The huge Wall Street player Goldman Sachs has been intentionally raising the cost of aluminum by manipulating the commodities market through 27 warehouses in metro Detroit, The New York Times reports.
According to an article by David Kocieniewski, a Goldman subsidiary stores 1,500-pound bars of customers' aluminum in the warehouses, and each day, fleets of trucks shuffles at least 3,00 tons of the metal among the storage facilities, repeatedly picking up the bars in one warehouse and dropping them off in another.
Goldman choreographs the bizarre routine to exploit pricing established by an overseas commodities exchange, The Times found.
The project has raised the price of aluminum by intentionally slowing down service so the company can charge higher storage fees. These fees, passed on to consumers, have netted Goldman Sachs over $5 billion. And, The Times reports, it's legal.
A former employee describes the process:
Anthony Stuart, a forklift team leader at the Mount Clemens warehouse until 2012, said he and his nephew — who worked at a Metro warehouse about six miles away in Chesterfield Township — occasionally asked drivers to pass messages back and forth between them.
“Sometimes I’d talk to my nephew on the weekend, and we’d joke about it,” Mr. Stuart said. “I’d ask him ‘Did you get all that metal we sent you?’ And he’d tell; me ‘Yep. Did you get all that stuff we sent you?’ ”
Regulators are busy trying to catch up to the manipulation of commodities that banks like Goldman Sachs is making a fortune off of, but the banks always seem one step ahead. Now Goldman Sachs, JP Morgan, and BlackRock have bought over 80% of the world's copper on behalf of their investors and will begin moving it to warehouses much like Goldman did with aluminum. Companies are now fearful that the prices of copper will soar, and consumers will carry even more of the burden."
