The revelation that about $2 million of “nickel” on the London Metal Exchange was actually just bags of stones has thrown a spotlight on the sprawling web of warehouses and metal stashes underpinning the billions of dollars of derivatives traded daily on the LME.
Over the past week, warehouse staff from Busan in South Korea to Genoa in Italy have rushed to check tens of thousands of two-ton bags of nickel – in some cases, by literally kicking them.
The LME advised warehouse operators to wear steel toe-capped boots for safety, one person who received the instructions said. The rule of thumb: If it hurts when you kick it, it’s probably nickel.
Source: JPMorgan’s Mystery ‘Nickel’ Rocks: The Hunt for Clues Begins With a Kick