Goldman Sachs, shuffling metals and cha-ching!

Read the comments that people are posting on that article... lol.

StudentLoanBackedSecurities:

Read the comments that people are posting on that article... lol.

Lol....yea.

Hahahaha. Hilarious comments.

Goldman should have employed an army of Detroit hobos shuffling aluminum from one warehouse to another. Doing it with a fleet of trucks is too conspicuous and they were asking to get caught.

This is an absolutely painfully misinformed article written only to make the "Main streeters" feel like there's yet another way they're getting fucked by Wall Street. While I could spend the better half of 6 hours writing a piece on everything that's painfully incorrect about the "accusations," I'll leave it at this: stock financing agreements do in fact cause the contangos on aluminum to widen since millions of tons of aluminum are locked up in LME contracts that force it to sit tied up in warehouses. Those contangos don't cause aluminum prices to be higher on average, they simply mitigate what the LME price depression caused by such activity (this activity creates ridiculous oversupply at the LME, obviously) and actually stock financing is a net negative to aluminum prices. In certain areas where the spot mix is much higher and prices are more heavily affected by a physical premium, it's possible that prices have "risen" on aluminum (they haven't risen...that cost markup would not be passed through to the customer for quite some time given the bulk purchase behavior of Ball Corp and other of the beverage can behemoths) but for the most part they are overwhelmingly lower... just ask Alcoa if their Global Rolled Products division has been seeing margin expansion or not... they'll tell you how bad this has been for business. Not to say it's bad in the long run, since stock financing also puts a floor on aluminum prices, but this whole thing is a total circle-jerk of journalists just now catching on to something that's been happening for as long as the Fed has kept interests rates low enough to make paying for owned warehouses on credit cheaper than simply putting excess capital into traditional risk-free assets.

And don't get me started on where they get off blaming Goldman exclusively for this... Goldman might be the third of fourth biggest offender of aluminum (and steel) stock financing arrangements. The biggest "culprit" is far and away Glencore, and DB may be slightly more involved than Goldman... but this isn't something that just big evil GS is doing.

This kind of journalism is the reason why normal people in this country will never have the appropriate understanding of how the economy works, and is why things like Obamacare seem like a good idea to the public. Absolutely disgraceful.

Disclaimer: I'm drunk.