https://korii.slate.fr/biz/comment-jpmo ... ge-paniqueHow JPMorgan Stole A Fortune In Nickel
And this, in a warehouse controlled by the supposedly very safe London Metal Exchange. Panic on board.
Spotted by Thomas Burgel on Bloomberg
28/03/2023 à 18h19
The world of nickel is decidedly more ruthless than that of Dallas. In March 2022, the precious metal market collapsed in minutes, taking with it the Chinese tycoon Xiang Guangda and the Tsingshan Holding of which he is master, the leading producer of stainless metal in 2019.
A few weeks ago, in February 2023, it was not a "short" as in March 2022 but a massive hijacking that shook the market, with the discovery by the trader Trafigura of a fraud that cost him 577 million dollars (about 533 million euros). Basically, Trafigura had realized that the containers of nickel bought from a crooked Indian businessman did not contain any nickel. They contained nothing. Or anything else, of lesser quality or even worthless.
That's pretty much what just happened to JPMorgan Chase Bank. It acquired from the London Metal Exchange (LME), the benchmark world market, a few tonnes of nickel which it thought were wisely stored in one of the buildings for which the intermediary is responsible.
But in the bags, mess, zero nickel – their weight did not correspond to that announced on the initial contract. These are pebbles that have replaced the metal briquettes, no doubt stolen by a gang of strong-armed burglars. As Bloomberg explains, the sum is not exorbitant, at least relative to what is exchanged every minute on these markets: the estimated value of the theft JPMorgan suffered is $1,2 million.
The problem is elsewhere, and it is major: it is the credibility of the LME, an old institution that was once indisputable, which is wavering again with this dirty business. “In today's world, the LME system is a place where things are considered perfectly safe,” Bloomberg reporters write. “The options held in the LME warehouses were the highest standard in the world, they were almost treated as the equivalent of cash,” said John MacNamara, veteran of the commodity markets, on LinkedIn, as specified in an article by Bloomberg. dated March 17.
The Nickel Police
Thus, the contracts (these famous options, “warrants” in English) on nickel, zinc or copper for which LME is responsible are supposed to be of unequaled security. In people's minds, they are the equivalent of a safe or an account in a bank, but in the form of a receipt issued for a certain quantity of bags of various materials, stored in a warehouse managed by the platform. But, inevitably, after the misadventure of JPMorgan and all the previous ones like these 490 million euros of Chinese copper “lost”, the spirits begin to see their old certainties eroding.
So, as the American media points out, in mega-warehouses around the world, workers were requisitioned to try to verify that the bags – therefore fortunes – contained what they were supposed to contain.
The initial method to determine if these astronomical quantities of metals are indeed metals? Before any further analysis, start by kicking said bags. If it goes “Knock!” and if it hurts your toes, it's probably metal. It's already better than vulgar pebbles, of course. But that does not prevent the LME system from apparently being much more permeable to fraudulent thefts than previously thought.
The original article: https://www.bloomberg.com/news/articles ... ify%20wall
