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Goldman Sachs to ship metals directly to customers

150px-Goldman_Sachs.svgGoldman Sachs announced last week that it will make metal shipments available for immediate delivery to customers, following complaints about the availability of metal stored at its warehouses.

The announcement comes on the heels of a Senate hearing on the questionable practices of bank holding firms in the physical commodities market. A recent article from The New York Times alleged that Goldman Sachs uses its warehouses to manipulate aluminum demand, and ultimately, price.

Late last month, the Senate Banking Subcommittee on Financial Institutions and Consumer Protection raised concerns over recent reports of bank holding firms controlling the price and supply of physical commodities.

Tim Weiner, the global risk manager of commodities and metals at MillerCoors, testified before the committee that the brewer was sometimes forced to wait up to 18 months for aluminum delivery.

“These bank holding companies are slowing the load-out of physical alumnimum from these warehouses to ensure that they receive increased rent for an extended period of time,” Weiner said. “This does not happen with any of the other commodities we purchase…It is only with aluminum purchased through the London Metal Exchange that our property is held for an extraordinary period of time, with the penalty of paying additional rent and premiums to the warehouse owners, until we get access to the metal we purchased.”

Goldman President Gary Cohn said the company has placed calls to major metals consumers and offered to make immediate deliveries, adding that “so far we haven’t found a consumer that needs to do that transaction,” according to The Wall Street Journal.

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