Is Goldman Sachs manipulating the gasoline futures market to push prices down before the November elections?
It sure looks that way.
- An article appeared this Saturday in the New York Times pointing to some unusual trading by Goldman Sachs in the gasoline futures market. As Raymond Keller, who spotted the article, points out http://www.kellerkomments.com/2006/10/gasoline-price-manipulation.html , "They always hide the good stuff in the low circulation Saturday edition." (...)
Unleaded gasoline made up 8.72 percent of Goldman's commodity index as of June 30, but it is just 2.3 percent now, representing a sell-off of more than $6 billion in futures contract weighting. A sell-off of more than $6 billion in gasoline futures contracts?
Let's put it this way, a $6 billion trade is not decided on at the lower levels of the firm. Keller provides some insight into the curious timing of this trade:
President George W. Bush nominated Henry M. Paulson, Jr. to be the 74th Secretary of the Treasury on June 19, 2006. The United States Senate unanimously confirmed Paulson to the position on June 28, 2006 and he was sworn into office on July 10, 2006. Before coming to Treasury, Paulson was Chairman and Chief Executive Officer of Goldman Sachs. So what does Goldman do just weeks after Paulson is sworn in as Treasury Secretary? It announces a subtle move that drives down gasoline prices, short-term. Nice move, coming just months before the election. Now it may be hard to swallow for some that market manipulations go on, but they do at all levels.