
Stock Relay
23 Oct 14 13:56:20
$PLUG Open Click Here: http://t.co/1lMHGk6dLp Also See: $ISIS $GS $NFLX $ABX ~
Busisiwe Ndabana
23 Oct 14 13:52:04
RT @GS10KWomen: See how $GS #CommunityTeamworks volunteers in #Brazil mentored #10KWgrads on overcoming business challenges & more: http://…
Quantpost Financial
23 Oct 14 13:49:55
$BAC $C $GS News: "Fed details 2015 stress test details $DB $BAC $C $GS …" http://t.co/ZOrLlG4KH6 Board view: https://t.co/lrbE4dnoyE
23 Oct 14 13:49:53
Fed details 2015 stress test details http://t.co/NNUMSalGtC $DB $BAC $C $GS
Langan Stocks
23 Oct 14 13:40:56
$GS Last Trade Click Here: http://t.co/m60Z4TAhYM Also See: $GGAL $PMBSD $CREE $SA ~
  +Follow August 1, 2013 6:46AM



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