Former Congressman Ron Paul Says Market Backwardation a Result of Manipulation

Kitco News -- Former Congressman (R-TX) and three-time U.S. presidential candidate Ron Paul says the current market situation is acting ‘strange’ -- with the spot market now higher than the futures market. The market condition Paul references is called backwardation and it occurs when the spot price is higher than the futures price. This is generally favorable for investors who have long positions since they want the futures price to rise. The reasoning behind the current condition is manipulation, Paul said. ‘[O]ne thing governments can do -- and it goes back to the time I got interested in monetary policy -- is the manipulation of the dollar,’ he said in an interview with Kitco News. The ultimate test of the dollar is the purchasing power of the dollar and that is going down all the time,’ he added. Paul extended his manipulation thoughts on gold, ‘our government actually has the legal ability to do it in the Exchange Stabilization Fund which they got in the 1930s– they were allowed to manipulate the price of gold for the interest of the dollar and the economy.’ He added, ‘The [government] does [manipulation] pretending that no one knows what they are doing. I don’t think we would have this type of market if someone was not trying to prop up the value of the dollar,’ he said.