Metals participants remember the warehouse scam that boiled over in 2011: FT "Aluminium groups call for warehouse rule change", Reuters "LME declines comment on report of Coca Cola complaint", where, because of LME rules (FT: LME warehousing rules cause controversy) that "While metal can be delivered in as rapidly as it comes, the warehouses need only send it out again at a rate of 1,500 tonnes a day..." (now 3000 T/d) with the warehouse owner charging rent on the metal it refuses to load-out any faster than the LME minimum.
As Reuters put it in "LME says proposal will help metals warehousing problem":
...These rules - along with financing deals that tie up stocks for years and concentrate them in warehouses where rent is cheap - have caused long queues for delivery of metal to consumers and an artificial tightness in immediate supply that pushes up costs....Here's the latest, from Reuters:
Novelis gives up on LME, seeks other avenues in warehouse battle
* LME says can't resolve logjams, calls on industryBy Susan Thomas and Maytaal Angel
* Logjams only at warehouses owned by banks, trade houses
* Consumers pass complaints to EU watchdog
LONDON, Feb 1 (Reuters) - The world's top maker of aluminium for beverage cans has lost patience with the London Metal Exchange's failure to tackle access problems at the warehouses the LME monitors and says it will seek a solution elsewhere.It is very tough to get an exploitable edge in a rigged game but as I relayed in 2008, some folks keep trying:
Novelis has long criticised the warehouse system for contributing to record-high price premiums for aluminium, a metal in chronic surplus.
"The LME sees no need to do anything else, even though they sympathise with the aluminium consumers," Nick Madden, vice president and chief procurement officer at Novelis, a unit of Hindalco Industries, said in an interview....MUCH MORE
...I've mentioned* that one of my mentors was the best trader I've ever met. Creative, intelligent, disciplined (and bankrolled).Hubris, the cause of and answer to many a trading problem.
From time to time though, he would lose his mind and run around the floor screaming
"Sell 'em all, they aren't worth the paper they're printed on"....2) He got into a rigged blackjack game in Yugoslavia. Lost half-a-mil. Said he started to think it was was fixed when he was down a couple hundred.
Wife: "Then why the hell did you keep playing?"
Him: "I thought I could beat it".
