John Paulson believes the gold bull market is in its early stages.
Legendary investor John Paulson, who gained fame for betting against the U.S. mortgage market ahead of the 2008 crisis, is once again drawing market attention. This time, his forecast concerns precious metals. Paulson is convinced that gold has entered the initial phase of a long-term bullish trend, and the current rise is merely a prelude to a massive rally.
Central Banks and Private Investors: Gold Demand Is Expanding
According to the expert, the key driver of growth is the erosion of trust in fiat currencies. This process is pushing not only central banks, which have been actively increasing reserves for several years, but also private investors to buy. Recent industry surveys confirm that most central banks plan to continue replenishing their reserves, despite having purchased 41 tons of the precious metal even during one of the weaker months this year.
At the time of analysis, the spot price of gold was fluctuating near the $4,121 per ounce mark. This is noticeably higher than the June low below $4,000, but still far from the all-time record of $5,600 set in late January. "When people lose confidence in paper money, demand for gold as an alternative will continue to grow," Paulson emphasizes.
NovaGold and the Ambitious Alaska Deal
The billionaire made his statements amid news that his company, NovaGold Resources, is buying 40% of the Donlin Gold project in Alaska from his own fund. As a result of the deal, NovaGold will gain full control of the project. A new company with U.S. registration will be created based on the assets, with an estimated value of around $4.2 billion. NovaGold shareholders will receive approximately 65%, while Paulson will get 35%.
Paulson notes that he prefers working with gold mining companies over direct investments in the metal. As an argument, he cites an estimate: NovaGold has 40 million ounces of gold reserves, which, at its current market capitalization, indicates significant growth potential.
However, not everyone shares his optimism. JPMorgan recently lowered its fourth-quarter gold forecast after sharp fluctuations, although the bank still expects the metal's value to rise in the long term. The NovaGold deal requires approval from shareholders, the court, and regulators—both companies expect to complete the process in the fourth quarter.
Expert Opinion: Paulson's stance is a classic example of faith in "hard assets" in an era of monetary uncertainty. His bet on gold miners rather than the metal itself suggests he expects not just a price increase, but a substantial capital inflow into the sector. However, it is worth remembering that the implementation of projects like Donlin Gold involves long timelines and regulatory risks, which could limit upside in the short term.