Salient to Investors:

The New York Times reported that every time an American opens a can of soda, beer or juice they pay a fraction of a penny more because of a maneuver by Goldman Sachs and other financial players that ultimately costs consumers billions of dollars. The allegation is that investment banks have moved into the aluminum market in order to rig it and force prices up.

What’s mostly going on is that the price of aluminum for future delivery has risen above its price in the spot market, creating an arbitrage opportunity. Users of aluminum are having to pay higher premiums for delivery as though there were a shortage, despite high stocks in warehouses.

Both the US CCFTC and LME are looking into complaints.

LME data is quirky, because some inventory is not counted as inventory because the LME has not officially certified its existence, giving sophisticated players an opportunity to mislead the market and game the system. LME’s standard contract allows warehouses to charge fees long after the owner has asked for delivery, giving the warehouse owner a reason to stall.

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