Here’s something a little different.
There is a journalist that works for CNBC (I usually use that term loosely when referring to CNBC, but in this case, she’s pretty good) named Kate Kelly who wrote a book “A Secret Club That Runs The World: Inside the Fraternity of Commodity Traders.”
Kat’s investigative work uncovered several things. Some people knew about and really didn’t care, and others are more profound and speaks to the sinister nature of wall street.
In particular, there is reference to how Goldman Sachs approached the aluminum trading business.
You see, Goldman gets all the credit in the world for thinking different than everyone else. Most firms who trade in commodities either broker orders on behalf of clients or trade for their own accounts, or both.
Trading for clients is done through SOP or standard operating procedures, but when it comes to their own money, Goldman takes the cake.
Instead of finding the best analysts and traders in the Aluminum space, allowing them to take positions based on where they think the future price will be relative to current price. That would be too “main street” for these guys.
What Goldman decided to do what purchase a network of aluminum storage facilities in and around Detroit. Why Detroit you ask? Go where the money is. For example, at the time they entered into this side of the business, we were in the midst of the financial crisis and therefore everything in Detroit was for sale and the auto business was flat on it’s rear.
As they took physical delivery of the metal, they increasingly began to stock pile the resource subsequently causing a perceived supply shortage in the market.
Obviously they made a ton of money as they normally do, but at who’s expense? If the price rose as a result of they’re activity, then didn’t everyone during that time period pay more for things that are made out of or with aluminum.
Thanks again guys!!
You can read the full article about the book through this link.
These are the type of things that turn everyday regular people like us away from wall street. That’s exactly why we don’t invest like everyone else, we swing trade the markets for quick profits over and over again without any regards for these thieves and their merry men.