Goldman Sachs Hoarding 1.5M Tons Of Aluminum In 27 Detroit Area Warehouses

[Jimaz]

This article also touches on hoarding copper, oil, etc. Nothing of genuine value is produced by this bizarre process. It's just wasting energy to take, not make, profits. Private sector efficiency atcha!

NYT: A Shuffle of Aluminum, but to Banks, Pure Gold

MOUNT CLEMENS, Mich. — 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.

...

Metro International holds nearly 1.5 million tons of aluminum in its Detroit [Metro] 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. And because storage cost is a major component of the “premium” added to the price of all aluminum sold on the spot market, the delays mean higher prices for nearly everyone, even though most of the metal never passes through one of Goldman’s warehouses.

...

Nick Madden, chief procurement officer for one of the nation’s largest aluminum purchasers, Novelis, said the situation illustrated the perils of allowing industries to regulate themselves.”...

[Gistok]

Can someone please post the addresses around the scrap yards of Detroit??

Maybe if we keep the scrappers busy enough with this goldmine [[pun intended), then they'll leave the houses alone!

[Richard]

It is Alcoa doing it to bring down and take over an Australian company which would basically control the market solely in the coming years.

GS is the front,and it is going into the third year now,could have paid for Packard twice over playing the musical warehouse game as it is going on across the country,state to state,Detroit is a drop in the bucket comparatively.


Remember years ago when they tried doing it with silver? same concept.

[EastsideAl]

It's idle speculation and price manipulation for non-productive profit at its most stark. Veblen warned us that this would be the end product of capitalism.

[Richard]

It's idle speculation and price manipulation for non-productive profit at its most stark. Veblen warned us that this would be the end product of capitalism.

It is 1911 all over again .... President William McKinley for reelection if we can reincarnate him that is.

Alcoa already got spanked in 1945 for doing the same thing.

[professorscott]

Overall I'm not in favor of urban mining but I'll make an exception here. Miners: you have my permission [[which counts for zero, but what the hell) to break into these warehouses and steal all of the aluminum. It will take you a while to fence it, but you will be doing society a great favor so hopefully it won't try your patience too much.

[Richard]

Overall I'm not in favor of urban mining but I'll make an exception here. Miners: you have my permission [[which counts for zero, but what the hell) to break into these warehouses and steal all of the aluminum. It will take you a while to fence it, but you will be doing society a great favor so hopefully it won't try your patience too much.

Actually they have that aspect covered,a few years back I bought a salvage yard,then I bought a smelter to make aluminum ingots such as these to sell on the open market.

Waste of $18,000 as it is illegal to melt or buy in ingot form and if the scrap yard gets caught it is federal.

[Honky Tonk]

This article also touches on hoarding copper, oil, etc. Nothing of genuine value is produced by this bizarre process. It's just wasting energy to take, not make, profits. Private sector efficiency atcha!

NYT: A Shuffle of Aluminum, but to Banks, Pure Gold

I need a piece of 3" X 3" X 1/8"' X 5', do you think they'd have it?

[detroitsgwenivere]

This story was first published 2 years ago...

http://www.reuters.com/article/2011/...76R3YZ20110729

http://www.theatlanticwire.com/busin...l-metal/40525/


... and nobody but me bothered to read it apparently.

[Richard]

They [[Regulators) knocked JP Morgan out of it,they are going after Goldman now.

They could crash the market if they dumped all of that at once.

[compn]

you mean crash the high price on aluminium scrap market?

we could actually see aluminium cars made?
that use less gas because they are lighter than cars made of steel?

[Honky Tonk]

... and nobody but me bothered to read it apparently.

I'm sorry......

[JBMcB]

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.

Sounds like regulatory capture to me. Good thing Obama put the brakes on the revolving door between the financial regulators in the Treasury and Sachs.

Oh wait no he didn't...

[Wheels]

I need a piece of 3" X 3" X 1/8"' X 5', do you think they'd have it?

Could you please draw that for me? I have never worked in the fourth dimension before!

[Hermod]

It is 1911 all over again .... President William McKinley for reelection if we can reincarnate him that is.

Alcoa already got spanked in 1945 for doing the same thing.

McKinley ran for president and won in 1896 and 1900. By 1911 he was long dead [[one of the four presidents to be assassinated in office).

In 1911, William Howard Taft was president.

Get on the raft with Taft boys
Get in the winning boat
The man worthwhile
With the big glad smile
Will get the honest vote
He'll save the country sure boys
From every kind of graft
So all jump in
We're sure to win
Get on the raft with Taft

[Hermod]

Truly amazing when the price of aluminum is currently very depressed and Alcoa stock is in the crapper. Alcoa was trading as high as $48.80 a share in 2007 and this year has been stuck in a $7.70 to $9.40 range.

Value Line: "Surplus capacity is on pace to eclipse demand by one million tons in 2013."

Chinese increases in aluminum production will only add to the glut.

Aluminum prices are around $1,880 per ton.

[oladub]

GS was the largest contributor to the 2008 Obama campaign. GS was also the largest contributor to Romney during the 2012 primary. Obama vs. Romney - a win win for GS.

That said, what's the problem here?
-Banks routinely store money. US money used to be backed by gold and silver. Now, money is backed by faith like Beanie Babies. It probably makes more sense to store tangible assets than Federal Reserve notes or Beanie Babies.
-Companies owning oil drilling rights don't have to immediately pump all the oil they can. If they did, there would be a temporary glut disrupting markets. Solar energy and EV technology would be almost destroyed by temporarily cheap oil.Similarly, Bauxite mines would shut down until aluminum reserves were used up.
-China has stockpiled huge amounts of copper and other commodities for a rainy day or to hedge against higher future prices. No one is calling for actions against China.
-the US Treasury similarly stores gold in Ft. Knox which is supposed to be the largest amount of gold in one place on earth. It doesn't even back our money. Shouldn't the same logic about hoarding be applied to Fort Knox as GS? After all, gold would be temporarily cheaper if it were dumped onto the market. Electronics and jewelry would become cheaper. China would be able to stockpile gold more affordably. China would also buy and store more aluminum if it were all dumped on the market and temporarily depressed prices.
-If there is a problem here it is a law which makes it more expensive to store aluminum. However that cost will not be passed along as new bauxite, out of the ground, does not include that cost. Commodities are fungible. Any storage cost and lost interest will eventually force GS to sell.
-Not mining bauxite is no more or less evil than storing aluminum. They are just two different ways of storing a commodity. Dumping aluminum will just keep more bauxite stored in the ground. The difference is a price we pay for flexibility. Let's say Boeing suddenly has a big new order and doesn't want to wait for mines to reopen, the aluminum would be available now if there are stockpiles.

[Honky Tonk]

Could you please draw that for me? I have never worked in the fourth dimension before!

I don't have time right now, but I will, and I'll post it here. I was really hoping someone was going to post "Hey, I have a piece like that lying around my warehouse". So much for that fishing expedition.

[Honky Tonk]

That said, what's the problem here?

Well, the problem is it's going to cost me over $50 for the piece of Al I need. But screw me, as long as the banks and investors are fine, that's all that matters.

[DetroitPlanner]

This story was first published 2 years ago...

http://www.reuters.com/article/2011/...76R3YZ20110729

http://www.theatlanticwire.com/busin...l-metal/40525/


... and nobody but me bothered to read it apparently.

LOL FIrst thing I thought of was that this is not new!

[Jimaz]

This story was first published 2 years ago...

http://www.reuters.com/article/2011/...76R3YZ20110729

http://www.theatlanticwire.com/busin...l-metal/40525/


... and nobody but me bothered to read it apparently.

That is interesting. The NYT article is dated July 20, 2013.

[Lowell]

Actually they have that aspect covered,a few years back I bought a salvage yard,then I bought a smelter to make aluminum ingots such as these to sell on the open market.

Waste of $18,000 as it is illegal to melt or buy in ingot form and if the scrap yard gets caught it is federal.

I don't get that^. What is the rationale? Why does it matter in which shape it is molded?

[Lowell]

Leave it to the $heads at GS to figure out a loop hole like that, making money by wasting money. They are the best of the worst. I knew I should have bought them when they got our bailout billions.

[JBMcB]

Well, the problem is it's going to cost me over $50 for the piece of Al I need. But screw me, as long as the banks and investors are fine, that's all that matters.

The scheme is adding roughly $0.03 per pound on to the cost of aluminum. Assuming a price of around $0.80 per pound, it's costing you an extra $1.80.

I can see why you are so outraged over this. They are stealing the cost of a sausage egg mcmuffin and a small coffee right out of your mouth!

[Richard]

I don't get that^. What is the rationale? Why does it matter in which shape it is molded?

Because now the supply is controlled,up to a year for delivery.

If you have the smelter and create ingots you can put it up for bid and if a company needs it now that's where they go.

If you are trying to control the market and have these others placing product not out in bulk form they become a thorn so you figure out ways to keep them from doing it.

Alcoa international worldwide owns the mines,the processioning plants and now the power companies that supply the plants 100% control of the product start to finish.

3 players that control the majority are Alcoa,a Canadian company and now the Chinese,they set the rules,the flow and the price in the same way Standred oil,Carnegie and JP Morgan did until 1911 when the anti trust hearings began.

The bells,the airlines even Henry Ford to a point tried to control product from start to finish and eliminate competition.

You could not become a new automobile manufacture in early Detroit unless the commission said yes and they never did,I believe it was Tucker that got a judge to crush that.

Fords new F150 is being built with use of aluminum even more so,they are setting up or retooling now,as this whole aluminum supply thing going on with the supply shortage as listed would create a serious crunch in production,interesting timing in all of this coming to a head.