Hedge Fund Billionaire Paulson Says Gold Bull Run Only Just Beginning

The hedge fund billionaire who made his fortune shorting subprime mortgages before the 2008 financial crisis said gold is only in the early stages of a long-term bull market.

Paulson argued that fading trust in fiat currencies will keep pushing investors toward gold. He said demand is broadening beyond central banks to include private investors too.

Central Banks Keep Buying as Paulson Bets Bigger on Miners

Central banks have expanded their gold reserves for several years. A recent industry survey found most plan to keep growing their holdings, even as they logged 41 tonnes of purchases during one of gold’s weaker months this year.

Spot gold traded near $4,121 an ounce Wednesday night. That is up sharply from June’s sub-$4,000 dip, though still well below the record $5,600 gold touched in late January.

“As people lose faith in paper currencies, gold as an alternative will continue to grow.”

— John Paulson, CNBC

Paulson’s NovaGold Goes Big in Mining

Paulson’s comments came as NovaGold Resources (NG) agreed to acquire his firm’s 40% stake in the Donlin Gold project in Alaska. Paulson serves as NovaGold’s co-chairman.

The deal raises NovaGold’s ownership of the project to 100%. It creates a new US-domiciled company worth roughly $4.2 billion, with existing NovaGold shareholders holding about 65% and Paulson receiving the remaining 35%.

Paulson said he prefers early-stage gold miners over bullion itself. He pointed to NovaGold’s 40 million ounces of gold resources against that valuation as evidence of the upside.

Not every bank shares his conviction. JPMorgan recently cut its Q4 forecast for gold after a volatile stretch, even while keeping a bullish long-term view.

The NovaGold deal still needs shareholder, court, and regulatory approval, with both companies targeting a close in the fourth quarter.

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