What Business does Goldman Sachs Have to be Warehousing Aluminum?

Goldman Sachs is facing lawsuits for the way it is warehousing aluminum.  The CFTC has sent out subpoenas and the DOJ is investigating a metals warehousing firm according to Market Place Business. 

Goldman, of course, can explain everything.

Lawsuits claim banks involved in aluminum price fixing
Interview with Sabri Ben-Achour - Market Place Business

Reuters is reporting that the U.S. Commodity Futures Trading Commission has subpoenaed at least one metals warehousing firm, and the Department of Justice is probing another. Separately, aluminum manufacturers have launched class action lawsuits against the London Metals Exchange.

The concern is whether warehouse companies -- many of them owned by Wall Street Banks and trading firms like Goldman Sachs or JP Morgan Chase -- are manipulating prices by controlling how much metal enters and leaves the market.

Coca Cola and beer producers have made these accusations for several years.

The banks and firms that own warehouses only store the metal, they do not own it.

But two points to consider:

Warehouses do control how fast or how slow the metal can be released. Under (recently relaxed) rules of the London Metal Exchange, only 3,000 tons per day of metal are allowed out of a warehouse per day. It can take a year for that metal to leave the warehouse.

Two, some of the owners of metals in warehouses are hedge funds or other speculators who have a vested interest in affecting prices.

Read the article here