John Paulson says we are in early stages of a long-term bull market for gold
Hedge fund manager John Paulson, who bet billions of dollars against the US housing market before becoming bullish on gold, said he believes the precious metal is only in the early stages of a long-term rally.
“I think we’re at the beginning or early stages of a long-term bull market for gold,” Paulson said Wednesday on CNBC’s “The Exchange.” “Gold as an alternative will continue to grow as people lose confidence in paper currencies.”
Paulson, whose bets against subprime mortgages became one of the most profitable trades in Wall Street history, shifted his focus to gold in 2009, arguing that the unprecedented fiscal and monetary stimulus that followed the financial crisis would ultimately weaken the US dollar. Since then, gold prices have roughly quadrupled and surpassed the $5,000 threshold before pulling back.
The billionaire investor said that bullion demand continues to expand under the leadership of central banks, which increase their reserves with increasing private sector interest.
“Gold is becoming the most viable reserve currency in the world, replacing fiat currencies,” Paulson said. “Demand from central banks, for example, continued to grow, as did the private sector.”
Paulson also argued that investors would benefit more from owning gold miners rather than bullion, especially companies with large undeveloped reserves.
“I think the best way to invest is to invest in early-stage gold stocks,” he said.
Paulson commented: NovaGold Resources Announced that it will acquire 40% shares of Paulson Advisers. Donlin Gold project in Alaska. Paulson, who serves as co-chairman of NovaGold, said the company offers investors an advantageous position against rising gold prices due to its large resource base.
“NovaGold has indicated and measured gold resources and reserves in the market of 40 million ounces [capitalization] “I think the best way to play gold is through stocks like NovaGold, if not NovaGold,” Paulson said.
