You prompted me to dig in further to see what the source of the underlying distortionary rule is. Looks like the LME or London Metal Exchange[1]. But that in turn is governed by the government[2]. And the government, including the CFTC which governs the LME, has indeed passed distortionary "anti-hoarding" laws in allied areas[3]. See links below.

The key question is whether the LME is free to change these rules and/or purchasers are free to use another exchange in response to Goldman's attempt to increase prices. If they are not so free - if, say, the LME's rule here is imposed to be compliant with some CFTC or SEC or equivalent provision - then we are back to where we started.

Conversely, if the participants are free to use another exchange or start a competing one, then this issue is on the level of Zynga spamming Facebook - a dispute between two powerful private parties that will be worked out via LME countermeasures/competition rather than federal regulation.

[1] http://www.reuters.com/article/2011/07/29/us-lme-warehousing...

Goldman's warehouse business relies on a lucrative
opportunity enabled by the LME regulations. Those rules
allow warehouses to release only a fraction of their
inventories per day, much less than the metal that is
regularly taken in for storage.

[2] https://www.lme.com/en-gb/regulation/

The Exchange provides the environment for trading and
regulates the operation of the market. It has a statutory
requirement to ensure that business on its markets is
conducted in an orderly manner, providing proper protection
to investors.

Approved as a recognised investment exchange (RIE) and
conforming with UK and other international regulatory
requirements, the LME offers, through price and volume
transparency and audit trails, a legally safe forum for
metals trading. As an RIE, the Exchange comes under the
direct jurisdiction of the UK Financial Conduct Authority
(FCA).

Regulation of the market is largely carried out by the LME,
while the FCA is responsible for regulating the financial
soundness and conduct of LME members' business.

Beyond this, both the Exchange and its members are subject
to regulatory controls and input from various UK bodies and
government offices, as well as EU directives. In
international trading, rules applied by overseas regulatory
bodies such as the US Commodity Futures Trading Commission
(CFTC) also have to be taken into account.

To ensure the observance of these regulations, the LME has
a compliance department under the supervision of the
Executive Director of Regulation & Compliance.

[3] http://finance.fortune.cnn.com/2011/10/19/cftc-commodities-r...

The Commodity Futures Trading Commission approved new
limits on commodities traders. Now analysts want to know
what will happen next.

FORTUNE -- Is the cure for speculation in the energy
markets worse than the illness? Futures industry
professionals are up in arms over a vote by regulators
Tuesday to introduce position limits on hedge funds and
other traders, saying it will lead to commodity hoarding
and large price spikes in the futures.

The CFTC decision (the full text is here) places various
limits on how much a speculative trader, like a hedge fund
or ETF manager, can hold in any of 28 commodity contracts,
including energy. The aim is to prevent a run-up like June
2008 when oil hit $140 a barrel which ultimately introduced
$4 a gallon gasoline at the pumps. The problem is,
according to futures analysts, if speculators aren't
allowed to buy the futures, they'll buy the physical
commodity instead.

"Eventually you're going to see a shortage, I think it's
going to create a disruption in the marketplace. We might
get away with it for some time, but if there's a crisis
like 2008 you'll see one," Phil Flynn, the energy analyst
at PFG Best, a Chicago brokerage, told me this morning (he
also lets loose on his morning market commentary).

Similarly, if less ominously, CME Group (CME) chairman
Terry Duffy told CNBC yesterday ahead of the CFTC vote that
passage would "encourage manipulation" of the markets.