Friday, 29 July 2011

Goldman in aluminum market manipulation?

Stumbled over this reuters report this morning. It seems to suggest that Goldman is reaping millions on leasing warehouse space to third parties who are stockpiling aluminum in Detroit. Goldman is gaming the London Metals Exchange rules to its advantage. The side effect is choking back supply of aluminum to domestic industrial consumers.

London Metals Exchange Aluminum price per tonne, time period 12 Months to today

This graph straight from the LME website would suggest that there is quite a lot of volatility in aluminium trading. If houses like Goldman are the first order buyers of commodities, could all kinds of futures contract games be played with these assets in storage?

I'm surprised industrial metals are holding up so well in the face of flagging industrial output in Europe, Asia and to a lesser extent America. This big scam may go part way to explaining what is going on with commodities while the world is still limping out of recession, after the GFC.

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