John Paulson: The gold bull market is just getting started — and here's why
Legendary investor John Paulson, whose name is forever etched in financial history for his brilliant bet against the US mortgage market in 2008, is once again capturing market attention. This time, his focus is on precious metals. And his verdict is unequivocal: gold is in the early stages of a long-term bull trend, and the current rally is merely a prelude to a much larger move.
Paulson argues his position based on a deep structural shift. In his view, the key driver is the erosion of trust in fiat currencies. Investors, from small retail participants to the largest institutional funds, are increasingly seeking alternatives to paper money. And gold, as a millennia-old safe-haven asset, is becoming the primary beneficiary of this process.
Central banks set the tone, retail investors follow
It is important to note that gold demand today is not only driven by central banks, which have been increasing reserves for several years. The latest industry surveys confirm that the vast majority of central banks plan to continue expanding their holdings. Even during a relatively weak period for gold this year, they purchased 41 tonnes. But Paulson rightly points out that retail investors are also actively joining this process. This creates a powerful two-way flow of capital that fuels the upward trend.
At the time of writing this analysis, the spot price of gold was hovering near the $4,121 per ounce mark. This is notably above the June low, but still far from the all-time high of $5,600 recorded in late January. "When people lose faith in paper currencies, demand for gold as an alternative will only grow," Paulson notes.
NovaGold: A bet on real assets
Paulson backs up his statements with action. His company, NovaGold Resources (NG), is buying back a 40% stake in the Donlin Gold project in Alaska from his own fund. As a result of the deal, NovaGold will gain full control of the project, and a new US-registered company with an estimated value of around $4.2 billion will be created based on the assets. NovaGold shareholders will receive approximately 65%, while Paulson himself will get 35%.
This move is not just a financial transaction. Paulson is demonstrating his commitment to the early stages of working with gold mining companies, rather than simply playing the price of the metal itself. And his argument carries weight: NovaGold holds approximately 40 million ounces of gold reserves, which, at the company's current market capitalization, points to enormous potential for value growth.
Of course, not everyone shares this optimism. JPMorgan recently lowered its forecast for the fourth quarter, although the bank still expects growth in the long term. The NovaGold deal requires approval from shareholders and regulators, and the parties expect to complete the process in the fourth quarter.
Expert opinion: Paulson's position is a classic example of betting on a structural deficit of trust, rather than short-term market conditions. His moves in gold mining signal that "smart money" sees not just a correction, but the beginning of a new supercycle. For crypto investors, this is another reminder: in times of monetary uncertainty, assets with limited supply, whether gold or bitcoin, become the primary beneficiaries.