Pure Gold to Banks — the Customer Always Waits
|November 8, 2013||Posted by Staff under Uncategorized|
Aluminum ingots waiting to be shipped from a processor. Financial institutions like Goldman Sachs have used industry pricing regulations to earn millions of dollars each year.
This 2013 excerpt is from the New York Times, July 20 , by David Kocieniewski.
Americans pay a fraction of a penny more for each aluminum article because Goldman Sachs and other financial players manipulate regulations, costing consumers billions of dollars.
A Goldman subsidiary stores customers’ aluminum. Two or three times a day, sometimes more, their drivers load in one warehouse. They unload in another. And then they do it again.
The back-and-forth lengthens the storage time. And that adds many millions a year to the coffers of Goldman. It has cost American consumers more than $5 billion over the last three years.
The maneuvering in markets for oil, wheat, cotton, coffee and more have brought billions in profits to investment banks like Goldman, JPMorgan Chase and Morgan Stanley, while forcing consumers to pay more every time they fill up a gas tank, flick on a light switch, open a beer or buy a cellphone. In the last year, federal authorities have accused three banks, including JPMorgan, of rigging electricity prices.
In the case of aluminum, Goldman bought Metro International Trade Services, one of the country’s biggest storers of the metal. More than a quarter of the supply of aluminum available on the market is kept in the company’s Detroit-area warehouses. Before Goldman bought Metro International three years ago, warehouse customers used to wait an average of six weeks for their purchases to be located, retrieved by forklift and delivered to factories. But now that Goldman owns the company, the wait has grown more than tenfold — to more than 16 months. The delays are so acute that Coca-Cola and many other manufacturers avoid buying aluminum stored here. Nonetheless, they still pay the higher price.
The vast majority of the aluminum being moved around Metro’s warehouses is owned not by manufacturers or wholesalers, but by banks, hedge funds and traders. They buy caches of aluminum in financing deals. Once those deals end and their metal makes it through the queue, the owners can choose to renew them. About 90 percent or more of the metal moved at Metro each day goes to another warehouse to play the same game.