They are the Jeopardy question to the answer "Three words we never thought we'd use in the same headline." But that was before "A Shuffle of Aluminum, but to Banks, Pure Gold," dateline Mt. Clemens, which describes the 27 industrial warehouses around Detroit in which a Goldman subsidiary stores its customers’ aluminum. (The story was published on July 20 and has over a thousand comments posted on it.) Pulitzer Prize-winning business writer David Kocieniewski writes that Goldman Sachs has choreographed an "industrial dance" that sends trucks back and forth between the facilities to lengthen storage time and exploit overseas pricing regulations. The dance, he says, racks up "many millions a year" for Goldman Sachs, which owns the warehouses and charges rent to store the metal. Oh, and it also increases the price of aluminum, he says. As does John Oliver, taking up the story on The Daily Show.
The Conglomerate's David Zaring, an Assistant Professor of Legal Studies and Business Ethics at the University of Pennsylvania, is not yet convinced. He writes:
One the one hand, those prices are set by a commodity exchange, which, in theory, the firm would have to corner to set prices. And getting around a "you must deliver 3000 tons of aluminum to the market every day" rule by delivering it to other warehouses in Detroit that you own hardly seems like effective subterfuge. If anything, it is too dumb a regulatory compliance strategy to be possibly what the firm had in mind. On the other hand, since GS bought the firm that stores 25% of the nation's aluminum, the market has changed. ...
If lengthy delivery delays began the second that Goldman bought the firm, that's something. And if the idea is that creating delivery delays makes the future price of alumninum higher than the present price, there could be a reason to create those delays.
Well, according to Bloomberg, someone's convinced enough to file suit in federal court in Detroit, alleging that Goldman and London Metal Exchange are restraining aluminum supplies and driving up the metal’s price in violation of federal antitrust law.