How Goldman Sachs manipulates Commodity prices by controlling supply
Nov. 20, 2014 (Bloomberg) -- Goldman Sachs Group Inc. executives sparred with lawmakers over accusations that its aluminum business improperly influenced prices and that the firm’s traders had unfair access to market-moving data.
Under fire at a hearing today on whether Wall Street’s ownership of commodities spurs conflicts, Goldman Sachs’s Jacques Gabillon disputed senators’ charges that long wait times for aluminum stockpiles had a direct effect on what companies and consumers pay for the metal. Only a handful of Goldman Sachs employees get information on the aluminum unit and reports are limited to financial performance, he said.
Senator Carl Levin, who chairs the Permanent Subcommittee on Investigations, called the Goldman Sachs transactions “merry-go-round deals” that had little purpose other than moving aluminum around from warehouse to warehouse to influence how much customers paid for storage and financial products tied to the metal.
“If you can say there’s no correlation between premium and the length of the queue then you are in a very different mathematical world than most of the mathematicians that look at this,” said Levin, raising his voice.
Did Goldman Sachs rig commodities markets?