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Spot The Goldman And Glencore Aluminum Warehouses

Tyler Durden's picture




 

Across the 137 warehouses that the London Metal Exchange has begun tracking, 2 stand out. Having been at the center of allegations of manipulation of the metals markets - most notably Aluminum - thanks to monopolistic warehousing, the following report from the LME will not entirely shock that none other than Goldman Sachs (and Glencore) have simply incredible waiting times for delivery of the base metal. We discussed the monopolization (thanks to lax Fed regulation) here, here, here, and here and as Reuters reports lengthy logjams at warehouses monitored by the LME, the world's oldest and biggest market for industrial metals, prompted bitter criticism by consumers and sparked a wide-ranging reform program at the exchange. With nearly 2-year-waits for Aluminum delivery by Goldman - we are sure regulators will see nothing wrong at all.

 

 

As Reuters reports,

The LME's new report, covering the month of April, showed the backlogs were concentrated at four warehouse locations and with three major warehouse operators.

 

The LME already publishes data on inventory levels by location and metal, but up until now has not published the amount of stock held by individual companies.

 

The LME report showed the longest queue was just over two years, or 748 calendar days, for aluminum at Pacorini warehouses in the Dutch port of Vlissingen and the second longest was 683 days at Metro depots in Detroit.

 

Pacorini Metals is owned by commodity group Glencore Xstrata and Metro International Trade Services is a unit of Goldman Sachs.

Nothing to see here regulators... move along...

 

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Mon, 05/12/2014 - 11:46 | 4750964 jaap
jaap's picture

Vlissingen rules. Only sad tthat all those trucks between the warehouses block my speeding.

Mon, 05/12/2014 - 11:50 | 4750984 Pladizow
Pladizow's picture

Why dont these miners:

1. hoard

2. vertically integrate?

Mon, 05/12/2014 - 11:55 | 4751002 fonestar
fonestar's picture

fonestar has been hoarding aluminum pop tabs for years (they are better for building nuclear powered wheel chairs).  Remembers when 1 pop tab = 1 BTC in value.

Mon, 05/12/2014 - 11:57 | 4751011 BaBaBouy
BaBaBouy's picture

YESssssss...

And The Wait List For RETURN Of Your CB's GOLD From The FED Is.........
20 To 30 Years...

Sorry, Logistics And Plane Issues Be Damned...

Mon, 05/12/2014 - 12:17 | 4751078 knukles
knukles's picture

Hey, aluminum don't spoil, so what's the rush for delivery, huh?
Dumb fucks.

Mon, 05/12/2014 - 13:10 | 4751279 TBT or not TBT
TBT or not TBT's picture

Goldman gave generously to the '08 Obama campaign, so they're good through the 2014 midterms, regulation wise. Remember when Obama and McStain both promised to use public support only, then exactly one of the two sociopaths welched? Too much of that panicked banker money available in late '08.

Mon, 05/12/2014 - 12:07 | 4751033 DoChenRollingBearing
DoChenRollingBearing's picture

One Bitcoin fetches some $850 in Argentina now (vs. +/- $440 here).  Their .gov is making it increasingly hard for their people to save themselves from financial calamity by making it illegal to bring in (large amounts) of US$, and otherwise obstructing personal freedom.

***

The CB of DCRB is hoping to find localbitcons.com people to source more digital money to supplement its PM holdings and 52100 steel products as reserves.

(Aluminum takes up way too much space, unless your CB is in Canada or something...)

Mon, 05/12/2014 - 12:27 | 4751127 Ignatius
Ignatius's picture

I appreciate the special circumstances that arise when people hoard for preservation's sake, but this article highlights the problems inherent in the hoarding of necessary raw materials:  artificial shortages in key commodities.

Gold's limited utility makes it nearly ideal for storing savings and any government that was interested in the welfare of its general citizenry would encourage gold savings as insurance in uncertain times.

What happens when/if we find out that Goldman et al is hoarding wheat as the people starve, speculating on a better price?

 

Mon, 05/12/2014 - 12:36 | 4751153 Jack Sheet
Jack Sheet's picture

infantile prick

Mon, 05/12/2014 - 12:56 | 4751230 fonestar
fonestar's picture

fonestard.

Mon, 05/12/2014 - 11:59 | 4751005 BaBaBouy
BaBaBouy's picture

.

Mon, 05/12/2014 - 11:57 | 4751010 Tabarnaque
Tabarnaque's picture

Because the big boyz own the miners. The big boyz are vertically integrated.

Mon, 05/12/2014 - 12:01 | 4751023 Schmuck Raker
Schmuck Raker's picture

Pladizow, because the miners get kickbacks to sell into the warehouses, plus limiting supply to users drives up prices. I'm sure you'll find details in one of the links Tyler supplied above.

[Edit: Plus what Tab. said, probably.]

Mon, 05/12/2014 - 13:26 | 4751346 dontgoforit
dontgoforit's picture

Release the Kracken Inventory!!  Deflation!!  Deflation!!

Mon, 05/12/2014 - 12:18 | 4751091 ParkAveFlasher
ParkAveFlasher's picture

Vertical integration is instable, and prone to collapse, whether by accident (Tower of Babel) or by incident (WTC).  This is true in the production and marketing of real goods, that allowances are made to take advantage of specialization by partner firms; I don't know if it should apply to the miners as well.  Honestly I don't consider "finance" worthy of specialization or horizontal integration; you either finance your exploits with your own operations (i.e. the selling of your goods) or you are not a viable enterprise.  I don't know anything though.

Mon, 05/12/2014 - 12:20 | 4751095 Jack Sheet
Jack Sheet's picture

Pladizow:

Simple. Because there are bankers on the coroporate board.

Mon, 05/12/2014 - 12:45 | 4751164 Herodotus
Herodotus's picture

Why do you think that Henry Ford was so adamant about making his own steel, his own glass, buying his own iron mines, transporting the ore in his own steamships, owning his own rubber plantation, his own forests and sawmills, etc.  In the course of building up his auto manufacturing business he ran into the tribe and their ways of doing business.  He wanted to be free of them and their manipulations.  He tried to explain what the tribe was up to in his own newspaper, the Dearborn Independent.  They eventually isolated him and nearly drove him mad.  Finally, in 1955, after the old man was dead, the company had to go begging to Wall Street and sell stock to the public.  Luckily, the family kept control of the stock voting rights through ownership of a special class of stock that would alway give them an automatic 40% of the vote.

Mon, 05/12/2014 - 13:15 | 4751304 TBT or not TBT
TBT or not TBT's picture

Occam's answer: Because Ford was a control freak. Conspiracy nut answer: The illooneynaughties would have ruined him otherwise, so he had to do all that, and support nazis too. Speaking of paranoid control freaks.

Mon, 05/12/2014 - 16:01 | 4752031 Kapital Xposure
Kapital Xposure's picture

its simply a weather issue.

Mon, 05/12/2014 - 11:48 | 4750972 firstdivision
firstdivision's picture

Hahahahaha! 

Step 1: Manipulate physical commodities

Step 2: Trade the financial derivatives, whose price is determined by the physical price

Step 3: Profit, and laugh with the regulators as your bribe them with .01% of your profits.

Mon, 05/12/2014 - 12:09 | 4751054 DoChenRollingBearing
DoChenRollingBearing's picture

Yes, a million dollars still goes a long way with your friendly regulator, even today.

Mon, 05/12/2014 - 12:30 | 4751139 firstdivision
firstdivision's picture

I bet you Goldman's physical business at best, breaks even.  Probably even loses money each month.  They more than make up for it on the wholesale side of the business.

Mon, 05/12/2014 - 12:21 | 4751108 Jack Sheet
Jack Sheet's picture

"whose price is determined by the physical price"

arguable.

Mon, 05/12/2014 - 11:48 | 4750979 TheFreeLance
TheFreeLance's picture

Just wait until it is Soylent Green and not ALUM.

Mon, 05/12/2014 - 13:28 | 4751353 dontgoforit
dontgoforit's picture

Or corn flakes and pork bellies....

They're comin' for us - but we're partially ready.

Mon, 05/12/2014 - 14:39 | 4751620 Spungo
Spungo's picture

Soylent Green is racist

Mon, 05/12/2014 - 11:54 | 4750996 Squid Viscous
Squid Viscous's picture

wait, Goldman is involved in some kind of scumbaggery? shocking!

Mon, 05/12/2014 - 11:55 | 4751000 rosiescenario
rosiescenario's picture

Thought I'd read a similar article 1 or 2 years ago????

Mon, 05/12/2014 - 11:56 | 4751007 Winston Churchill
Winston Churchill's picture

So many different alum.alloys to choose from.
Do GS stock them all ?

Mon, 05/12/2014 - 12:06 | 4751050 DoChenRollingBearing
DoChenRollingBearing's picture

Their tentacles are everywhere.  Their beak dips into every warehouse, every pile...

Mon, 05/12/2014 - 11:58 | 4751012 Uncle Remus
Uncle Remus's picture

Time for some more referendums...

Mon, 05/12/2014 - 11:58 | 4751014 ForWhomTheTollBuilds
ForWhomTheTollBuilds's picture

This is a good chart to show any gold investor who tells you the gold price will skyrocket as soon as we see a few people screaming, "its been two months and comex won't deliver my gold!"

 

You can't get aluminum delivered for over two years from the people who's paper trades determine market price and yet it doesn't seem to have any effect on price at all.

 

Makes you wonder what the inflation rate will be when all these markets break at once.

Mon, 05/12/2014 - 12:19 | 4751017 FieldingMellish
FieldingMellish's picture

They have the metal... you'll just have to wait. Images of German gold now popping up...

Mon, 05/12/2014 - 11:59 | 4751021 Rainman
Rainman's picture

" SEC penalties are, at most, a tollbooth on the bankster turnpike ".

                     James Kidney, retired, SEC Enforcement Division

Mon, 05/12/2014 - 12:05 | 4751047 unwashedmass
unwashedmass's picture

 

well two year wait is better than never at all like we see in the gold market.....all cash no bullion now, so....don't know what's the problem with these aluminum whiners. 

Mon, 05/12/2014 - 12:10 | 4751060 Oreilly
Oreilly's picture

This article meshes nicely with the one earlier on commodities traders agglomerating in Switzerland.  All supply and demand relationships are meaningless when a third party controls the flow of materials.  You don't like it?  No soup for you!

Think China has such brotherly love for Africa that it wants to spend 3.5billion USD for rail systems?  China is looking for as many ways as possible to bypass the financial cartel's attempts to dismiss the market's or supply and demand's control of pricing on raw materials.  Next time you see some fool's writing on peak oil controlling price or peak anything controlling price, remember how the NEW system works. 

Mon, 05/12/2014 - 12:12 | 4751069 Government need...
Government needs you to pay taxes's picture

So Goldman banksters still believe some muppets have eyes.

Mon, 05/12/2014 - 12:17 | 4751084 mayhem_korner
mayhem_korner's picture

 

 

What's a "regulator"?

Mon, 05/12/2014 - 12:20 | 4751097 FieldingMellish
FieldingMellish's picture

<--- The recipient of your bribes

<--- A future/former employee

Mon, 05/12/2014 - 12:32 | 4751145 firstdivision
firstdivision's picture

A regulator is just someone who creates barriers of entry for any potential competitive entity for either of the above options.

Mon, 05/12/2014 - 12:23 | 4751114 Notsobadwlad
Notsobadwlad's picture

I suppose it is no surprise then that foreign metal smelters are trying to disintermediate the banks, LME and NY dealers and contract directly with the major users for their commodities.

Mon, 05/12/2014 - 12:32 | 4751143 ...out of space
...out of space's picture

silver is by product of aluminium. they fill the warehouses with aluminium, lift the price, for exchange, with miners, for crashing of silver price

Mon, 05/12/2014 - 13:10 | 4751281 NEOSERF
NEOSERF's picture

Tony Hayward, Tony, Tony Tony.  Isn't one "lack of internal controls visible to the CEO" enough for one career?

Mon, 05/12/2014 - 14:28 | 4751577 orangegeek
orangegeek's picture

Another reason for plastic.

Mon, 05/12/2014 - 14:59 | 4751724 Rusty Nayle
Rusty Nayle's picture

A simple tax parcel search in Detroit for 'Metro International' results in:

https://is.bsasoftware.com/bsa.is/AssessingServices/ServiceAssessingSear...

They aren't really hiding anything...

 

Mon, 05/12/2014 - 19:42 | 4752758 Herodotus
Herodotus's picture

Those places are in the middle of the Detroit ghetto.  If those coils or ingots of aluminum weren't so heavy, they would be have been stolen by scrappers.

 

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